In October 2021, we published an article emphasizing the importance of salary transparency with benefits such as equality and employee trust. As we explained in the article, Buffer is a radical company in the salary transparency approach.
This article revisits salary transparency, including insights based on the podcast “Moving to salary transparency” by Hung Lee from Brainfood with guest speakers from CLEO, TRAFFIT, 360Learning, People Collective, and Whereby. In addition, this article also analyzes the hierarchical salary structure of Buffer.
What is Buffer
Buffer, released in 2010, is a company focused on Social Media Tools. It lets users plan and schedule social media campaigns and track their progress with analytics. Buffer has +80 workers living in 15 different countries.
Their salaries are public since transparency is one of their core values. The data they publicly disclose includes department, role, location, and compensation in dollars. All the information is presented next to each worker’s name and photograph, making Buffer the most radical company in terms of transparency.
The motivation for Buffer to publish this data is to help other businesses. Nevertheless, being salary transparent is a trust-builder tool within the company and it holds the employers accountable.
48% is the salary difference between Customer Advocates and Customer Advocate Managers. The increase between the DEI Manager (Diversity, Equity, Inclusion) and the chief of staff is also 48%. From Head of Customer Advocacy Operations to VP of Customer Advocacy, an increase of approximately 50% can be observed.
From the figures, one can conclude that usually, when an employee is promoted, their salary increases roughly by 50% on average.
The change with the greatest difference in the hierarchy is the increase from marketing engineer to engineering manager (first increase) at 60%.
The case for product managers is notable since there are three levels: Product Managers, Director of product, and CPO. The first increase in the hierarchy is just 22%, whereas the second is 45%. It shows that the salary of the CPO is inflated.
Dealing with seniority
Promotions can be due to seniority (the employee has worked for a certain period of time in this position and has experience) or due to performance (the new position will imply more responsibilities, managing other workers, etc.). Both types of promotions are not related and, in general, the increase in salary is much higher when promoted by performance than by seniority.
For example, a product designer earning $120,000 when promoted to a senior product designer earns $140,000, whereas when promoted to a design manager earns $200,000. In terms of hierarchy, the managerial role is superior to the individual contributor role.
Similarly, a product manager earning $150,000, when promoted to a senior product manager earns around $165,000, whereas when promoted to director of the product earns $200,000.
These are two clear examples where the salary increase between an employee and a senior employee ranges from 10%-20%. Meanwhile, the salary increase between the employee and the manager is significantly higher.
Hierarchy across departments
Even if the salaries vary based on roles, the hierarchy should always be present. Where Buffer could be more precise is in maintaining salary ranges by the hierarchical level across departments.
To give context, the department with the highest salaries on Buffer is “Product” with an average of $170,000 annually. On the other hand, the legal department has an average of only $100,000.
When comparing these two departments, it is clear that customer advocate managers and senior escalation managers are compensated less than data engineers. It should have been the other way around as data engineers are just individual contributors, while the other positions are managerial, which means they have a varying set of responsibilities and lead other employees.
Currently, there is a massive demand for IT roles, and they are receiving high salaries, breaking the salary hierarchical structure of the whole company. The most extreme case is that of data scientists. A data scientist at Buffer is earning $165,000, which is higher than the salary of their head of customer advocacy operations or the director of people.
This shows that Buffer still has some space for implementing appropriate salary structuring in their organization.
Wage differences around the world
The difference in location has a significant impact on salaries. As a result, companies must consider the cost of living in each country when determining appropriate salaries. For example, an average wage in the US could mean a high salary equivalent in India. For this reason, an analysis of the salaries normalized by the cost of living has been conducted.
This means that Software Engineers in Egypt and India, and Engineering Managers in Nigeria, have better compensations. This is primarily because their pay is proportionally higher in their respective countries than the CEO and CPO salaries in the US.
Other workers who benefit from their locations include those living in Romania, Morocco, Spain, and South Africa.
Why is salary transparency relevant?
Salary transparency is strongly related to company culture and is a sign of a cohesive, consistent, and orderly organisation. Transparency indicates that a company has nothing to hide. Of course, transparency needs a high level of trust, and employers want employees who believe in them.
When it comes to salary transparency, talking about “benchmarking” is inevitable. The level is one of the deciding factors of compensation. A company will not share its salaries if they are not following the company’s organisational structure for benchmarking the salaries. Showing a clear organisation creates a reputation for being fair and a trusting environment within the company.
Salary transparency also requires thorough organisation beginning with the levelling, and progressing to compensation. Therefore, the earlier a business starts implementing salary transparency, the better. This is mainly because it is easier to classify employees by levels and departments when a company is still in its early years. When a company is already accounting for hundreds of employees and different departments, this task can become very complex.
Moreover, if salaries are public, companies are compelled to keep up with market prices. This is a particularly appealing signal for future candidates. It ensures that the salary offer they receive will be in-line with the market.
Salary transparency is an excellent tool for comparing your company to others of similar size. In addition, if your company is expanding, you can use the hierarchical levels of more prominent companies as a guide.
Benchmarking through transparent salaries
Different levels of transparency
Not all companies use the same model when sharing salaries, resulting in a broad spectrum of transparency options. Some companies just give possible ranges of wages for each position. Others present the skills that can make these salaries vary within a range.
An extreme case would be to share individualized wages for each position or individual. On the other hand, companies can communicate the salaries only to company members or make them available to anyone who is interested.
Cultural or geographical differences also influence which transparency model a company chooses. For example, according to experts from a psychological point of view, Americans are less reluctant to share information (in this case, salaries) than Europeans (mainly British). Another concern in the case of Europe for example is that it may raise legal concerns over privacy. Complete transparency can raise legal concerns about sharing personal information.