src=”https://buffer.com/resources/content/images/2022/02/javier-allegue-barros-C7B-ExXpOIE-unsplash.jpg” alt=”Our Vision for Location-Independent Salaries at Buffer”>
It’s a great pleasure to announce that Buffer’s long-term goal is that Buffer’s salaries will not be determined by where you live. Last year was our first step in this direction. We moved from four location-based cost-of-living bands to create two salaries. This was achieved by eliminating the two lower location bands.
We made salary increases for 55 out of 85 team members. The average increase was $10,265. We will eliminate the cost-of living based location bands completely when it is time. This will allow us to provide more transparent, generous and fair salaries at Buffer.
This post will share my thoughts on this change and our overall approach to pay.
Locations and Salaries
It has been fascinating to watch the conversations about salaries and location unfold within Buffer as well as elsewhere. Over the years, we have heard many of our colleagues discuss the pros and cons associated with the location factor. We also watched with interest how this topic became a common topic of discussion within the wider remote work community.
I’ve had many productive discussions with remote leaders. There are arguments to eliminate a location component. Pay differences between locations are not unethical. It has worked well for us in the past. Remote teams have experienced a lot of change in the past few years. Change like this cannot be taken lightly and comes with many considerations.
Our Compensation Philosophy
As markets and companies mature, compensation changes slowly. Since the launch of the original version, we have gone through many iterations and many small adjustments to our salary formula. It’s part of the fun of a salary formula. We know that it will continue to evolve. Caryn, our Vice President of Finance, and myself worked together to create our compensation philosophy.
Four principles governed our decisions about compensation. Buffer strives to have the following approach to compensation:
These are the principles that have guided us throughout our years of making compensation decisions. These principles were our compensation principles. We were able to see the location factor in our formula with new clarity.
There were a few key factors that we discussed and Buffer’s decision to move forward with removing the location factor from our salaries. I’ll be more specific about them next.
Trust , Simplicity and Transparency
One of the main reasons we are able to share our salaries openly is because of our salary formula. A spreadsheet listing the salaries of each team member is a great step towards transparency. But true transparency can only be achieved when the formula is clear, simple, understandable, simple to use, and most importantly, transparent.
One of our older versions of the salary formula calculated the cost of living multiplier for each new location. This was done when we made an offer. This was cumbersome and meant candidates couldn’t really know the range of their salaries until we calculated it.
This was greatly improved when we introduced the “cost-of living bands” concept. After that, cities and towns could be easily classified into each band. This greatly increased transparency and helped to build trust in the system. Anyone could easily identify the band that their location falls into and, with that information, understand exactly what salary they would receive at Buffer. This combination of an immediate understanding of the salary formula and the ability to calculate it yourself is what makes transparency truly valuable and builds trust within the team.
Despite having four cost-of living bands, it was still necessary to make decisions about where the locations should be. This has been a topic of healthy and productive discussion over the years. We introduced the Intermediate band after many conversations about locations falling between the High and Average bands. There are four locations to choose from, which has led to some differences in the salaries. The powerful combination of simplicity and transparency, along with the increased trust fostered by having more parity throughout the team, has led me to choose to push Buffer’s salary formula towards a zero cost-of-living goal.
I am choosing to steer Buffer’s salary formula towards a zero cost-of living factor. Joel Gascoigne, CEO and co-founder of Buffer
Flexibility and Freedom
Our work approach has been based on the idea of more freedom and flexibility for team members. Buffer was founded because I desired more freedom and a better life than what I thought possible working for a company. This freedom came in many forms: flexibility in working hours and location freedom. As we built the company, I have been proud of how we created a culture that allows everyone to experience an uncommon and refreshing level freedom and flexibility.
Since our inception, one of our most treasured values has been to improve consistently. In particular, this line: “We choose where we feel the most happy and productive.” This value has encouraged and supported colleagues to travel, and live in other cities in search of the “happiest” and most productive place. This has allowed people to find the work they love and great colleagues, even if they live far from their families. It also allows them to find local companies that offer the same challenge and experience. People can also travel to support their partner during a career shift. This makes it easier to make a stressful transition much less stressful.
A culture that allows you to travel freely around the world has given you a lot of freedom and flexibility. This freedom is matched by a system that adjusts compensation to account for these changes in a fair, equitable and appropriate manner. However, the fact that your salary can fluctuate and decrease depending on where you choose to work does not limit your freedom to decide whether or not to move.
A salary formula that is equal across all locations will allow for greater freedom and flexibility. My understanding is that moving is a personal decision. It is important that Buffer salaries reflect this reality. It is exciting to see that we can work together towards eliminating our cost-of living differences, which will significantly decrease the friction in making this potentially life-changing decision to move to another country or city.
Results, Independence and Reward
Buffer is not following the traditional hyper-growth VC path. This has some limitations: We don’t have unlimited capital or tens of million in funding to help us find a fast path to $100m, and we are not aiming to go public.
This means that our team’s experiences in many ways directly relate to how well we serve existing and potential customers. Our revenue growth and profitability are key factors in determining the quality of our compensation.
This is also independence. We need to remember that although we might feel constrained at times we still have complete freedom over what we do with any success. This is an example of this.
As founder/CEO, it is my goal that we all share the success of our company and make adjustments that will improve our lives and create wealth. Our profitability allows us to make a significant contribution towards eliminating the cost-of living factor from our salary structure. This is what I believe will help achieve those goals. It will only be possible to eliminate it completely if we execute our strategy well and serve customers well.
Lowering the Cost of Living
Our salary formula works by benchmarking a colleague’s position based on San Francisco market data at the 50% mark for the software industry. Then we multiply that number by the cost of living. $108 838 is the benchmark for a Product Marketer at the 50th percentile in San Francisco’s market data. This would depend on where the teammate lives, and be multiplied with a cost of living band (Low Average, Intermediate, or High). If they were to live in Boulder, Colorado with an Average cost-of living, their benchmark would be multiplied 0.85 to get a $92,512 salary.
has eliminated the Low and Average cost of living bands to best reflect our company values and compensation philosophy.
We have now created our Global band by bringing all low (.75 multiplier), average (.85 multiplier), and intermediate (.9 multiplier) salaries.
This led to 55 colleagues seeing an average increase in their salaries of $10,265.
The two bands we have are Global (.9 multiplier), and High (1.0 multiplier).
This change was inspired by my vision for Buffer, how being part of this team impacts each of us individually, and the direction I believe the globe is heading. First and foremost, the change supports our goal to have a transparent, fair, simple, and generous approach towards compensation.
It also means that salaries were raised immediately for over half the team. This is a point that gives me joy, as compensation is an integral part of my job at Buffer. To be happy at work, money is not everything. We all need to have kind, intelligent colleagues, to be able to work on interesting and challenging problems, and to be able to share in the success of others. But money has a real impact on your life and decisions. That’s what I want for every Bufferoo. The freedom to make their own choices and choose for their long-term happiness and health. I believe it’s vital that Buffer employees have the freedom to choose how they want to live their lives. For those of us who live in lower-cost areas, a Buffer paycheck could be life-changing. That’s a great outcome.
I was also affected by the direction the world is heading (and the direction we want it to go). Remote is currently in full swing and geographical boundaries are being increasingly broken down. This is great. I believe we will see a major rebalancing or correction in the next 10 to 5 years. It’s important that we are aware of these shifts and be proactive in choosing the most appropriate and stimulating path for us.
We plan to eventually move to one location band, eliminating the cost of living factor entirely from our salary formula. Once we are able to afford this change, and continue our commitment to profitability, it will be possible. This will be driven by our long-term results, which we achieve through hard work, creativity and commitment to customers.
This sparks questions in you. Send me a Tweet with your thoughts.