How Buffer cheats on Open Salaries
I have to open with saying that I love the very premise that Buffer is willing to open up their salaries to scrutiny. There’s a fully detailed spreadsheet and a whole blog post on how the calculations are made. Sunlight is the great disinfectant and the field of compensation needs a lot of sunlight. It’s our likely path to solving discrimination, to better valuing people and to building better companies.
Sadly, the Buffer salary spreadsheet openly displays the problems with the compensation industry. This spreadsheet is a window into Buffer’s culture and it’s not always pretty.
Buffer Doesn’t Believe in Product Quality
With 67 people on the payroll not a single one has the words “Quality” or “Testing” in their title. Quality is a pretty important thing in a Software product, it can’t just be “everyone’s responsibility”.
The Android product is literally just one person. You’re not allowed to test your own code, so who’s testing it?
How do you build a large tech company with no QA? That sounds like a recipe for disaster.
Buffer Has a Real Diversity Problem
Their leadership is overwhelmingly male.
Their company is overwhelmingly male and overwhelmingly white. They are also very young. Of the 67 people, only four people are 35+ and nobody is over 44. A typical University-educated professional will work from about age 25 to 65+, so 45 is the career midway point. If you’ve passed this midpoint, Buffer doesn’t want you on staff. There’s basically nobody at Buffer with 20+ years on one thing because they’re not old enough to have been doing this for 20+ years. The charts below are from their own diversity page.
Buffer Doesn’t Hire Beginners
Buffer breaks out experience into tier that they use as a salary multipliers. But they don’t actually use all of the tiers because they don’t hire Beginners. Some people have multiple roles, but even the secondary roles have no Beginners.
Buffer Doesn’t Value Experience
Let’s look at that chart above, “Master” is valued at 1.3x. To flip this around, if a fresh out of school Developer is worth 100k, then a PhD with 20 years of professional Development experience is worth 130k!?! Is that what new grads have to look forward to?
If you can become a master of your craft you can earn 30% more than your vastly less competent clone from 20 years ago? — Buffer Management
This probably explains the giant age problem. People who truly are Masters are simply worth so much more than 1.3x that they won’t work there. Seriously, the curve from Beginner to Master is probably more like 2x or 3x. When it comes to developers many have argued that the number is 10x. I can say this about my own life. My 35-year old Advanced self is at least 2x more valuable than my 22-year old Beginner self.
This factor is even more obvious in light of their loyalty bonus…
Buffer Values Loyalty Highly
Imagine that you start at Buffer at Intermediate,you make $1.1x. Over the course of 4 years, Loyalty bumps you to $1.33x. Now Buffer finds a Master and wants to bring them on for $1.30x. How is this going to work? The Master is forever going to make less money than the Intermediate+4 years.
Buffer would rather have a person with 4 years of “Buffer” experience than 20+ years of real industry experience.
It’s good to see an employer value Loyalty, but it’s hard to see how this is ever going to attract anyone but the young and inexperienced. The mathematical benefit of “getting in young” is dramatically more that “being good”.
Buffer Values “Optics” over Results
Pioul in France earns a “normalized” salary of $85k for being an “Advanced Backend/FrontEnd Developer”. Michael earns $125k “normalized” for the exact same position because he lives in Santa Cruz, California (just outside of the Bay Area). Again, based on the sheet, these two people deliver the exact same results, but Michael earns nearly 50% more.
In fact it’s worse than that, Michael lives in the US where employers pay healthcare costs on top of salaries. He list 3 dependants, so Buffer is likely spending another $10k+on Michael to help fund his healthcare benefits, bringing his “normalized” salary to $135k. Buffer doesn’t list these costs, but they’re a very real expense.
Rather than pay all of their remote employees equally, Buffer is paying “what we think we can get away with”.
The cost tweaking happens everywhere. The spreadsheet is clearly manipulated to manage people to specific salaries.
- Colin, Niel and Dan are all “Developer / Lead” positions. But Colin makes a little bit less because he’s only a “Lead” for 15% of the time instead of 20% like the other two.
- Likewise, Jim is the “Product Leader”, but only 15% of the time? The “Product” team seems to include 3 “Creators” and 4 “Designers”. That sounds like a full-time leadership position to me?
- The “Lead Android Engineer” (Tom) is the only engineer, but he gets credit for“Lead” 50% of the time. The “Lead Backend/Frontend” people only get 15% of 20% credit. Meanwhile the “Lead iOS Developer” doesn’t exist, despite having 4 regular iOS Developers, there is no Lead.
- The CEO and COO are both “off-formula”. If you look at the spreadsheet their salary numbers are just typed in! Nothing says “we believe in our system”, like people who turn off the formula for their own row.
Transparency without Simplicity or Fairness
Buffer isn’t trying to fairly pay people for their output and value to the company. They’re trying to pay people based on “what the market values” instead of “what the company values”.
They’re trying to build a company with lots of remote people and digital nomads, but the “cost-adjusted location” actually undermines that premise. Rather than valuing employees directly for their contributions, they are valuing employees by paying “whatever we can get away with”. That’s not valuing your employees, that’s outsourcing your employees.
We believe that everyone should be able to live a good life — and we don’t want to exploit people living in places where wages are generally lower. We’re not an outsourcing company. Therefore, we decided to create a significant lift in salaries for those that live in places that are generally much lower paid compared to the average… The value that someone in San Francisco creates for Buffer is not different compared to the value a teammate in Cape Town creates.
Except that you’re still valuing them differently by paying them differently. Sure it’s cheaper to live in Cape Town, but it’s obviously not the same as living in San Francisco or New York. At the back of his mind Niel in Cape Town knows that Buffer could afford to pay him $50k+ more, but they’re not going to unless he moves to the Bay Area… I mean they’re doing it for Andy and Michael.
This pay gap cuts both ways.
Can’t get a visa to move to San Francisco? You are now worth less to Buffer (because they are paying you less). Need to leave SF to care for a sick family member in Kansas City? Go right ahead, have this pay cut on the way out, because you are now worth less to Buffer. Thanks for saving us money by moving!
Just typing these examples leaves an awful taste in my mouth.
The answers are easy
- Pay a flat rate by position regardless of location.
Align this with your values not market values.
- Reconsider your valuations of experience.
Masters are not worth a mere 30% more than Rookies.
- Take another look at your hiring process.
Somewhere in the rush to get people from across the world (which you’ve done very well), you’ve managed to miss women, Beginners and people over 45. They’re clearly applying, you’re not picking them up.
- Hire some QA people.