An effective compensation philosophy defines what your company wants to achieve by paying its people and how it will do so. It encompasses how you attract, retain, and reward your talent. Organizations must become increasingly creative and equitable with their compensation philosophies to compete in a global talent marketplace. This includes base pay, bonuses, and other elements of total rewards such as benefits and work-life balance.
While each company has unique factors to consider when making pay decisions, looking to other successful organizations can be one source of inspiration. Here are a few examples of compensation philosophies working well for other companies.
Compensation philosophies in the wild
Buffer, a social media management company, addresses a common concern with their compensation philosophy: pay secrecy. They publicly disclose salaries for all employees—even the CEO—on their website to promote fairness and support an open dialogue around compensation.
Basecamp, a project management software company, offers one of the more unique examples of a compensation philosophy statement. Their global compensation strategy is based on paying everyone the same salaries based on their seniority level, regardless of location. Known as location-agnostic pay, this compensation philosophy rewards employees based on the value of their work rather than where they’re performing it. For companies looking to expand their global workforce, location-agnostic pay can be a powerful strategy for attracting remote talent.
Starbucks, a global coffeehouse chain, offers a competitive total rewards program with the option to purchase company stocks at a discounted rate. Global companies can emulate their model as a compensation philosophy example, as the company provides locally competitive insurance benefits, college tuition assistance for eligible employees, and industry-leading leave policies for vacation and sick time.
Daily is a company that powers real-time video for users worldwide, with APIs for developers who build audio and video features into apps. With a global workforce, the company pays its employees based on merit instead of location. One element of their compensation philosophy that other companies might wish to consider is the straightforward pay structure, which features seven distinct levels based on years of experience.
Outdoor apparel company Patagonia emphasizes social responsibility and environmental sustainability in their compensation philosophy. They offer employees paid time off to participate in environmental activities, and also provide on-site childcare facilities, encouraging work-life balance and employee wellness.
One of the most noteworthy examples of a compensation philosophy statement by a large corporation is that by Adobe. Their website outlines their commitment to pay parity, which ensures that employees in the same role and location are paid fairly relative to one another, regardless of ethnicity or gender. While perhaps not as progressive as other companies offering location-agnostic pay, companies seeking examples of a compensation philosophy emphasizing equitable pay may be inspired by Adobe. Since 2020, the company has achieved parity among employees of all genders and ethnicities, including underrepresented minorities.
Float is a resource management software company that enables project and schedule management for thousands of leading companies across the globe. Their location-agnostic pay structure is based on contribution, not geography. Their salaries are benchmarked to 90% of median San Francisco pay rates, calculated using third-party data. For many workers outside the U.S., these pay rates are incredibly competitive. The company also tracks differences in exchange conversion rates and compensates for negative accrued balances at six-month intervals.
Microsoft, which is one of the largest computing companies in the world, offers equal pay for equal work. The Fortune 500 company is committed to supporting diversity and inclusion through equitable pay practices. Global companies looking to structure their total rewards packages strategically can look to Microsoft for compensation philosophy elements, as the tech giant offers competitive health, welfare, retirement, and insurance benefits.
Google uses a data-driven approach for its company compensation philosophy. Its pay structure includes performance-based salaries that reward top talent, flexible work arrangements to support a positive work-life balance, and monetary or non-financial incentives.
Cal.com offers event scheduling that simplifies meetings and events for businesses, allowing users to sync calendars seamlessly. As an open startup, the company shares all of its pay data. Its founders are committed to pay equity and base their compensation philosophy on meritocracy. Their team is fully distributed and works solely online, making theirs among the best examples of compensation philosophy for companies with global workforces.
A pre-accounting platform leveraged by more than 10 million global users, Expensify enables seamless app-based expense management. The company was among the first to offer a global standard for pay by compensating employees according to San Francisco salary data, irrespective of their location.
The e-commerce platform Gumroad is made up of employees located across the globe. As of 2020, the company had wholly deprecated all location-based pay. Their goal is to help creators and entrepreneurs earn more, an endeavor they’ve supported by paying more than $400M to creators worldwide since their inception. Most of their employees also enjoy a highly coveted work-life balance, working roughly 22 hours per week on average.
An all-remote company with hundreds of employees, Sourcegraph creates a universal code search for developers to create software. According to their employee handbook, the company does not structure pay based on location. An employee’s geographical location is never considered when determining their cash and equity compensation.
14. Habitat for Humanity
With locations across the U.S. and in 70 different countries, Habitat for Humanity is a global organization that helps families build and improve homes. The nonprofit organization aims to create a culture where all employees feel welcome, supported, and respected. If you’re seeking compensation philosophy examples in the nonprofit sector, consider their total rewards philosophy, which is based on competitive pay for employees of all races, ethnicities, national origins, ages, and gender identities.
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