Negotiation is a very common practice when it comes to how compensation works generally across our industry. As we focused on Approaching salaries from first principles, we also reflected deeply on the why behind salary negotiation, and the implications of salary negotiation.
Salary negotiation is largely necessary because without negotiating, individuals will end up with a lower salary than they deserve, or than is possible. This is very much because most companies strive to pay the minimum salary they can negotiate for themselves. This could be argued as an efficiency gain, however we believe that there is a significant lost opportunity for trust in the company, in leadership, and among the team with this approach.
The direct implication of negotiation occurring and a salary being determined through a process of negotiation, is that there will be discrepancies in salaries across the same role and level. We hold ourselves to a high standard and fully adhering to our Compensation Principles. By holding ourselves to having Fair salaries, we have committed to no discrepancies or exceptions in salaries of the same role at the same level. Further, we are committed to having a very clear system for our salaries and full transparency of that system.
To achieve these outcomes, we have no salary negotiation at Buffer. Where salary negotiation occurs or feedback is shared on the outcomes of our salary system, we treat this as an input to improve the system overall. The Salary System is always evolving and is never complete; it is more comprehensive today as we have grown significantly from our early days, and in the future when we grow larger, there will be roles or necessary elements which aren’t currently captured. Therefore, it is essential that we have ongoing feedback so that we can understand any issues and improve the system. When we find an issue that should be resolved, the improvement will positively impact everyone in a role where that particular change is relevant to them. In this way, our approach is one where A rising tide lifts all boats (salaries).
One of the powerful outcomes of full transparency of our Salary System and all salaries within the team, is that if someone believes they are not being paid adequately, they have all the information to understand exactly why their salary is what it is. This enables someone to assess more deeply whether they feel they are truly not paid appropriately, and if so, to pinpoint what aspect of our formula and approach is the factor leading to a salary that is not hitting their expectations. This allows us to expect an ownership mindset from people in regards to how they approach salary questions, requests or negotiation. Team members are fully aware we are actively Limiting opportunities for discrepancies and exceptions, and will not do anything one-off for them, and so they are empowered to share wider concerns which have the potential to benefit many people.
Another reason salary negotiation is required in most companies is that without negotiation, you will be in a worsening position over time. Most companies will rarely give a raise without it being asked for, and therefore salaries will fall out of line with the market. In these situations, individuals can often get a better salary by leaving and finding a new company, since they are in the best negotiating position when starting in a new role. At Buffer, we conduct Rebenchmarking where we regularly bring our salaries in line with the latest market salary benchmarks. These rebenchmarkings come at a significant budget impact and result in many salary increases across the team. This is something we have determined is essential for the integrity of our system and to uphold our Compensation Principles.