6 ms·

Buffer’s Salary Formula 3.0

43 points by abhij89 9y ago

moxious 9y ago
I applaud transparency in general and the intent here is noble. One of my companies considered adopting the old model for a time. However: > The new formula now includes an elastic part that adjusts to the cost of living and market influence of salaries for different roles. The transparency and simplicity of the old model was its key value. The more complex and hard to assess terms you put in, the more you lose transparency and make salary assignment something that can be "massaged" to fit the circumstances. And I think having a formula is supposed to be the antithesis of that. But this is a really hard damn problem. Markets aren't the same, and people's egos are real. Algorithms don't tend to do well when one of the things in the balance is "people's perception of fairness" since fairness is an emotional and non-quantitative concept.
StavrosK 9y ago
I really dislike adjusting salaries of remote employees by location. Oh, you live in San Francisco, where everything costs a lot because it's trivial to network and get a multitude of job offers the minute you change your LinkedIn status? Let us pay you for the privilege double what we pay someone in Kenya who has none of these opportunities! Or, alternatively, "You don't live in SF so we don't have to compete with a bunch of other companies for your salary? Haha, sucker, here's less money for the same job."
- ploggingdev 9y ago
  Basecamp recently started paying all employees SF salaries : https://m.signalvnoise.com/basecamp-doesnt-employ-anyone-in-san-francisco-but-now-we-pay-everyone-as-though-all-did-3ee87013cfc2 https://m.signalvnoise.com/basecamp-doesnt-employ-anyone-in-... They are a class act, I'm not aware of any other company that does this.
  - moxious 9y ago
    That comes across to me really strange. Labor is a market just like bananas or mobile phone data. How does it make sense to pay the ceiling price of all markets, everywhere? I'm all for personally earning more money, but this also disproportionately rewards people who live in cheap places.
    - jasonkester 9y ago
      That's why the smart remote developers live in cheap places. It's the rational choice, since your bill rate is determined by the work you do, not the place you do it. The choice of whether to be disproportionately rewarded is yours, not the employer's. It costs them the same either way. They do have places where your value is tied to your location. They're called offices.
    - simonhamp 9y ago
      As I recall, none of Basecamp’s staff actually live in SF so everyone wins! The main goal here appears to be securing their talent, as it’s becoming increasingly difficult to hold onto staff and create a stable enterprise. I imagine that only becomes more difficult when you’re a distributed team. From the employee perspective: Will you really switch jobs now that your salary is top of market for your location? Any job nearby won’t pay you anywhere near that salary! You will have to move to the valley. So it obviates job choice based on salary being a deciding factor in your life, your location and your connections. (Just because SF and other places have opportunity doesn’t make it attractive to all - opportunity cost like being away from family or friends can outweigh it.) It’s then entirely up to you where you live and how beneficial you make that salary to you and your family. The community where the staff live benefits too. Their surplus income will most likely be spent locally and depending on how they’re taxed, the local authority will benefit too. Basecamp also has a sideline benefit: the massive PR that comes from awareness of this. And I bet they get droves of great talent jumping all over their new positions this year, from everywhere, _especially_ the valley! Great tactic. Putting people first.
    - rtpg 9y ago
      Market capitalism is a tool that lets you pay the person living in the countryside less. But we are the ones who decide whether paying the countryside person less is "fair". The moral weight of our actions are mostly independent of what a free market gives. The market is a tool, not the objective.
- chrisan 9y ago
  Ya.. I don't get how they can call this a "remote-first" approach or adheres to "Do the Right Thing" for the employees The reason these high cost of living places exist is because they are in high demand due to all the benefits. Someone living in North Dakota (sorry anyone who is, I'm sure it is great!) won't have all the culture, food, weather, entertainment, night life, etc of someone living in the bay area. A "Do the Right Thing" would be to truly embrace "remote-first" and realize you are paying someone for the work they do, not where they live. We are paying $x for job y and what you do with the value you bring to the company is up to you: live some place nice or some place cheap. Our company is 100% remote (most live in bay area anyways) and we don't have pay scales by area.
  - moxious 9y ago
    If people were truly paid for what they did and not where they were, this would probably exclude most Bay Area people since they're at the top of the market. Perhaps your company has adjusted to the normalcy of SF rates? OTOH, location matters a lot. Otherwise your company wouldn't be in the Bay Area. Centers of gravity are a thing. Why not pay for location? Even if an employee is remote only, if they network well where they are, it's worth paying for location.
    - pawelkomarnicki 9y ago
      Location matters for PR purposes, a great team located in the Bay Area will have the same output if located in rural USA, Europe, or Asia. Companies are made by people, not places (unless you're a farmer, but that's a different story entirely).
      - moxious 9y ago
        I don't follow this at all. Yes companies are made by people not places, but people are in places. Those places matter a lot. Where will you find better people, in downtown London or rural Iowa? Given a group of 7 people (posit some great team) their output is the same irrespective of location, sure -- but how did you get those 7 people? If you were in rural USA, your probability of ever having arrived at that situation is already much lower. If location truly didn't matter, then you'd be able to move your SF team to Iowa and save a lot of money, but that's not going to work.
- kawera 9y ago
  Exactly. Plus, are their services priced differently according to the client's location? Obviously not.
- murukesh_s 9y ago
  What about living cost? I agree the difference now is higher than adjusted for living cost, but it's really unfair for someone living in the high cost area to get paid the same salary as someone who need to spend only a 5th of that to get the same quality of life.
  - StavrosK 9y ago
    That's the thing, you don't get the same quality of life. If you're in the valley, you have many orders of magnitude greater job liquidity than anywhere else, which is why you're paying the living cost premium. Otherwise, why would you live in a high-cost area?
    - moxious 9y ago
      There are a zillion reasons to live in high cost areas aside from job liquidity. The magic of concentrations of people is that the advantages scale faster than population growth because of the network effect. Which, separately, is why cities are awesome and population density is a good thing for the planet and most people, even if it upsets some people that they can't have a big yard.
      - StavrosK 9y ago
        That's my point: Getting paid less on top of not having those advantages isn't appealing to me. However, your argument is not valid: Large size doesn't imply high cost. Neither Shanghai (most populous city) nor Manila (most dense city) have higher costs of living than SF.
        ci5er 9y ago
        > Manila (most dense city) This comment doesn't take away from your point - but isn't densest either Dhaka or Mumbai?
        StavrosK 9y ago
- walshemj 9y ago
  Tough the word isn't fair
- kennydude 9y ago
  I'm glad they at least put a minimum on the "Cost of Living" multiplier. For me that works out at 0.45 (Newcastle-upon-Tyne)
- greysteil 9y ago
  That's not quite how the economics works here. A fully rational company should be thinking "what do I have to pay to get the work I need doing done?" If that work can be done remotely then that optimisation works out as: - Who can I hire in low cost locations and pay less for, without sacrificing quality (which I'm using VERY broadly to represent ANY differences in the work, team interactions, etc.). - If I can't hire enough of those, fast enough, how much am I willing to pay in high-cost locations. In the short term, when the company is trying to hire fast, talent is scare globally, and the company isn't connected to all global talent pools (so struggle to hire there) a sensible optimisation is salaries adjusted by location. In the long term, as the company has time to build its remote brand and (if) its hiring requirements stabilise, a sensible optimisation will be work leaving high-cost centres like SF. Don't feel too sorry for people in low-cost centres who work gets redistributed to at a lower cost - in the long term work from the high-cost centres is shifting to them, unless there are quality reasons for it to stay in the high-cost areas.
  - StavrosK 9y ago
    You're overcomplicating this. At any given point, a rational company hiring remote is thinking: "Who is the cheapest person I can hire that passes a quality bar?" Why should they care about location at all? They just want the job done. > Don't feel too sorry for people in low-cost centres who work gets redistributed to at a lower cost - in the long term work from the high-cost centres is shifting to them, unless there are quality reasons for it to stay in the high-cost areas. I don't feel sorry for them (us), I just dislike it because I see job postings from companies I'd like to work at that say "Come work for us! Oh, you live in <place>? We can only make you an offer that's a fourth of what you're currently making at <other company>, sorry. Feel free to move to SF and our offer will go up fivefold, though!". In the end, it's a free market and everyone does what they want, but these companies end up missing out on good people because they artificially restrict their search to high-cost areas (because people in low-cost areas won't work for these companies when they can get higher-paying work elsewhere). It just irks me to see that a company I like is engaging in misguided, indirect area targeting when they purport to do remote.
  - deleted 9y ago
    [deleted]
- bryanlarsen 9y ago
  There are definite advantages a company can get when an employee lives some place well-connected, the casual networking that happens when all of your friends are in the industry. Very occasionally such a connection can land a big lead or a 10x employee or whatever. So that could be used as justification for the salary differential. Pretty flimsy though. But they should just call a spade a spade. It's basically a retention bonus: somebody living in SF is far more likely to jump ship than somebody living in Podunk Hollow. So just practice some of that radical transparency they're claiming and say that outright.
  - StavrosK 9y ago
    I agree with you, but both those points use what I call "invalid proxy metrics". If you want to reward connectedness, do that. Connectedness doesn't correlate with cost of living very much. In other words, why would an introvert employee in SF get paid more than a conference/meetup organizer and pillar of the tech community in Bangalore? > It's basically a retention bonus: somebody living in SF is far more likely to jump ship than somebody living in Podunk Hollow That's more reasonable, but again, the probability of jumping ship doesn't correlate with cost of living. We already give people who are likely to jump ship more money than others when we do the initial salary negotiations, this is a strict subset of that.
tallanvor 9y ago
Good luck attracting and retaining qualified support people with that type of salary disparity.
- joeblau 9y ago
  If your engineers are this good You don't need support :roll-safe: But seriously. I don't know too much about support salaries. Most of the salaries seem in a good range. The only one that stands out for me is maybe the Android engineer — that seems a bit low especially for Toronto.
mxstbr 9y ago
(2016) The formula in that post is outdated, they recently changed it again, this is the blogpost from December about the changes: https://open.buffer.com/salary-formula/ https://open.buffer.com/salary-formula/
pablolmiranda 9y ago
Based on all the parameters, It’s funny that Andy lives in SF and is with the company longer than Sunil CTO that lives in Boston, and makes less than Sunil. Something doesn’t look so transparent.
DeusExMachina 9y ago
I find the idea of equity that is quickly spreading deeply flawed. Equity is not equality, which is giving everybody the same opportunities, like the same starting salary and the same objective performance reviews (which I fully support). Equity means equality of outcome regardless of merits. It means you have to actively discriminate against your most productive members and reward others for their poor choices. This usually has two effects: the most productive people leave for places that reward their productivity and others have no incentive of being more productive [1] You can see this in their formula: * Location base: did you chose to live in a place that cost more? No problem. Here is a bunch of money completely unrelated to your performance. * Cost of living correction: we didn't reward you enough for your expensive choices, so here is some more money on top of that. * Loyalty: did you stay here for a long time, maybe because you have no other choice, or because we give you money to live in an expensive place? Here is another bunch of money again unrelated to your performance. At least they have multipliers for role value and experience, which sort of reward the ability of each individual. But what if a person is more productive than others in the same role with the same experience? Can they negotiate a higher salary? Given the existence of a formula, I doubt. Although I might be wrong. And yes, these people could be promoted, but there are not enough higher positions for everyone (there is only one team lead in each team), not everybody has the skills for a different role (managing people is different from writing code) and not everyone has even interest in changing roles.
have_faith 9y ago
There are people with the role "Happiness Hero". This is new to me, can anyone explain? What do they tell future employers?
- moxious 9y ago
  You tell them that at startups, titles are total fiction not used to describe job responsibilities but to participate in a branding effect for the company. And then you describe your actual duties and experience. I don't think titles matter at all because they're always different everywhere you go. The only exception is if you're a committed ladder climber and you're going from one place with a rigid hierarchy to another similar place. In this case jockeying for title position can be important.
- AdamSC1 9y ago
  You tell them it was the title for a customer support role at the startup you worked at. Most of those people will likely end up at other startups anyway.
jasonkester 9y ago
To me, this seems like it will ensure your company only ever has average developers. A good developer can negotiate a bette rate if he wants, or at the least, he'll be offered gigs at above average rates. By sticking to the exact market average according to their salary surveys, they're only able to select from the list of candidates who don't meet the above criteria. That is, the below average ones, and the occasional good one who has never been told what he's worth. I've written about this in the past: http://www.expatsoftware.com/articles/developers-should-learn-to-negotiate.html http://www.expatsoftware.com/articles/developers-should-lear...
- moxious 9y ago
  Not all developers care about salary first. I see this overall approach as more like flying a flag and publicly indicating culture because there's a particular crowd they want. This is how they advertise what's important to them and draw like minded people closer. That seems 100% legit to me, and super useful for any dev considering them that they're so straightforward. No one has to like it or choose it for themselves, but I see it as nothing but laudable. It's a big wide market out there, and this is a quirky option I'm glad exists
  - jasonkester 9y ago
    Negotiating your market rate isn't caring about money 'first'. It's caring about money 'at all.' They're different. Leaving $50k/year on the table at age 30 will move your retirement date back ten years. It takes a lot of culture to make up for that.
    - humanrebar 9y ago
      Right. If it's not about money, just issue me blank checks every month.
    - moxious 9y ago
      Remember, labor is just another thing we buy and sell. In other markets, like those for cars, there are specialists that focus on naming fixed, non-negotiable prices. What buffer is doing seems pretty similar. Like I said, the market has lots of options for devs. I don't know if they're $50k off...when I said not all devs care about salary, I'm talking about the last 10%. I don't know anybody who ignores $50k.
pawelkomarnicki 9y ago
"Cost of living" factor is the most idiotic thing ever.
- scrumper 9y ago
  Why's that? Food, housing, and transport cost different amounts in different locations.
  - humanrebar 9y ago
    I wouldn't use the word "idiotic", but cost of living is highly situational. The cost of living adjustment for someone who can have three roommates is different than the cost of living adjustment for a family of five. Also, cost of living adjustments should only be applied to subsistence-level, locally-priced expenses (i.e. rent, gas prices, fresh groceries, etc.). You don't want the $X you are putting into savings every year to be adjusted down because you moved to a cheaper zip code.
  - karrotwaltz 9y ago
    But everything else is the same price. If my rent is twice the price of yours, should I really have twice your salary? If the formula for salary was (basic expenses * life factor) + (benchmark * role * experience) I would understand, but we're nowhere near that.
    - humanrebar 9y ago
      > But everything else is the same price. It's more complicated than that, too. The average NYC rent is higher, but the average NYC apartment is also smaller. And the average commute for a SF employee is longer. Let's say you're in a three bedroom townhouse with a garage ten minutes from work in Austin. Is the COL adjustment going to pay you enough to have a three bedroom townhouse ten minutes from work in SF? Also, COL is more local than the city. The rent in Jackson Heights, Queens is a fraction of the rent in Chelsea, Manhattan.
latch 9y ago
Repost. Original had good comments https://news.ycombinator.com/item?id=15861043 https://news.ycombinator.com/item?id=15861043
phantom_oracle 9y ago
A couple of things to point out: - They say they are doing away with location-specific factors in the formula. However, their formula still uses Numbeo to calculate cost-of-living based on your locality (which is location-specific) - They seem to be transparently "hiding" (an oxymoron I know) the fact that their new formula is stripping away 2 major benefits: - Removing 3% Loyalty Raise - The Salary Choice Option Now Phases out at 4 Years ("In fact, in May of 2016, we stopped offering this choice.") I actually mentioned this company in my comment about the Basecamp salary adjustments [1] I'm going to agree with StavrosK on this and say that these formulas are pointless at best (and probably just a means to give HR/finance/marketing some extra work). Living in SF/NY/London is expensive, but the tradeoffs for living in these areas is the high demand for technical skills and networking (tradeoffs in a professional sense). [1] https://news.ycombinator.com/item?id=16051062 https://news.ycombinator.com/item?id=16051062
pleasecalllater 9y ago
<sarcasm on> Oh, so the average salary in your city is $100 per month? Oh, cool, so you get $300 per month from us, work like we do in SF, and buy that $2k computer, so you can have stuff like we have. Oh, and don't forget to work hard enough, our CEO needs to buy another car this month. <sarcasm off>
deleted 9y ago
[deleted]

43 points by abhij89 9y ago

I applaud transparency in general and the intent here is noble. One of my companies considered adopting the old model for a time. However: > The new formula now includes an elastic part that adjusts to the cost of living and market influence of salaries for different roles. The transparency and simplicity of the old model was its key value. The more complex and hard to assess terms you put in, the more you lose transparency and make salary assignment something that can be "massaged" to fit the circumstances. And I think having a formula is supposed to be the antithesis of that. But this is a really hard damn problem. Markets aren't the same, and people's egos are real. Algorithms don't tend to do well when one of the things in the balance is "people's perception of fairness" since fairness is an emotional and non-quantitative concept.

StavrosK 9y ago

I really dislike adjusting salaries of remote employees by location. Oh, you live in San Francisco, where everything costs a lot because it's trivial to network and get a multitude of job offers the minute you change your LinkedIn status? Let us pay you for the privilege double what we pay someone in Kenya who has none of these opportunities! Or, alternatively, "You don't live in SF so we don't have to compete with a bunch of other companies for your salary? Haha, sucker, here's less money for the same job."

ploggingdev 9y ago
Basecamp recently started paying all employees SF salaries : https://m.signalvnoise.com/basecamp-doesnt-employ-anyone-in-san-francisco-but-now-we-pay-everyone-as-though-all-did-3ee87013cfc2 https://m.signalvnoise.com/basecamp-doesnt-employ-anyone-in-... They are a class act, I'm not aware of any other company that does this.
- moxious 9y ago
  That comes across to me really strange. Labor is a market just like bananas or mobile phone data. How does it make sense to pay the ceiling price of all markets, everywhere? I'm all for personally earning more money, but this also disproportionately rewards people who live in cheap places.
  - jasonkester 9y ago
    That's why the smart remote developers live in cheap places. It's the rational choice, since your bill rate is determined by the work you do, not the place you do it. The choice of whether to be disproportionately rewarded is yours, not the employer's. It costs them the same either way. They do have places where your value is tied to your location. They're called offices.
  - simonhamp 9y ago
    As I recall, none of Basecamp’s staff actually live in SF so everyone wins! The main goal here appears to be securing their talent, as it’s becoming increasingly difficult to hold onto staff and create a stable enterprise. I imagine that only becomes more difficult when you’re a distributed team. From the employee perspective: Will you really switch jobs now that your salary is top of market for your location? Any job nearby won’t pay you anywhere near that salary! You will have to move to the valley. So it obviates job choice based on salary being a deciding factor in your life, your location and your connections. (Just because SF and other places have opportunity doesn’t make it attractive to all - opportunity cost like being away from family or friends can outweigh it.) It’s then entirely up to you where you live and how beneficial you make that salary to you and your family. The community where the staff live benefits too. Their surplus income will most likely be spent locally and depending on how they’re taxed, the local authority will benefit too. Basecamp also has a sideline benefit: the massive PR that comes from awareness of this. And I bet they get droves of great talent jumping all over their new positions this year, from everywhere, _especially_ the valley! Great tactic. Putting people first.
  - rtpg 9y ago
    Market capitalism is a tool that lets you pay the person living in the countryside less. But we are the ones who decide whether paying the countryside person less is "fair". The moral weight of our actions are mostly independent of what a free market gives. The market is a tool, not the objective.
chrisan 9y ago
Ya.. I don't get how they can call this a "remote-first" approach or adheres to "Do the Right Thing" for the employees The reason these high cost of living places exist is because they are in high demand due to all the benefits. Someone living in North Dakota (sorry anyone who is, I'm sure it is great!) won't have all the culture, food, weather, entertainment, night life, etc of someone living in the bay area. A "Do the Right Thing" would be to truly embrace "remote-first" and realize you are paying someone for the work they do, not where they live. We are paying $x for job y and what you do with the value you bring to the company is up to you: live some place nice or some place cheap. Our company is 100% remote (most live in bay area anyways) and we don't have pay scales by area.
- moxious 9y ago
  If people were truly paid for what they did and not where they were, this would probably exclude most Bay Area people since they're at the top of the market. Perhaps your company has adjusted to the normalcy of SF rates? OTOH, location matters a lot. Otherwise your company wouldn't be in the Bay Area. Centers of gravity are a thing. Why not pay for location? Even if an employee is remote only, if they network well where they are, it's worth paying for location.
  - pawelkomarnicki 9y ago
    Location matters for PR purposes, a great team located in the Bay Area will have the same output if located in rural USA, Europe, or Asia. Companies are made by people, not places (unless you're a farmer, but that's a different story entirely).
    - moxious 9y ago
      I don't follow this at all. Yes companies are made by people not places, but people are in places. Those places matter a lot. Where will you find better people, in downtown London or rural Iowa? Given a group of 7 people (posit some great team) their output is the same irrespective of location, sure -- but how did you get those 7 people? If you were in rural USA, your probability of ever having arrived at that situation is already much lower. If location truly didn't matter, then you'd be able to move your SF team to Iowa and save a lot of money, but that's not going to work.
kawera 9y ago
Exactly. Plus, are their services priced differently according to the client's location? Obviously not.
murukesh_s 9y ago
What about living cost? I agree the difference now is higher than adjusted for living cost, but it's really unfair for someone living in the high cost area to get paid the same salary as someone who need to spend only a 5th of that to get the same quality of life.
- StavrosK 9y ago
  That's the thing, you don't get the same quality of life. If you're in the valley, you have many orders of magnitude greater job liquidity than anywhere else, which is why you're paying the living cost premium. Otherwise, why would you live in a high-cost area?
  - moxious 9y ago
    There are a zillion reasons to live in high cost areas aside from job liquidity. The magic of concentrations of people is that the advantages scale faster than population growth because of the network effect. Which, separately, is why cities are awesome and population density is a good thing for the planet and most people, even if it upsets some people that they can't have a big yard.
    - StavrosK 9y ago
      That's my point: Getting paid less on top of not having those advantages isn't appealing to me. However, your argument is not valid: Large size doesn't imply high cost. Neither Shanghai (most populous city) nor Manila (most dense city) have higher costs of living than SF.
      - ci5er 9y ago
        > Manila (most dense city) This comment doesn't take away from your point - but isn't densest either Dhaka or Mumbai?
        StavrosK 9y ago
walshemj 9y ago
Tough the word isn't fair
kennydude 9y ago
I'm glad they at least put a minimum on the "Cost of Living" multiplier. For me that works out at 0.45 (Newcastle-upon-Tyne)
greysteil 9y ago
That's not quite how the economics works here. A fully rational company should be thinking "what do I have to pay to get the work I need doing done?" If that work can be done remotely then that optimisation works out as: - Who can I hire in low cost locations and pay less for, without sacrificing quality (which I'm using VERY broadly to represent ANY differences in the work, team interactions, etc.). - If I can't hire enough of those, fast enough, how much am I willing to pay in high-cost locations. In the short term, when the company is trying to hire fast, talent is scare globally, and the company isn't connected to all global talent pools (so struggle to hire there) a sensible optimisation is salaries adjusted by location. In the long term, as the company has time to build its remote brand and (if) its hiring requirements stabilise, a sensible optimisation will be work leaving high-cost centres like SF. Don't feel too sorry for people in low-cost centres who work gets redistributed to at a lower cost - in the long term work from the high-cost centres is shifting to them, unless there are quality reasons for it to stay in the high-cost areas.
- StavrosK 9y ago
  You're overcomplicating this. At any given point, a rational company hiring remote is thinking: "Who is the cheapest person I can hire that passes a quality bar?" Why should they care about location at all? They just want the job done. > Don't feel too sorry for people in low-cost centres who work gets redistributed to at a lower cost - in the long term work from the high-cost centres is shifting to them, unless there are quality reasons for it to stay in the high-cost areas. I don't feel sorry for them (us), I just dislike it because I see job postings from companies I'd like to work at that say "Come work for us! Oh, you live in <place>? We can only make you an offer that's a fourth of what you're currently making at <other company>, sorry. Feel free to move to SF and our offer will go up fivefold, though!". In the end, it's a free market and everyone does what they want, but these companies end up missing out on good people because they artificially restrict their search to high-cost areas (because people in low-cost areas won't work for these companies when they can get higher-paying work elsewhere). It just irks me to see that a company I like is engaging in misguided, indirect area targeting when they purport to do remote.
- deleted 9y ago
  [deleted]
bryanlarsen 9y ago
There are definite advantages a company can get when an employee lives some place well-connected, the casual networking that happens when all of your friends are in the industry. Very occasionally such a connection can land a big lead or a 10x employee or whatever. So that could be used as justification for the salary differential. Pretty flimsy though. But they should just call a spade a spade. It's basically a retention bonus: somebody living in SF is far more likely to jump ship than somebody living in Podunk Hollow. So just practice some of that radical transparency they're claiming and say that outright.
- StavrosK 9y ago
  I agree with you, but both those points use what I call "invalid proxy metrics". If you want to reward connectedness, do that. Connectedness doesn't correlate with cost of living very much. In other words, why would an introvert employee in SF get paid more than a conference/meetup organizer and pillar of the tech community in Bangalore? > It's basically a retention bonus: somebody living in SF is far more likely to jump ship than somebody living in Podunk Hollow That's more reasonable, but again, the probability of jumping ship doesn't correlate with cost of living. We already give people who are likely to jump ship more money than others when we do the initial salary negotiations, this is a strict subset of that.

tallanvor 9y ago

Good luck attracting and retaining qualified support people with that type of salary disparity.

joeblau 9y ago
If your engineers are this good You don't need support :roll-safe: But seriously. I don't know too much about support salaries. Most of the salaries seem in a good range. The only one that stands out for me is maybe the Android engineer — that seems a bit low especially for Toronto.

mxstbr 9y ago

(2016) The formula in that post is outdated, they recently changed it again, this is the blogpost from December about the changes: https://open.buffer.com/salary-formula/ https://open.buffer.com/salary-formula/

pablolmiranda 9y ago

Based on all the parameters, It’s funny that Andy lives in SF and is with the company longer than Sunil CTO that lives in Boston, and makes less than Sunil. Something doesn’t look so transparent.

DeusExMachina 9y ago

I find the idea of equity that is quickly spreading deeply flawed. Equity is not equality, which is giving everybody the same opportunities, like the same starting salary and the same objective performance reviews (which I fully support). Equity means equality of outcome regardless of merits. It means you have to actively discriminate against your most productive members and reward others for their poor choices. This usually has two effects: the most productive people leave for places that reward their productivity and others have no incentive of being more productive [1] You can see this in their formula: * Location base: did you chose to live in a place that cost more? No problem. Here is a bunch of money completely unrelated to your performance. * Cost of living correction: we didn't reward you enough for your expensive choices, so here is some more money on top of that. * Loyalty: did you stay here for a long time, maybe because you have no other choice, or because we give you money to live in an expensive place? Here is another bunch of money again unrelated to your performance. At least they have multipliers for role value and experience, which sort of reward the ability of each individual. But what if a person is more productive than others in the same role with the same experience? Can they negotiate a higher salary? Given the existence of a formula, I doubt. Although I might be wrong. And yes, these people could be promoted, but there are not enough higher positions for everyone (there is only one team lead in each team), not everybody has the skills for a different role (managing people is different from writing code) and not everyone has even interest in changing roles.

have_faith 9y ago

There are people with the role "Happiness Hero". This is new to me, can anyone explain? What do they tell future employers?

moxious 9y ago
You tell them that at startups, titles are total fiction not used to describe job responsibilities but to participate in a branding effect for the company. And then you describe your actual duties and experience. I don't think titles matter at all because they're always different everywhere you go. The only exception is if you're a committed ladder climber and you're going from one place with a rigid hierarchy to another similar place. In this case jockeying for title position can be important.
AdamSC1 9y ago
You tell them it was the title for a customer support role at the startup you worked at. Most of those people will likely end up at other startups anyway.

jasonkester 9y ago

To me, this seems like it will ensure your company only ever has average developers. A good developer can negotiate a bette rate if he wants, or at the least, he'll be offered gigs at above average rates. By sticking to the exact market average according to their salary surveys, they're only able to select from the list of candidates who don't meet the above criteria. That is, the below average ones, and the occasional good one who has never been told what he's worth. I've written about this in the past: http://www.expatsoftware.com/articles/developers-should-learn-to-negotiate.html http://www.expatsoftware.com/articles/developers-should-lear...

moxious 9y ago
Not all developers care about salary first. I see this overall approach as more like flying a flag and publicly indicating culture because there's a particular crowd they want. This is how they advertise what's important to them and draw like minded people closer. That seems 100% legit to me, and super useful for any dev considering them that they're so straightforward. No one has to like it or choose it for themselves, but I see it as nothing but laudable. It's a big wide market out there, and this is a quirky option I'm glad exists
- jasonkester 9y ago
  Negotiating your market rate isn't caring about money 'first'. It's caring about money 'at all.' They're different. Leaving $50k/year on the table at age 30 will move your retirement date back ten years. It takes a lot of culture to make up for that.
  - humanrebar 9y ago
    Right. If it's not about money, just issue me blank checks every month.
  - moxious 9y ago
    Remember, labor is just another thing we buy and sell. In other markets, like those for cars, there are specialists that focus on naming fixed, non-negotiable prices. What buffer is doing seems pretty similar. Like I said, the market has lots of options for devs. I don't know if they're $50k off...when I said not all devs care about salary, I'm talking about the last 10%. I don't know anybody who ignores $50k.

pawelkomarnicki 9y ago

"Cost of living" factor is the most idiotic thing ever.

scrumper 9y ago
Why's that? Food, housing, and transport cost different amounts in different locations.
- humanrebar 9y ago
  I wouldn't use the word "idiotic", but cost of living is highly situational. The cost of living adjustment for someone who can have three roommates is different than the cost of living adjustment for a family of five. Also, cost of living adjustments should only be applied to subsistence-level, locally-priced expenses (i.e. rent, gas prices, fresh groceries, etc.). You don't want the $X you are putting into savings every year to be adjusted down because you moved to a cheaper zip code.
- karrotwaltz 9y ago
  But everything else is the same price. If my rent is twice the price of yours, should I really have twice your salary? If the formula for salary was (basic expenses * life factor) + (benchmark * role * experience) I would understand, but we're nowhere near that.
  - humanrebar 9y ago
    > But everything else is the same price. It's more complicated than that, too. The average NYC rent is higher, but the average NYC apartment is also smaller. And the average commute for a SF employee is longer. Let's say you're in a three bedroom townhouse with a garage ten minutes from work in Austin. Is the COL adjustment going to pay you enough to have a three bedroom townhouse ten minutes from work in SF? Also, COL is more local than the city. The rent in Jackson Heights, Queens is a fraction of the rent in Chelsea, Manhattan.

latch 9y ago

Repost. Original had good comments https://news.ycombinator.com/item?id=15861043 https://news.ycombinator.com/item?id=15861043

phantom_oracle 9y ago

A couple of things to point out: - They say they are doing away with location-specific factors in the formula. However, their formula still uses Numbeo to calculate cost-of-living based on your locality (which is location-specific) - They seem to be transparently "hiding" (an oxymoron I know) the fact that their new formula is stripping away 2 major benefits: - Removing 3% Loyalty Raise - The Salary Choice Option Now Phases out at 4 Years ("In fact, in May of 2016, we stopped offering this choice.") I actually mentioned this company in my comment about the Basecamp salary adjustments [1] I'm going to agree with StavrosK on this and say that these formulas are pointless at best (and probably just a means to give HR/finance/marketing some extra work). Living in SF/NY/London is expensive, but the tradeoffs for living in these areas is the high demand for technical skills and networking (tradeoffs in a professional sense). [1] https://news.ycombinator.com/item?id=16051062 https://news.ycombinator.com/item?id=16051062

pleasecalllater 9y ago

<sarcasm on> Oh, so the average salary in your city is $100 per month? Oh, cool, so you get $300 per month from us, work like we do in SF, and buy that $2k computer, so you can have stuff like we have. Oh, and don't forget to work hard enough, our CEO needs to buy another car this month. <sarcasm off>

deleted 9y ago

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