Our Salary Method and Compensation Philosophy

Compensation is an important issue in every company. At a company like Buffer, where ours wages have been transparent since 2013, compensation is a transparent internal discussion in which the entire buffer team can exchange thoughts and feedback.

Much has changed in our salary formula in recent years. We took a very simple formula and fine-tuned it for the job market, and lately we’ve been focusing on improving our formula to make it a real benchmark for a remote world.

In this post we provide an overview of our compensation philosophy and a simple explanation of our salary formula. Transparency is an incredibly powerful tool, and we hope that sharing our approach to compensation can help others who are currently in this area.

How we think about compensation

Our approach to compensation has evolved over the years and our salary formulas have taken various forms, but some of the fundamental pillars of our overall compensation philosophy have not changed.
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Ultimately, we see compensation and benefits as a set of tools that empower our teammates to do their best for Buffer so that we can share the same generosity in serving our customers. We want every single customer interaction to be a pleasant experience. By making sure our team members are happy and engaged with their work, we can develop the solutions and tools to help our clients achieve success and fulfillment in their personal and work lives.

These key principles guide all decisions we make about our team’s compensation and performance:

transparency: We openly share our approach and all salaries to instill trust, hold ourselves accountable and serve as a resource for the industry.

simplicity: Our goal is to maintain an easy to understand formula that allows everyone to easily see how we get to each individual salary.

Justice: We ensure that people with the same role and responsibility who have the same level of experience are paid fairly.

generosity: We pay above the market to attract the team we need, to be successful as individuals, and to avoid bargaining exceptions and inequalities.

Our salary formula

Every base salary at Buffer is based on our salary formula. The formulaic approach minimizes biased decisions about compensation. This has been a valuable tool in ensuring we are aware of the gender pay gap as our salary formula is based on objective market factors that are consistently applied across the team. Read our latest payroll analysis for more insights into pay equity at Buffer.

Our formula is Your role x cost of living = your salary.

This is how we determine the role remuneration

We compare each role with data from Radford, one platform Collects compensation and benefits data from companies that take part in global surveys twice a year. The role benchmark is based on the software industry and the 50th percentile of the San Francisco market data. We selected San Francisco as part of our generosity policy because it is a competitive job market.

How we calculate the cost of living

After evaluating the position and level of experience, we multiply by a cost of living factor that objectively takes into account one of four geographic areas compared to the San Francisco Cost of Living and Property Price Index.

High cost of living
100% of the San Francisco market = multiply by 1.
Examples: San Francisco, CA & New York, NY

Average cost of living
90% of the San Francisco market multiplied by 0.90
Examples: Singapore & Sydney, Australia

Average cost of living
85% of the San Francisco market multiplied by 0.85
Examples: Boulder, CO & Madrid, Spain

Low cost of living
75% of the San Francisco market, a multiple of 0.75
Examples: Bangalore, India & Wroclaw, Poland

These cost of living multipliers take into account that we are a global team while bridging the gap found in traditional compensation approaches.

To see this formula in action, visit our Salary page with the transparent salaries of the entire buffer team.

The future of our salary formula

Over the past few years, our goal has been to further simplify our formula and eliminate the cost of living as part of the formula. In practice, this would mean that we would eliminate the low, average, and middle tiers in order to pay everyone the same level of salaries in the San Francisco market.

The result of that shift would be a $ 1.2 million increase in operating costs based on the team we have today (March 2021). While this change remains a consideration, we have made a conscious goal to do this gradually rather than all at once. Investing in our team is important, although we will have to trade compromises, and this season for Buffer we believe that expanding our team size will better suit our customers’ needs.

In the meantime, we are also seeing market shifts that will inevitably affect global compensation. As more and more companies use telework, access to talent no longer depends on the local talent pool. You don’t have to live in Silicon Valley or New York City to work for companies based in these areas. You don’t have to be based in these cities to access top talent either! While we’ve never just looked at the local market to evaluate our salaries, we recognize that as we move to support a global workforce, the cost of living is likely to become increasingly irrelevant.

What do you think of our approach to compensation? How would you like payment to become more transparent inside or outside your company? Join the discussion with the Buffer community on Twitter here.

Would you like to work in a team with transparent salaries? Take a look at our current vacancies here.