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Your Questions On Pay Transparency with Buffer

Posted by: on 11 September 2018 in Business Strategies, Finance, HR, Human Capital Management, Payroll

Q&A with Buffer

Buffer is a social media management company who has taken a radical approach to pay transparency by publishing their employee salaries and their unique salary calculation formula on their website.

Here are some of the questions our audience asked as part of ADP’s webinar with Courtney Seiter, Director of People and Jenny Terry, Finance and Compliance Manager at Buffer.

Applying the Salary Formula

How do you determine the Role Multiplier and Experience Factor?

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.

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. The experience factor is determined during the interview process.

Cost of Living (COL) Multiplier – Does it mean a team member’s salary is cut if they work in a low cost area?

We would never cut an employee’s salary – in the latest version of our salary formula we landed on geographical bands, where we look at the cost of living + rent index for each teammate’s location.

How does Buffer deal with the varying currency exchange rates between the US dollar and other currencies? For example, Sydney, Australia is listed as 85% cost of living (COL) however recently the COL is now on par with COL in New York.

This is something we’re keen to re-evaluate as cost of living fluctuates so frequently. As we continue to develop the salary formula, we’ll be looking at adding more cities to the higher cost of living bracket.

How does Buffer find that benchmarking to the SF market compares to the cost of living and various taxation and labour laws in countries in the APAC region?

At the moment, our international teammates are classified as contractors, so we are not contending with international taxation and labour law agreements across Asia Pacific. However, in choosing this route it means that our international team members are contending with currency fluctuations, which is not ideal and something we are looking to address in the future.

Are shares / stock options/bonuses awarded also as transparent?
Right now we don’t have a lot of mechanisms to reward individual contribution, like a bonus plan. It’s something our team has expressed interest in, and we’re working on the best way to work that concept into our strategy. We’ve done some profit sharing, which was very cool and more of a group distribution.

Does Buffer use this salary formula for annual salary increments?
We do re-benchmark role every year to make sure we’re keeping up with the San Francisco labour market and also inflation. We will do a one-time adjustment to all salaries in October (we will never adjust down).

Talent Acquisition

Are the salaries for new hires fixed, or do you entertain negotiation? Have there been any problems because of transparency?

Most candidates have at least a passing knowledge of our salary formula by the time we get deeper into the interview process, so negotiation is rare. We place teammates where we think makes sense upon hire, and we re-assess every new teammate’s role and contribution after their first 90 days, in case they are contributing at a much higher level than expected. In that event, that would be an upward adjustment we look into making (we would not adjust someone’s salary downwards – instead, we rather hire into the role we feel highly confident that they’ll succeed at!).

I have encountered a few people who have a bit of anxiety around the idea of sharing how much they make with the public at large, but there are generally some concrete reasons why, like personal safety concerns.

We have also had candidates choose not to join us based on the salary that’s offered via the formula, and we do try to track that data in case it helps us make a change to the formula going forward.

How do you think Salary Transparency will be ever possible in countries in Asia? I am from India, and have been in the HR industry for 14 years and feel this is impossible in the Indian context.

All change takes time, we would love to see pay transparency adopted more widely but we understand that culturally this change can be slow. One of the best ways to start implementing more transparency is to start very small. One method could be releasing the ranges of salaries for a certain position either while you are hiring for it or internally to all employees. If several companies started to be slightly more transparent, or even if one company decided to be radically transparent, that could help in showing the path forward for others.

Thank you, Courtney and Jenny! Did you miss the webinar? You can listen to it here.

Our next webinar is coming on 26 September – Design Thinking for HR Leaders with Abhijit Bhaduri. Click here to register.

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TAGS: Business Strategies Finance HCM HR Payroll

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