Since the early days of Buffer, we've taken a first principles approach to how salaries work. A first principles approach means aiming to break down something to its most fundamental truths. In the case of salaries, this means asking ourselves questions such as “What are salaries?”, “How should salaries be determined?”, “What are the core components that should make up a salary?”, and “What is absolutely necessary to factor into determining a salary versus what can be left out?”
We believe that a salary is the appropriate remuneration for work put in to contribute to making our company a success. We believe that pay should be in relation to the stage and state (performance) of the company, the role and the impact that role has on the business, and the seniority of the position in terms of the level of responsibilities and impact that on the company.
At its most basic principles, we believe a salary number should be tied to the value that work brings to the business in direct monetary terms. In reality, this is very hard to quantify and the ability to quantify varies drastically between roles. Therefore, we also value the market rates and believe in the concept of a market for compensation. With enough individuals and companies, a market is formed based on the pay companies offer, and the pay employees expect.
Based on the existence of a market for compensation, and our preference for this methodology over attempting to value every role, we heavily utilize market data in our approach to salaries. We have created a level of flexibility in our approach to enable us to have some element of value-driven differences in salaries, based on a foundation of market-driven salaries.
When reflecting on the market of salaries and where we want to sit in the market, we have determined that we want to pay on the upper end of market rates for most roles. This is reflected in our Compensation Principles, specifically to be Generous. The reason for this choice is that we want to have a small-for-revenues, high performing, tight-knit team in line with our Operating Principles. We want the team to generally not be concerned about compensation, and be able to focus on delivering value to customers and creating something special.
We fundamentally believe that pay should be fair and equitable. Again, our Compensation Principles reflect this with our Fair principle alongside Transparency. Being fair leads us to having a clear system and formula for salaries, and Limiting opportunities for discrepancies and exceptions. Transparency means that anyone can verify that we are in fact being fair and meeting our other stated goals, since they can see the entirety of the methodology. This helps us to establish full trust in our approach to salaries as a company.
Our salary methodology changes the power dynamic that usually exists at companies. Where most companies keep their methodology secretive and opaque as it puts them in the stronger negotiation and power position, we choose to make our methodology and all salaries fully transparent. Candidates and team members have full information to make their decisions, and can actively share feedback which can and often does lead to changes to the system that positively impacts everyone, i.e. A rising tide lifts all boats (salaries).