
Buffer’s Salary Formula 3.0 - abhij89
https://open.buffer.com/salary-formula/
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latch
Repost. Original had good comments

[https://news.ycombinator.com/item?id=15861043](https://news.ycombinator.com/item?id=15861043)

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StavrosK
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."

~~~
murukesh_s
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
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
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.

~~~
hueving
I think you might be blinded by your love for high density. Traffic, long
commutes, higher crime, higher rent compared to the average salary (adults
need roommates), long lines for anything decent, crappy parking or crappy
public transit... These are all reasons that almost every large city in the US
sucks.

Smaller cities like Boulder, Fort Collins, etc offer a decent amount of
variety while eliminating the majority of the problems with the large cities.

Career is about the only thing a big city can be critical for and you have to
be in the right city for your field.

~~~
moxious
It doesn't have to be a huge city. I'm in a midsize city not in the Bay area,
and I agree with everything you're saying about places like Boulder.

I wrote this to contrast _any size city_ with places like the endless suburbs
or rural areas, not to create a hierarchy of "biggest is best".

Problems do also scale with size, so it's not like the massive benefits of
cities are tradeoff-free. For as great as San Francisco is purported to be,
they have a huge homeless problem that they seem to do relatively little
about.

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jasonkester
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-
lear...](http://www.expatsoftware.com/articles/developers-should-learn-to-
negotiate.html)

~~~
moxious
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
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.

~~~
moxious
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.

~~~
humanrebar
When you're netting $20k a year into your 401k, mortgage, principal, and long
term savings, $10k is a lot of money.

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moxious
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.

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phantom_oracle
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)

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DeusExMachina
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.

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pablolmiranda
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.

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pleasecalllater
<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>

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

~~~
joeblau

      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.

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

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scrumper
Why's that? Food, housing, and transport cost different amounts in different
locations.

~~~
karrotwaltz
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
> 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.

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

~~~
moxious
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.

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mxstbr
(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/)

