The Transparent Salary Playbook: Creating a Compensation Model connected to Growth

Pay transparency starts by building a Career Framework for your company.

Back in 2013, I shared my salary publicly for the first time. Not just with my team or some close friends but with everyone on the internet. 👀

I had recently joined Buffer and we decided to share our salaries (and eventually equity) with the world. At the time, my personal understanding was that it was the right thing to do because it aligned with our company values. 

I had (and have) a level of privilege that meant I didn’t have to worry about friends, family, partners or strangers on the internet knowing my take-home pay. Or, be concerned about how that level of pay transparency could impact future job offers.

It took me 9 years of scaling People Ops and pay transparency at early-stage startups to understand the nuance required for salary transparency and the paradigm shift from exposing numbers to putting in structure to reduce bias and pay inequity. 

I’m going to narrow down the past 9 years of learning into one sentence: pay transparency should first and foremost be about giving your team a crystal clear understanding of why they are paid what they are paid and how they can grow in their role. 🌱

Below, I walk you through the four-step process for building a Career Framework. It is the key to unlocking internal pay transparency. All of the other things you might be wanting from it - gender pay equity, employee retention, more diverse hiring pipelines, a strong employer brand - will follow.

Pay transparency doesn't start with the numbers

Isn’t the point of pay transparency to share salary data with your team? It is.

But before you get to the point of opening up these salary discussions, you have to start the same way as most inclusion work: investing a good deal of time,  headspace, and feedback cycles that pay dividends as your company grows. Pay transparency starts by building a Career Framework for your company.

A Career Framework is a clearly defined map with a system of Levels and Steps for how someone grows and develops at your company. Some other terms you may have heard for this are career ladders, career paths, or leveling. The terms that might make some people roll their eyes and curse bureaucracy but have proven to increase employee retention, perception of fairness, and happiness. 

It is important not to look at compensation data until you’ve defined your Career Framework because it can be tempting to look at your current pay structure and try to back your way into designing around that. But by defining your Career Framework first, you can be much more objective and rooted in performance measures when it gets to pay. For the purpose of this exercise, we’re only going to look at base pay transparency. But, this structure also sets you up for equity transparency! 🙂

Why building a Career Framework for your company comes first

What does a Career Framework do for your company?

1. It outlines explicit behaviors and actions for growth.

Have you ever had a new employee come to you six months in and surprise you by asking for a promotion? Often the subtext of the promotion request translates to ‘how do I grow here?’. Creating a Career Framework gives both managers and team members a shared language to discuss that question and more directly connect performance to observable behaviors. Essentially, you are pulling the things you’d like to see from your team out of your head , and making a much more equitable framework that can grow and evolve as your team does.

2. It makes compensation conversations more natural.

A Career Framework anchors your team’s ability to have compensation conversations. Instead of people getting frustrated, not having the tools to discuss compensation, and then quitting, it sets the expectation that employees can openly talk about salaries. When new team members join, they enter with this framework and are immediately given a map to guide their growth and conversations with their manager. It also empowers managers to have discussions with their direct reports about mobility and compensation without having to get numbers from People Ops or the executive team.

3. It lets people decide how they want to grow.

In building a Career Framework, you get to decide how your company rewards team member growth. You will answer questions like - how do we view the path of a people manager vs. an awesome technical individual contributor? In the Career Framework below, I suggest creating dual paths for People Managers and Individual Contributors that allow for equal compensation no matter the route. 

4. It reduces gaps in pay equity.

A recent study on pay transparency from Tomasz Obloj and Todd Zenger combed through the salary data for approximately 100,000 US academics between 1997 and 2017. In this study, they found that pay inequality by gender dropped by about 20% in organizations with pay transparency. Buffer has also seen their gender pay gap reduced with pay transparency, closing in from 15% to 5%. 🙌

4 steps for building a Career Framework

Step 1: Create a Career Progression Guide

Your Career Progression Guide is the foundation for the rest of this process. It is a matrix where you decide the number of Levels and Steps a team member can progress through at your company. 

Here is one I like to use: 

I’ll start with a few quick definitions: 

Levels: Levels are larger progressions in someone’s growth at your company. In my example, there are 5 Levels for Individual Contributors (IC) to progress through and 3 Levels for People Managers to Progress through. When we get to compensation, moving from one Level to another is both a larger progression in responsibility and salary.

Steps: Steps are smaller progressions of growth within each Level. Steps are increasing performance at the stated Level. When we get to compensation, moving from one Step to another means taking on more responsibility within a Level and is a smaller bump in salary compared to moving to the next Level. 

IC Path and Manager Path: In this approach, we are valuing dedicated Individual Contributors as much as People Manager roles. When someone gets to Level 3, they have the option of transitioning to People Management or deepening their expertise at an IC. The salary will be the same for the specific Level and Step no matter which path the person is on so you are showing your team that becoming a People Manager isn’t the only way to progress. This allows you to nurture people in their career path and provide them real valuable growth in your organization without having to become people managers. The benefit of this is a structure for retaining impactful individual contributors and it doesn’t force people into people management who shouldn’t be there.

For example, someone might be an Engineering Manager at Level 4 / Step A or they might be a Staff Engineer at Level 4 / Step A. 

Step 2: Decide how your company measures Level progression

Now that we have an outline of Levels and Steps, we add the good stuff - connecting your employee’s personal growth and development to the growth of your company. 

In Step 2, we are getting really clear on the attributes of growth from individuals that lead to growth of your company. Ask yourself: As someone progresses through each Level at your company, what behaviors would you like to see more of? 

Again, an example: 

In this example, we’ve decided we will be defining our Levels based on increasing: quality of craft, role complexity, scope of work, and self-sufficiency. 

Select 4 -6 attributes that you’ll use to define these Levels across your company.  

To give you a wordbank to choose from, here are some additional attributes I’ve seen during this exercise: communication, collaboration, impact, internal influence, leveling up others, feedback, technical skills, knowledge sharing, relationship building, decision making, driving alignment, process thinking, facilitation, mentoring, strategic work. 

Step 3: Define the Levels and Steps for each department at your organization

Defining Levels

Now it is time for cmd-c, cmd-p. Copy and paste the Level Definitions chart for each department at your organization (engineering, product, marketing, people ops, etc.). You’ll use the same chart for each department while getting specific on what progression within a department looks like. This helps you calibrate across your organization while being specific enough to give your team members actionable guidance.

Using the Levels Definitions chart from Step 2, here is an example of how someone working in People Ops would progress through the Levels of the role:

There are a lot of words in this table but what you should really take away from it is that to progress from one level to another, the person should be increasing in their quality of craft, role complexity, scope of work, and self-sufficiency. And, as they do this, they will grow and have a positive impact on your company.

Work with team leads for each department at your company to get as specific as possible on the definitions. 

For another example, Figma has a great Product Designer Ladder.

Defining Steps

Steps are housed within each Level and are meant to mark milestones of growth within that Level. As progression markers, they are pretty straightforward:

Step 4: Adopt the Career Framework

Don’t skip this step. You wouldn’t spend months researching, designing, and building a new feature for your users to then just quietly push it out and hope people notice. The finish line isn’t the release, it is the adoption of the Career Framework by your team and people managers. 

Here’s my recommendation on roll out: 

  • Manager training: You will have worked with team leads to create the department-specific Level definitions. Make sure they clearly understand the Career Progression Guide, the Level definitions for their department, and how often they will review progression with their reports.

  • Share to the company: In a company-wide meeting, review the Career Progression Guide and share an example of what is expected of an engineer at Level 3, step A or a Product Manager at Level 2, step B, etc. Then, let your team know their managers will discuss in their next 1-1. 

  • Feedback in the first 1-1 since sharing: Have your managers ask their direct reports for feedback or questions in their next 1-1. In the next 1-1, the manager and the direct report should be prepared to discuss what Level and Step the direct report is operating at.

  • Leveling in the second 1-1 since sharing: The manager should come prepared to share what Level and Step their direct report is operating at AND actionable feedback on how they can get to the next Level and/or Step. 

  • Note!: We’re intentionally excluding salary discussion between managers and direct reports still. That’s up next.

Now, put in your salary data

Enter Base Salary for each Level + Step for every role at your company

Queue the spreadsheet! Once you have each Level defined for your roles, it is time to enter base salary for each Level and Step from your initial Career Progression Guide. Create a separate tab for each department at your company and copy and paste the Career Progression Guide. 

Using compensation databases like Payscale, Carta, Option Impact, Radford, Pave, Opencomp, etc. collect an understanding of market rates for each role. 

Rooted in an understanding of market-rate salaries, this next process is part science and part philosophy. Because we’re using a career framework with assigned salaries, we’re eliminating negotiation and a lot (not all) of the subjectivity that leads to pay inequity. In this framework, you can decide if you want to pay above-market rates for certain roles. For example, Help Scout pays their customer support team members above-market rates because they believe that field has been historically undervalued. 

In this part of the exercise, you are assigning value to certain departments at your company. If you are a location-based office, use your local market. If you are remote, you can choose a specific market or adjust based on a cost of living. 

Let’s complete our People Ops example: 

Using this example, don’t copy and paste the salary data! Do your own research of market rates for your stage, size, and runway. ✍️

And, finally, note that Levels and Steps are different bumps in salary. Steps are smaller progressions (i.e from Step A to Step B is $5,000) and Levels are larger progressions (i.e. from Level 1 to Level 2 is $10,000). This helps communicate that moving from one level to the next is a larger milestone.

BONUS: how to use this system to attract great team members

In the job description: Before posting any open role, make sure the Hiring Manager and Recruiter are aligned on the Level you’re looking for with the hire. For example, the Hiring Manager might be looking for a Level 2 to 3 People Ops team member. From our People Ops Salaries chart above, that would make the range $105,000 to $145,000. Include this in the job description to save everyone’s time and demonstrate your commitment to pay equity. 💪

In the job offer: Include the Career Progression Guide and corresponding base salaries for the department this person would be joining. It shows that your organization is thinking about how people grow and develop and they can imagine their own career path at your org. 

Wrapping up: this is just V1.

The needs of your team and managers will evolve as your company grows and you should gather feedback, understand patterns, and make changes. This transparent salaries framework is a great V1 to help your team understand and practice using a compensation structure tied to progressions in behaviors. 

In the next version, you might get even more granular in each department. Or, you might include equity bands for each Level. In each version, come back to the central mission of pay transparency: to give your team a crystal clear understanding of why they are paid what they are paid and how they can grow in their role. ✨

At Elpha, we believe that an important part of helping women succeed at work is making sure everyone understands their compensation and is paid fairly.

👉 For more on pay transparency, visit the Elpha Salary Database

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