Why This Startup Made Their Salaries Radically Transparent

Buffer revealed their salaries (and the formula that got them there) to the world. The question is why?

We're pretty open with some things: We tweet articles we just read, share which bar we just walked into, and snap photos of recently gobbled red velvet cupcakes. Yet it's taboo to broach other topics: like, say, how much money your friends and co-workers make.

But if you want to know what the folks at the social sharing startup Buffer earn, you need only make to a few mouse clicks.

This is part of their default to transparency: a commitment to making nearly everything the team does as open as possible, both inwardly and outwardly.

Yet seeing the formula for compensation laid out before you is still shocking. As CMO Leo Widrich explained to us, the salaries are based on a formula. As you can see below, the formula is composed of job types, seniority, experience, location, and equity. That translates into figures: The results, then, are totally open: CEO Joel Gascoigne makes $158,800, Widrich makes $146,800, CTO Sunil Sadasivan makes $137,600.

But what's the value of the full disclosure?

Is this the way to structure a startup salary?

Transparency breeds trust, trust breeds agility

"Being open and transparent about how we compensate our team breeds trust amongst all people involved," Widrich said to us in an email, "[like] other team members, users, partners."

But trust isn't just a virtue: smart folks have told us about how it serves business outcomes.Trust acts as a lubricant for interactions, since the more you trust a person or a company, the less vetting you'll have to do in the long run.

Open salaries can help people

Buffer has left a breadcrumb trail of their growth as company: you can check out how they turned from an idea to a product in seven weeks or click through the deck of slides they used while raising $500,000. The open salaries is another step along that path: making the salaries open, Widrich says, will help other startups trying to sort out their own compensation structure.

Open salaries bring in feedback

Most products in software startups run on iteration loops: the feature gets released, the userbase supplies feedback, the company revises accordingly. Now Buffer has made salaries and their formula part of that same process.

"For certain areas, companies operate in a vacuum, without any feedback or discussion," Widrich says. "[By] sharing with the whole world how we compensate our team members, we're getting an incredible amount of feedback from others, that helps us get to the next level, improve the formula and do an even better job compensating our team in a fair and beneficial way."

Transparency helps you become more honest, more productive

"[Y]ou can get an incredible amount done and move fast as a team without working 18 hour days and drinking Red Bull," Gascoigne says.

So rather than opting for Silicon Valley's badge-of-honor-martyr-complex, Buffer opts for openness. This, Gascoigne has said, builds a culture where people are less likely to hop from job to job. Salary transparency also builds a culture where people can talk about openly about how their lives affect their work--what you might otherwise call a practice of productivity.

As Gascoigne says, it's an open The Bottom Line:

"By having a completely open culture, we've created a workplace where people openly share when they have circumstances which affect their ability to work at 100%. We then discuss these challenges, and we find ways for everyone to become more productive without sacrificing balance."

[Image courtesy of Unsplash | Adam Przewoski]

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5 Comments

  • Nicole Yerkes

    As a project manager for a young web design company, I love seeing the different practices of all these startups. You can learn so much about what they value and in turn take a look at your own strategy and discern your priorities.

  • My company (Odd-e.com) also practice open salary (internal to everyone in Odd-e). But what are the advantages of making salary to the public (as compared to open to everyone inside the company)?

  • It says in the article Steven -

    'The open salaries is another step along that path: making the salaries open, Widrich says, will help other startups trying to sort out their own compensation structure.'

    :)