Buffer, a social media company, lets everyone know how its salary pie is divided.
A funny thing happened after Buffer, a social-sharing app and site, decided to publish every single employee’s salaries on its website: Applications soared and the quality of candidates improved. “It kind of feels like this is somewhat of a movement bubbling up here. That’s kind of surprising,” CEO and co-founder Joel Gascoigne says in an interview with Quartz.
For the record, Gascoigne earns $151,800 at the helm of the company that works with Twitter and other sites to schedule your social media shares. Now, an array of companies want to follow the same radical transparency that Buffer practices.
Its salaries formula, used to calculate what each worker will earn as they join the company, has become more nuanced and is being emulated by startups such as Groove and CustomerIO, says Gascoigne. Buffer also plans an “open equity” program where everyone knows how shares are divided.
The strategy is part of a broader movement toward workplace transparency, embraced by Buffer and an increasing number of companies trying to build trust, with an eye toward strengthening the foundation of teamwork. It takes a certain kind of person to work at Buffer, Gascoigne says, listing traits such as empathy and gratitude—in addition to being very good at the core job skills.
“The percent of people who were a good culture fit was a lot higher” after all themedia coverage of sharing the salary of every person on the payroll,” he said. And of workers turned off by it, he says, “it scares the right people away.”
Buffer received 2,886 applications for job openings in the month since the Dec. 19 news of its salary transparency showed up on its blog, compared to 1,263 in the 30 days beforehand, Gascoigne said. “We’ve never been able to find great people this quickly in the past,” he says.
The company expects to grow from 15 workers to 50 by the end of 2014. Among current openings: a weekend warrior to handle customer service on Saturdays and Sundays and a happiness hero to “champion for the customer.” Gascoigne spoke to Quartz about hiring and transparency. Edited excerpts:
Q: Where did the idea of disclosing salaries come from?
JG: I had a previous startup [OnePage] before Buffer. It wasn’t a success, but I learned a lot of key lessons I needed for Buffer. While working on that, I was sharing things that I was learning, just not in such a detailed or disciplined way that we have going on now. I realized quite early that was really quite useful. People were invested in what I was doing and where I was going.
Since the early days, I’ve always shared growth charts: how many people signed up; growth revenues. It became a theme before we actually took a moment and put into words the nine values of Buffer—[transparency] was like a key theme of ours.
When we raised our seed rounds, me and Leo [Widrich, the co-founder and COO] thought about it. We had 19 investors in our $450,000 seed round. We met each person in such a different way. We shared each one [with staff], partly because we were so grateful with each person who became a Buffer investor. Also to help other people see how that works. It’s normally quite a secretive thing, actually.
Someone asked on Quora how much equity we gave up and I answered it. I just decided to step in and answer it—about 14% we gave up. The answer went kind of crazy.
Q: Tell us about the negotiating process to hire an employee.
JG: The negotiating process is very alien to us at Buffer—because there is no negotiating. We have a really high focus on cultural fit to the point that if they didn’t know about the formula before they applied, they probably wouldn’t be a good fit. One bonus of transparency: You just search and learn. Generally, people are just really exited about the culture and they apply based on that.
They [job candidates] have three separate interviews and one is focused on cultural fit. Then if we all agree we want the person to join the team, we make an offer letter with a 45-day trial period. One person recently replied “I would love to be on the team. I was thinking that that would be my salary.” He’d seen the formula and done the calculations himself.
The ratio of people who make it from Buffer Boot Camp to totally on board is maybe 70%.
Our values are listen first, then listen more. It’s really about empathy. In some ways, someone who is negotiating would not be a good fit for us. Someone who is really trying to push to getting potentially more for their benefit than for Buffer’s. Our salaries, we try to make very fair and above market.
Q: So what do you do when someone gets another higher offer.
JG: We’ve been around three years, and it’s not happened yet. Or if it has happened, I don’t know about it. My intuition with that one is we aim with salary a little bit above market. We want them to be comfortable enough and not worry about money. I would hope that salary is not the highest, the key thing for people. In a way if they got a higher offer and that was something that swayed them, I would be happy to say good luck and thank you. And I would be happy for them if that was what they felt best. I wouldn’t try to negotiate. It could be a learning point for us. Is that something we need to adjust in the model or approach?
Q: How do you control jealousies among the team?
It’s not been a big issue, but we have had one or two situations, So for example, we have a location aspect of the salary formula and the experience portion as well. Those are areas where it’s not exactly an exact science. We use a service called Numbeo for the cost of living piece—the average rent on a one-bedroom apartment . We have four brackets for locations. A is New York, San Francisco, London, Syndney, Hong Kong. B covers smaller cities where it’s little bit cheaper to live.
Where is that line between A and B and C? One case where someone was in B and they wanted to talk about whether they would be in A [for the salary differential it would bring].
After quite a bit of change to the salary formula, we added seniority as an aspect.
We have one-on-one sessions to discuss it. People know how they could make more if they wanted to. We’re open to discussing those things. Does someone feel they’re not in the bracket? How can I get to A? Salary is a cultural thing. It can be similar with expenses; they can expense anything as long as it is at the right levels.
Our team focuses on empathy and gratitude. For example, people had kept their laptops far too long. One of them, Mary, was visiting San Francisco for the week. We hadn’t met her in person. She had along her laptop. And we said, “Let’s get you a new laptop now.” We visited the Apple store.
Everyone has that level of empathy. Generally, jealousy’s not an issue because of the forces of all the values in the company. If jealously or entitlement did show up, it would be a bigger issue and we would discuss it right away.
Q: Is this just Buffer’s belief in salary transparency or part of a larger trend?
JG: It does seem to be a trend. It’s not only us. It seems like people have wanted to do it and not thought about how until now. I really enjoy meeting people, having coffee, to discuss transparency. Last week I had coffee with a guy doing similar things—his company’s called Balanced Payments. It’s open source, on the business side they share everything as well. I have had Google Hangouts with someone who values transparency. At Unbounce.com, they encourage their staff to share everything they’re passionate about. I’m definitely seeing a trend emerging here.
There are a few companies we’ve been inspired by who are already very successful and have a culture of transparency: Moz, SumAll, and Semco.
Sometimes other adapters write in their blog posts “thanks to Buffer and Joel.” Sometimes they cite Buffer when they disclose their salaries or other transparencies. Keith Rabios, the former COO of Square, said the key reason transparency works for managers is they want them [their team] to make the same decisions they would make. How could they make it without the same information?
Q: What advice do you have for others just starting in on transparency?
JG: Just do a little bit. Experiment with transparency in a small way. You don’t have to go as far as posting everyone’s salary on the blog. There’s some cool things you could do. Every email between two or more people, any email in the team you cc a list. We have a bunch of different lists. I’m emailing who I’m going to meet. We’ve found some really incredible benefits of that. So share something that’s not your most critical information. See how that feels—and just build from there.