Compensation | Part III: Whereby’s Way to Pay
This is the last post in my three-part series on compensation frameworks. If you haven’t already, I suggest you go here and read the first.
Equally, if you have read the first one but haven’t had a chance to read the second yet — well, I think you should also go do that before you read this. It gives helpful context on the calculator itself.
Well. We’ve come to the end on our little jaunt down compensation lane. Compensation has always been presented as one of the driest functions in People Ops, and wrongly so if you ask me. I have great respect for the work done by compensation specialists; when the work is done well they are like strategic micro-economists… ploughing through market data to find the best way to leverage talent in your market. It’s good work, and it’s bloody hard.
Reading these three blog posts won’t make you a compensation expert. However, I hope I’ve helped you break it down somewhat so you can confidently tackle some challenges you’ll face as we move to a more globalised working-world. I also hope it’s helped instil some greater confidence in the commerciality of the People Ops function. I fully believe People Ops’ role in Compensation is the bedrock of the relationship between business strategy, human beings, and a business’s bottom-line.
Okay, enough waffling. The questions I want to make some headway on are — what is Whereby’s comp methodology and how did we come up with it?
Freedom to work from anywhere: our mission with Whereby is to give people freedom to live and work where they thrive. This means we are a fully-remote team, but we also have some office hubs around Europe which our team can elect to work from as they please.📍 Our global HQ is in Oslo, Norway, but our users (and team) are worldwide — having been used in nearly every country in the world by millions of folk.
For our 100-odd team members, and also for our customers, we know that the ability to decouple location from work can be life-changing. They can afford the house they want, can spend less time commuting, be closer to nature, and their children get to grow up seeing their grandparents every day. Everyone on our team enjoys the enormous benefits that a flexible work policy brings, and we truly believe the future of work will gravitate towards our vision of the future.
We have a reasonably typical SaaS team structure, primarily Product, Marketing and Engineering, with Sales, Customer Support, and Business Ops functions supporting a product-centric roadmap.
Behind the framework
From my original blogpost it should become clear just how important our organisational design principles were when we made decisions around our compensation structure. Considerations like, “Do we want to be paying like companies at $50m ARR, or $5m ARR?” and “Should we pay our marketing team (for example) more competitively the others we hire?” start to become clearer when we understood what type of company we want to build.
At Whereby, we want to build a team which is:
- Biased towards top-talent
- Diverse and inclusive
From there, the exec team and I worked on a set of rules which reflected the principles: we need to be highly-competitive (in every role and every team), we have both ethical and commercial reasons to take geography into account, and, due to the nature of a T-shaped team, need to have an element of flexibility in the outcomes. This lead to decisions that we would have: high data, geographic regions (but not cost of living based), and a final step of measured discretion.
At this point the process required me to ensure we had the data to back this up and meet our objective of being data-informed and market-driven. We purchased the data from a company called the Economic Research Institute.
Why ERI? We went with the ERI because, ultimately, we wanted to use a range of geographic “hubs” rather than centre to one location and adjust by cost of living (refer back to Part II to see an example of COL in Buffer’s comp calculator). ERI is most practical for the structure we wanted to build because of this geographic flexibility which some competitor data-sets offered (such as Radford).
I built a sheet which walked us through the rest of this process. The sheet had 5 tabs:
- Calculator data (to make it all tick),
- Job Codes: All of our current functions and levels with their corresponding ERI Job Codes,
- Levels: All of our current team members corresponding to their current function and level, and
- Calibration: I later added a final, secret tab, which held a formula to show the outcomes of our comp structure against our current team so that we could calibrate the rules.
(I have shared a template of this in the resources at the end of this post.)
I then talked our Senior Leaders through the framework, asking for their feedback and buy-in. Once they had interrogated the framework’s principles, I requested for them to begin the process of:
- Confirming which ERI job codes were most appropriate to the different levels and roles in our team (I had put my rough thoughts in for all, and asked them to check against the ERI Job Code list)
- Confirming which ‘level’ everyone in our team was currently operating within
The crucial step
Then, and only then, I revealed the secret tab with the outcomes (and the calculator, which was not fully built until after we had confirmed role codes). This is where the Exec and I were able to see how things played out. It gave us a chance to arrest any concerns in the framework, but avoided us looking at individuals one-by-one until the structure revealed itself to us.
Most importantly, this means we lead with the philosophy first, rather than looking at our team’s salaries and then coming up with rules based on our current rates of pay. This is an important distinction because it enabled us to be as fair and objective as possible, as well as create a philosophy which is not driven by past decisions or baked in confirmation bias.
Before we published anything we did review the outcomes against our current team before we decided to proceed with the framework we’d created. This step gave us a clear overview of whether the rules we’d made at the beginning were: too ambitious, wonky (for example, if we were underpaying in one area, but over paying in another), or not competitive enough. It also enabled us to see, calibrate, and address existing pay-gaps between levels, backgrounds, or experience.We were very happy to see that the rules we had set out to make were very much already aligned with the current team’s salaries. This meant that we had created something which was sustainable for us, and met our immediate strategic needs, and would grow with us!
The bits we’ve all been waiting for…
So, now we have a compensation framework at Whereby. This means we are now able to… forecast recruitment costs, forecast promotion costs, better enable our teams to own their own career planning and remuneration discussions, enable more accountability and ownership for team leads, be transparent with how we pay to candidates and internally, and confidently attract the best candidates we can for our open roles.
We have adjusted any team members who fell outside of this framework. We are now working on a clear progression framework so our team knows how and when they can make moves to be promoted into a new role, or expand their current responsibilities.
This work is never 100% done, and we must always iterate, ask questions, and interrogate past decisions. This means we will, from time to time, react to the power of the market and review how our compensation framework works. However, I hope we can largely use this framework for the coming 18 months, with data updates from ERI each quarter.
Take a look yourself…
- Whereby’s Compensation Philosophy
- Our Organisational Design Principles
- More about the Economic Research Institute
And if you’re looking at doing this work yourself… here is a template of our sheet we used to do this important work:
I’m a hands-on Chief Operating Officer. I find my joy in diverse, kind, and world-changing companies of excellent people, which is why I am at Whereby, where our mission is to build a world where anywhere works. (How fantastic is that?)