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The Next Evolution of Transparent Salaries: Our New Remote-First Formula and Updated Salary Calculator

Four years ago we introduced transparent salaries at Buffer. The practice has in many ways come to define us. We’re proud of this, and the positive impact that it has had both within the team and in the wider community.

A growing company brings change and new learnings. Over time, our team has evolved – and so has our thinking around salaries.

Today we’re introducing Buffer’s Salary Formula 3.0 – a fresh, remote-first approach to our salaries.

We’re happy to share that having an open pay system continues to breed high trust among our team while also holding us accountable to paying people fairly, equitably, and without bias.

Living up to our value of ‘Defaulting to Transparency’ means that we take the opportunity to share our beliefs, failures, strengths, and decisions.

We, therefore, remain committed to both salary transparency and sharing our approach and learnings. Read on to learn about the full formula and how we derived every piece of it. We’re also sharing the list of all of our salaries as they are right now.

Why It Is Time For A New Salary Formula

Over the past four years, Buffer has seen a lot of growth. We realized over time that our salary formula became less effective and more complex than we’d like.

Over the past four years, a primary challenge was keeping up with pay benchmarks across a vast number of locations. It was complicated to explain how the formula worked to existing team members receiving promotions as well as new team members. With this level of complication, subjective decisions were made which put us further away from the intent of the formula.

It was time for simplicity. Our main goal was to build a framework that represents the unique elements of Buffer’s culture and fits our strides towards becoming a workplace of the future.

With that goal in mind, we thought through a larger compensation strategy that aimed to accomplish several key components.

  • Simple and Accessible: Our formula needs to be simple enough for anyone to use
  • Do the Right Thing: We made sure take-home pay wouldn’t drop
  • Adaptable: Our framework needs to be able to adapt and evolve
  • Competitive: Our compensation package remains competitive

Salary Formula 3.0

The latest evolution of our salary formula introduces an important new element – the Buffer Benchmark, where we’re benchmarking all salaries to a single city and establishing a remote-first salary formula.

Without further ado, here’s the latest evolution of our salary formula:

Our new salaries

You can see all our salaries via Google Sheets too! 

(If you’d like to export a salary spreadsheet of your own, there’s a spreadsheet we created where you can do that here.)

Here’s a little more on each section of the salary formula:

Buffer Benchmark

With the Buffer Benchmark we’ve essentially created our own competitive base salaries for each role, which is symbolic of the ways in which we march to the beat of our own drum. To calculate the benchmark we multiply the San Francisco 50th percentile market rate by the Cost of Living and Role Multipliers. For consistency, we use PayScale’s paid platform to gather all benchmark reports for the San Francisco job market.

While we use the PayScale benchmarks as the starting point for all of our salaries, we intentionally use this data to represent just that: a starting point for pay.

Cost of Living Multiplier

We’re introducing the Cost of Living Multiplier as a way to replace the Good Life Curve in the previous 2.0 salary formula.

The multiplier is one of three geographic bands, based on a high, average, or low cost of living area. We use data from Numbeo to figure out which band applies for each teammate. For high cost of living areas we pay 100% of the San Francisco 50th percentile, average is 85%, and low is 75%.

We figure out each teammate’s geographic band by comparing the cost of living index of a teammate’s location to the cost of living index in San Francisco.

For example, Numbeo data indicates that you would need around $1,575 in San Francisco, CA to maintain the same standard of life that you can have with $1,000 in San Luis Obispo, CA, (assuming you rent in both cities). $1,000 divided by $1,575 provides an index of .63 which we’ve determined to fall under an “average” cost of living area. The Buffer Benchmark allows us to use a generous labor market (San Francisco) as the basis of our formula while addressing the impact of locality in a simple, affordable and sustainable manner.

This approach isn’t perfect and doesn’t consider all unique circumstances, but it has allowed us to minimize subjectivity.

Role Multiplier

The Role Multiplier provides a level of flexibility within our framework.

Today, it is applied to our Marketing and Advocacy teams to increase the Buffer Benchmark, as we found that the general market in San Francisco provided benchmarks that came in below our current levels of pay.

We also plan to use the Role Multiplier as a way for individual contributors to see salary progression and to contribute outside of the experience levels as defined in different area career frameworks.

Experience Factor

The Experience Factor correlates directly with individual area career frameworks. This factor means experience levels will be applied differently from team to team, and we’re okay with that.

This is the part of the formula where we want to lean into the idea that compensation is an art, allowing for creativity and interpretation, and science, relying on market and economic data.

Other Factors

We have a few other unique elements that make up our total cash compensation: the Dependent Grant and the Salary Choice Option (offered to teammates in lieu of higher equity).

In 2015, when we introduced Salary Formula 2.0, we also added the dependent grant, to support teammates who have dependents, or family members who depend on their income.

Under salary 3.0, the dependent grant remains separate from the salary formula but is still a component of total compensation.

We’ve also honored all 2.0 salaries in the 3.0 formula to ensure that take-home pay would not drop.

The New Salary Calculator

We also have a fresh salary calculator live so that anyone can calculate what they would earn at Buffer and see compensation for each role.

Check it out here!

Location, Loyalty, and Salary Choice: The Three Biggest Changes to the Formula

The New Formula Isn’t Based on Location

The most significant change with this formula is that we’ve done away with many of the location-specific factors we had in the previous formula.

We believe that the work and value each teammate brings to Buffer is not limited by where they work from, and so our compensation for their contribution shouldn’t be, either. This is also supporting each teammate to choose to work where they are most happy and productive. (Living by our “live smarter, not harder” value.)

We got more than a few raised eyebrows when we announced that we’re now using the San Francisco labor market (one of the most expensive labor markets in the U.S.) as the basis of pay for all salaries at Buffer.

The question on everyone’s mind was “Can we afford this?” and “is this sustainable?” When we sought input and advice from those outside of Buffer we also were asked, “Why would you pay your team members with more generosity than you need to?”

As it turns out, our answers are: Yes, Yes and because we believe it’s the right thing to do.

Applying the Cost of Living Multiplier component of the Buffer Benchmark makes the San Francisco labor market both affordable and sustainable. It also helps us achieve one of the tenants of our compensation strategy: Objectivity and Simplicity. In other words, it allows us to use consistent benchmarks for teammates in the same position, regardless of where they live and work.

Another benefit of the location-agnostic approach is that it helps support our teammates who are digital nomads, by bringing consistency to their pay regardless of where they live and travel or how long they stay in any given location because we apply the average cost of living area multiplier for all nomads.

Removing 3% Loyalty Raise

One of the toughest decisions we made with the new formula was to remove the annual 3% loyalty increase given to teammates for each anniversary from their start date.

We looked at a lot of options and in the end decided to remove it as it created an unsustainable, compounding affect on pay. By removing this element, we’ll have more opportunities and greater flexibility to introduce other benefits for the team down the road.

We’re looking at other ways to recognize loyalty such as profit sharing, 401K matching, bonuses based on profitability, dividends, and future stock buyback programs.

The Salary Choice Option Now Phases out at 4 Years

Back in 2013, we began offering teammates the option between an additional $10,000 in annual salary or accepting 30% more in stock options.

71% of our current team opted to take the higher salary choice. This created an annual budget impact of $510,000.

In the end, we decided that in many ways we’ve outgrown the initial intention of this generous offer. In fact, in May of 2016, we stopped offering this choice. It became clear that it was best to retire the salary choice option and we’ve decided to phase it out in two steps ($5,000 each over the course of a year) beginning in 2019.

The Future of Salaries At Buffer, More Change To Come

When Joel first introduced Buffer’s transparent salaries, it was both frightening and exciting. That vulnerability has opened us up to something more valuable than we ever could have imagined.

It’s easy to allow transparency to erode with growth. That’s for understandable reasons – it’s tough to stay true to transparency as a company increases in size and becomes more complex. There are more edge cases and more voices. As a result, this version has been that much harder than any previous ones. We actively recognize this, and despite the challenges, we continue to believe in the value and remain wholly committed to radical transparency.

We’ve always seen our salary formula as a living document. We believe that this is just as true today as when we first introduced transparent salaries. Therefore we know that there will be more change in the future for salaries at Buffer.

We’d love to hear your thoughts on our latest version, and pay transparency in general, in the comments below.

  • I’d look for a different source for the cost of living, I live in Budapest and that website tells that between 2009 to 2017 the cost of living decreased by 30 and more points, while it’s actually the opposite.

    • Thanks for the feedback, @FezVrasta:disqus! Appreciate you sharing your experience there.

      • Jenny Terry

        Yes, thanks for the feedback, @FezVrasta:disqus! Curious if you’ve come across other sources besides, Numbeo, that feel like a more accurate portrayal of your cost of living?

        • Alicia DeSimone

          @HailleyGriffis:disqus @jenny_terry:disqus — I would consider looking into a number of different reports and indexes and creating an average to come up with a much more accurate calculation, as Numbeo’s methodology is purely sourced via volunteer data, which can of course be incomplete at best and just plain inaccurate at worst. With a globally distributed team, the EIU’s Worldwide Cost of Living Report should provide some helpful data for you. You should also look at the data provided by Bankrate’s Cost of Living Calculator (or, better yet, it’s source, Coli.org), as well as the data you are sourcing from sites like Numbeo. Aside, it’s clear that your entire team is paid incredibly well no matter where they live, plus benefits, so kudos to the Buffer team for creating a world-class people first culture. =)

          • Jenny Terry

            Thanks so much for sharing, @aliciadesimone:disqus! I’m excited to dive into these sources!

  • Aaron Dignan

    I agree wholeheartedly with this point: “We believe that the work and value each teammate brings to Buffer is not limited by where they work from, and so our compensation for their contribution shouldn’t be, either.” But then you go on to create an adjustment based on cost of living where someone happens to live. Seems logically inconsistent. Help me understand?

    • Hi @aaron_dignan:disqus! Great question. We used to have city as a bigger factor than it is, we’ve now adjusted it to to just three categories. The reason we have “high cost of living” in there is so that our salaries can be competitive in job markets like San Francisco and New York. Does that help clarify?

      • Jenny Terry

        Hey there @aaron_dignan:disqus. I definitely see your point here. This version of the formula is our first attempt at minimizing the differences is pay across locations. We did look at bringing everyone up fully to 100% of the SF benchmarks and we found that it wasn’t affordable (or scalable). We do believe that this version still values teammates for the work they do regardless of where they work (for example an Engineer in Cape Town will make the same as an Engineer in Chicago). We have fewer teammates in high COL areas and we didn’t want to bring their pay down in order to have everyone on the same band. We believe this formula ensures teammates currently in high COL areas are still paid competitively.

  • Michela Marini

    This is great, thank you for sharing your updated formula. I am wondering how you deal with moving employees? Do you adjust the salary depending on where they move to, even if it might mean a decrease?

    • Hi @michelamarini:disqus! Thanks so much for reading. Great question! Now that we have location bands it depends on where they move. Most cities that our employees live in are in the “average cost of living band” so if they moved to say San Francisco or New York it would go up to a “high cost of living” band. But if they moved from one average cost of living place to another it wouldn’t change at all. Does that make sense? :)

      • Caryn Black Hubbard

        Hi @michelamarini:disqus, I also want to thank you for checking out our formula. :) One perspective around the cost of living multiplier is that “average” really represents our baseline for pay regardless of where you live. For the highest cost of living areas like New York and San Francisco, we bring those salaries up so that those teammates have the same standard of life in those expensive cities.

  • Thanks for sharing this! I truly appreciate all the efforts you and a handful of other companies are doing to increase awareness of the advantages that remote work can offer both employees and companies. I am grateful to be able to count myself as such an employee and cherish (almost) every moment of it :D

    I have one question for you guys. How are taxes handled for non-U.S. employees and everything related to the advantages that your U.S. team mates have (pensions, 401Ks, etc)? Can I assume that employees pay their own taxes in their country of residency? In which case, how is that taken into account when calculating the salary (which I assume is the pre-tax salary)?

    All in all, great work that you’re doing! Being so open can only win you supporters! Ignore the nay-sayers!

    Cheers,
    Bogdan

    • Caryn Black Hubbard

      Hi @tricinel:disqus, Thanks so much for sharing your thoughts and graitude for the opportunity to work remote. I couldn’t agree more that the remote set-up can be so advantageous for companies, employees, team members and surrounding communities.

      You’ve asked a great question. All team members that contribute to Buffer, whether employees, consultants, contractors or advisors pay taxes in their country of residency. The rates we pay for “services” are benchmarked the same. That is, we don’t factor taxes into the formula that drives our rates of pay.

      Thanks again for your support! It means a lot.

      Cheers,
      Caryn

  • This is amazing. 👏🏼 So incredibly transparent and smart. My dream is to work remote and it’s wonderful to see a company that I admire and use leading the charge and showing how important it is to take care of your employees.

  • Marcell Almeida

    Congratulations! You are an example for so many companies around the globe. I really wish more companies could be this transparent. Great new formula, by the way!

  • Sarah Arcoleo

    Thank you for sharing all these details, I find the approach very thoughtful and the details quite helpful. May I ask, do you pay all team members in dollars? And if not, do you take exchange rates into account when determining salary for international team members? Very curious. Thanks!

    • @saraharcoleo:disqus thank for reading! Great question. We do pay everyone in dollars and so if you’re not in the U.S. it does fluctuate. We’re looking at making adjustments based on conversions but haven’t yet put anything into place. Being international as opposed to in the U.S. doesn’t affect salaries. You’ll hear about currency conversations on the Open blog when we make more changes here! :)

  • Kem Elbrader

    I’ve always been impressed with the approach to salaries at Buffer and I like the updates. At my company, we’re interested in adopting a similar methodology. Would it be possible to make a copy of your spreadsheet? Previous versions had the spreadsheet export option enabled but this latest version has it disabled. I’d suggest you make a template and open that one up for others to utilize. Also, I love the salary calculator at https://buffer.com/salary but I couldn’t find it in your open source projects. Any plans to open source the page for other’s to adopt and adapt?

    Thanks!

    • @kemelbrader:disqus Hi Kem! I really appreciate this thoughtful comment and you wanting to bring this spreadsheet to your own company! Our salary spreadsheet isn’t exportable at the moment for privacy reasons, however, our People team has kindly created a spreadsheet that is that you and everyone else will be able to export. I’ve added it to the post above, but here’s the link: https://docs.google.com/spreadsheets/u/2/d/1mUsfifogZAXjgFMXErYHgxRBH9VRnFn1sMoDoQXn2Mg/edit?usp=sharing
      Hope it goes well with your company!

      • Kem Elbrader

        That’s fantastic. Thank you for taking the time to put that together. I’ll share our sheet here once it’s complete.

  • Nicholas

    Hello! I read this post with great interest.

    To me it all makes sense, I have one questions:
    – Do you in any way incorporate performance in the salary? I understand that it is not explicit, but is it included in the experience factor, i.e. if you perform over expectations you growth faster and hence get a higher experience factor multiplier?

    Thx, Nicholas

    • Hi @disqus_v4QdYYSalV:disqus, great one! The experience levels focus primarily on influence and ownership (more on that here: https://open.buffer.com/career-framework/). Although really great performance can help create more influence and opportunities for ownership. So while it’s not explicitly a part of our formula, I can see it impacting the experience element. Thanks for reading!

      • Nicholas

        Thank you @HailleyGriffis:disqus for getting back to me. A follow-up reflection, if performance (or potential) not explicitly is taken into consideration for salary setting, have you had examples were this has been perceived as unfair? E.g. two individuals are on the same role and same experience level = same pay, but they are clearly performing at different levels.
        Thx, Nicholas

        • @disqus_v4QdYYSalV:disqus Really good question! I haven’t seen this personally though I don’t doubt it exists. I’d say that performance does still impact those elements and if someone is performing at a much higher level, I would expect they’d quickly start taking on more of those ownership areas which would end up impacting their experience level. :)

      • Shaheen Samavati

        Hi @HailleyGriffis:disqus thanks for the great answers! I was wondering, if there are different roles according to different levels of influence and ownership (ie, hapiness hero I, II and III) each with its own incrementally higher salary, what is the purpose then of the experience multiplier? For example, is it possible in theory to have someone with 10 years customer support experience hired in as a “hapiness hero I” who makes the same salary or more than someone with only 2 years experience but with a broader scope of influence and ownership as a “hapiness hero III”? I’m just trying to understand the difference between the two different factors and how they are considered in the calculation. Thank you!

  • dinogirl

    Thanks for this detailed post! I love how Buffer handles their salaries and this detailed level of transparency. I look forward to the chance of being a part of it!

    • Thanks so much for reading! :)

  • Aeon

    I love this blog. Thanks Buffer Twitter for recommending this. May I recommend including a subclass budget for company outing and etc?

    Travel, I think, is one of the essential thing of Buffer, putting it on a budget per person will make a chance for people who don’t do much travel to actually have a better and probably more cozy and luxurious one, I hope you take that in consideration.

    P.S. I made some percentage “profit sharing” scheme like this btw. I forgot when I made it, but just recently.

  • Kate

    Hi @HailleyGriffis:disqus – thanks for sharing this info. I do have one question: why do you multiply based on experience? If you’re pulling the benchmark for that role at a particular level, should the data already be adjusted for experience? Thanks!

    • Great question, @disqus_KF9Xnb7Utl:disqus! My understanding is that when we pull the role it’s not always the correct experience level because it’s based purely on the title, for example for a Social Media Manager, you can be a beginner or really experienced all within the same title before you move to a different title. Does that make sense?

  • Tom Sebright-King

    Thanks for continuing to share guys, it’s such a useful resource and forum.

    I have a question around the very start of the process. We are considering moving into a more transparent salary setup from a traditional ‘closed book’ setup. One fear we have is around tackling the initial move of publishing current salaries. Did you guys have to go through this at all? Were there any difficulties with staff? If so, do you have any advice or experiences that you can share? Thanks.

    • Tom Sebright-King

      Also – another question that has come up: Do your team stay on the same wage for the whole time they are considered at a certain experience level? i.e there are no incremental raises between experience levels?

      • Another great question! In the current state of the formula, you’re right, people stay at the same compensation until an experience level increase. (There is an annual cost-of-living increase that is not performance-based.) We’re working on an update to the formula that will allow for just the type of incremental raises you’re suggesting. :)

    • Great question, Tom, and congrats on exploring salary transparency. How exciting!

      When we first started with transparent salaries, we surveyed our team members to see how they felt (I believe it was open for discussion and not, “We’re doing this”). There wasn’t too much pushback at the time. I remember when I joined Buffer – after salary transparency was a thing – it was a question during the hiring process, if I would be comfortable with it.

      • Lael Uberuaga-Rodgers

        Thanks for your responses Kevan! For the small amount of pushback you did get, how did you deal with those folks? Did some leave? Did they come around? Did they accept it and live with it? At my company, our leaders have said in the past that they’re open to transparent salaries only if there is unanimous agreement, and I know for a fact we have 1 or 2 people that would NOT be into it. (as you can probably guess, I would be very into transparent salaries).

        • Ah good question, Lael. I’ll see if I can find someone from Buffer’s early days to answer this concretely for me. From my recollection, no one left over the transparent salaries decision, though I can’t recall exactly if anyone was “not on board” or had to be convinced.

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