From my cursory glance, I have a bunch of problems here:
1) Most egregiously, it looks like they're slashing a bunch of salaries. Not the CEO, of course, but a lot of others seem to be going down. I would be immediately headed for the door in that scenario. Talk about a way to keep only the poor performers who can't get another job.
2) Related to the above, what signal does this send to future hires? "We'll pay you $X based on this fancy formula...until we decide to change the formula and slash your salary by 20%."
3) Large COL adjustments make no sense to me. So I work for a remote company and choose to live somewhere cheaper and they think that the value I'm providing is less? The end result of this is that remote devs get screwed on average, while the best remote devs avoid companies like this, rightfully so.
4) I didn't look very carefully, but they definitely seem to be underpaying in general. An advanced engineering manager (mobile) in a HCOL area gets $145k? I'm a senior mobile developer and I'm pretty confident I could significantly outearn the CEO if I lived in SF or NYC.
Yes you could. But not for a company the size of Buffer.
Here's the thing a lot of us often forget to realize: The value you bring to the company is proportional to the value the company extracts from the market.
Can your code improve Walmart's revenue numbers by 0.001% per year? Awesome, that's worth $4,858,700 based on Wikipedia numbers. I'm pretty confident you can get a gigantic salary with those results.
Can your code improve Buffer's revenue by 3% per year? Awesome, that's worth $468,000 according to their dashboard[1]
That's still a lot of money and I don't know if Buffer would negotiate because they like to use their formula. My point was that the value of your contribution can be orders of magnitude different for the same amount/quality/level of work and skill.
So what?
The fact that Buffer can't compete with market salaries for top talent isn't my problem, it's theirs.
Ya I don't get this logic. High COL areas are high because there are _lots_ of perks living there. It is much more desirable to live in SF than to live in East BF Mississippi. You are basically rewarding someone by living in a high COL.
When selecting remote jobs, I'm looking for compensation for the value I bring. The dollars I earn from my value should be up to me how to spend them: living in SF with all of the glorious food and such or living somewhere cheaper and saving money to retire earlier but having to pick between Applebees or Fridays (vomits).
Come to Dallas. You get to enjoy low COL (while it lasts) and have your pick of Sichuan, Thai, Indian, Vietnamese, Mexican, barbecue, etc. restaurants.
Interesting that you say that. I can't speak for US area, because I live in Europe. Looking at the Spain salary, which is about 110k seems pretty good to me. Working as a senior frontend dev in my area (which has similar costs of living as Barcelona) gets you payed about 30-40% less than that.
In the past I've been interviewed by several startups which when the point for salary negotiations came asked: "What do you _need_ to earn?". Somehow some companies (if not even most companies overall) seem to think that that's an acceptable line of thinking, and Buffer seems to be one of them. Their "dependent grant" seems to go into the same direction: "Oh you have a dependant? Then you naturally _need_ to earn more."
Those Buffer salaries are quite reasonable for engineers. If you're not looking at them hungrily, then may I suggest you're probably not the customer here? And by "customer" I mean "competent engineer who never bothered to put together a portfolio or play the interview treadmill cycle game and is therefore making ~$100k total comp."
Those people exist. And contrary to what the vocal monitory says, they don't kill your company if you hire them. Matasano proved that.
At any rate, my point isn't that this will kill Buffer, but I suspect it'll be a drag on their performance over the long run. Who knows though. And I don't really care; it's not my company.
What I care about is whether I'd go work for them or advise others to do so. And my answer would be no. I think you can make more with a little bit of effort. And even if you can't, I think working for a company that won't yank the rug out from under you with a paycut like this is worth a premium.
Also $300k total comp translates to $450k fully-loaded cost to the employer, meaning you can only hire four of those engineers before you burn through $2M funding per year. Are you sure that's worth it?
Have you ever earned $300k in a HCOL? Because I have (NYC) and you're doing very well if you get to save $100k of that. If you're single, by default you lose $120k to taxes, so then you need to keep your budget under $6700 / month. Which isn't really that hard, but most don't. Granted, tax-advantaged retirement savings and other things can change the math here, but my point is that it would take more like 8-10 years (depending on market growth), not 3.3.
And my point wasn't that 10% of engineers are doing that, but just that they are capable of getting that kind of job with some effort. If all 10% of them tried, that would push the market down, so I'm really just talking capability, not whether 10% of devs could all be simultaneously making that.
Finally, I'd like to see a breakdown of the $300k to $450k number. The premium that employers pay to get to fully-loaded cost isn't a fixed percentage, it goes down as comp rises. So yes, it might cost $120k fully loaded to employ an $80k engineer ($40k on top of their salary), but why does it cost $150k for someone making more?) The cost for office space and healthcare are two of the biggest costs of employing someone, and they're relatively fixed, right? $450k might be realistic, just seems high to me.
There's an old Feynman quote:
"All the time you're saying to yourself, 'I could do that, but I won't' -- which is just another way of saying that you can't."
I used to feel the same way as you. But actions are all that matter, not beliefs. It was materially impactful to let go of the notion that "people could if they tried" and flip to "some do, some don't, and if they don't, they won't until proven otherwise." It turns out to be a handy general rule about people, not just this one scenario.
You might be right about total comp. But $350k vs $450k is rather quibbling: the main cost to the employer is a $350k burn rate.
And in Buffer's situation, it's all about averages, not outliers. If you're hiring 10 engineers, being more generous than Buffer's salaries seems like a mistake. After all, Buffer is proof that the market will bear these.
I think what's happening is that Buffer is one of the few companies willing to publish the data, so suddenly everyone is watching and analyzing them. But these kinds of tough decisions are routine.
It's very important to avoid http://www.paulgraham.com/pinch.html as a company. The company has to focus on not dying, since that's the way to win.
On the other hand, it's worrisome that there are no outliers at all. A fair market should look closer to a J curve rather than an even distribution. But everyone will just need to get used to the idea that some engineers will make $300k and others $100k. That is fair, because that $100k engineer could not easily get a non-$100k job, or else they would have done so. (Conversely, that's why the $300k engineer is making $300k: because they put effort into making sure they can get another one if they need to.)
That seems to explain your reaction pretty well, right? You balked because you're one of those $300k engineers that has a lot of options. Most don't.
EDIT: Actually, the distribution of engineering salaries seems pretty good: http://www.wolframalpha.com/input/?i=96917++101331+106709+10...
https://i.imgur.com/RLxLGzi.png
There aren't any outliers, but it's not linear, which is a good sign.
Well, that depends where the company is headquartered and how much the local employees make.
Let's say the company is headquartered in SF, and the local employees make an SF-typical salary. If the company pays all remote employees what they pay their local employees, then that's a very nice deal for remote employees in low COL areas. If the company uses COL adjustments for remote employees, then employees located in lower COL areas take a pay cut, and your argument holds.
But imagine if the company was instead located in a low COL area like Phoenix and the local employees make a Phoenix-typical salary. If the company is paying all remote employees what they pay their local employees, then remote employees in high COL areas won't make enough money to live on. So in this case, using COL adjustments for remote employees is the only way for it to be worth it for people in high COL areas to consider working for them.
We have CEOs and government employees who have public salaries for the specific purpose of public accountability, not just because we're curious or because we're entitled to know the price of everything at all times.
Now, a world with perfect price transparency in the labor market might make sense, but two points:
1) We don't have that universal transparency now, so being the 1% of firms that does (or their employees) can put you at a disadvantage. Why do you think some places are passing labor-friendly laws that make it illegal to ask what previous salary was?
2) Price transparency doesn't have to mean that we get those prices from an "objective" formula that has no room for flexibility based on the facts and circumstances of each case, right? How is this different from mandatory minimum sentencing guidelines, or whatever?
I think that price transparency would probably help the average worker by bringing low performer salaries up and high performer salaries down, and it would probably harm overall productivity by harming incentives. But I'm not an economist.
On the other hand, this is great material for both internal and external recruiters to start poaching away Buffer employees to orgs that have the budget to pay them market rate.
"I see you're making ~20-30% below market rate. Would you be interested in talking about a new role?"