Niteo Salary System
Instead of lengthy and often biased per-person negotiations, Niteo uses a Salary System to set salaries. Our goal is to have a fair and objective way to set salaries for all positions with as little subjective input as possible. The system excludes negotiations for individual salaries, and thus leveling the playfield, no matter your position, life situation, or willingness to negotiate.
We've done a lot of research before creating a system that works for us and big thanks go to companies who publish details about their own Salary Systems. These include Basecamp, Travis CI, Buffer, and others. We hope that by publishing ours, we inspire other companies to do the same.
Salary System is a constant work in progress and we always strive to make it better and fairer for everyone in the company. The spreadsheet with all the data and calculations is available on Resilio, People folder.
Our salary formula consists of three variables: Base Salary for the role, Location Factor, and Years Factor.
This is the Salary Formula:
(Base * Location Factor) + (Base * Years Factor)
Note: all amounts are gross and per-month.
Niteo Base Salary is calculated by first taking the Glassdoor salary for the role in San Francisco, converting it to EUR and finally discounting it by our affordability ratio.
Why San Francisco?
We take San Francisco because we assume it has the best data for the tech sector.
But what about EUR/USD fluctuations?
To avoid day-to-day currency fluctuations we take the 10-year exchange rate average to convert the Glassdoor amounts from USD to EUR, Niteo's primary currency. The exchange rate for 2019 is 1.23.
We are not a VC funded Sillicon Valey startup who scales for the sake of scaling and often does not care how much things cost. We strive to be profitable so every Nitean gets a cut. Hence, we discount Glassdor amounts by an affordability ratio, which we get by averaging Numbeo Location Ratios of Amsterdam, Barcelona, Berlin, and Lisbon. The affordability ratio for 2019 is 0.53.
How often do base salaries get calculated?
Once a year, in January, during our bi-annual IRL. Same for the affordability ratio.
Location factor takes into account the living costs. We determine them by comparing Numbeo's cost of living between San Francisco and the Nitean's city and calculating the Numbeo Location Ratio.
For the purposes of the Salary System, we take your official permanent residence (address stated in your passport), and do not change it for seasonal relocations or longer travel. If your city is not in Numbeo, or has less than 180 entries in the last 18 months, find the nearest city that qualifies.
We pay Niteans relatively more in inexpensive cities, increasing their local purchasing power. We do this by compressing the Location Factor of cities below affordability ratio upwards by 2/3 of the distance between location and affordability ratio. Inversely, cities above the affordability ratio are compressed downwards by 2/3 of the distance between location and affordability.
In other words, if you live in an inexpensive city, your salary will be decreased less and if you live in an expensive city, your salary will be increased less by the location factor.
This way we are motivated to hire in inexpensive regions, while at the same time providing a better salary for those Niteans. All things being the same, we will always hire a Nitean from a less expensive city.
Understanding how we operate makes a Nitean more productive and more valuable to the company. We reward this by the Years Factor. Each year after the first, the Nitean will receive a bonus to their base. The bonus decreases with every year, as every year there is less to learn about specifics of our work. We calculate the Years Factor using the natural logarithm:
Here's the Years Factor for the first couple of years:
|Years as permanent Nitean||Added to Base|
We use four primary careers for roles: technical, marketings, design, and operations. Each career has different levels or roles, based on which we define the responsibilities and salary.
Looking at salaries, you might feel that higher positions are a bit underpaid while the lower positions are overpaid. The idea is that we slightly overpay the lower positions to get the best juniors, while slightly underpaying higher positions in order to be more lean. At the same time we expect that in higher positions an additional 1000 EUR does not have a high marginal utility and they value our culture and benefits more. That said, we compensate loyalty with the Years Factor, profit sharing and (soon) equity.
We don't have a hard requirement that you need to hit all checkboxes to be promoted to the next level. You need to hit most of them, consistently. It helps if you are already hitting one or two from the level after the next. It also helps if you are dealing with customers directly and/or keeping production systems online.
Before leveling up, you are also expected to:
- read three books: one industry-specific, one about company culture and one on personal growth (our recommended reading list);
- attend one intensive online or in-person course (example: Coursera, or advanced English course);
- the third level on all position requires you to be on a Mac or Linux computer.
Read more about the careers and their roles:
Each month everyone is expected to work (on average) 7.5 hours per working day in that month (lunch time not included). Any additional hours are considered as overtime hours and are worth 130% of your hourly wage (which is your monthly salary divided by 150).
Tracking Actual Working Hours
All time spent doing work-related activities counts as working hours. The only exception is the commute to the office. Working hours include reading the documentation, answering emails, attending conferences, etc.
Track all hours spent working for the company, including transport to a meeting, conference (1 conference day = 7.5 hours), transport to a conference (up to 7.5 hours per day), reading purposefully chosen technical material, and participation in courses.
Everyone tracks working hours for themselves. At the end of each month, add your working hours and sick hours to Scrooge. If you are a Trialist, then just send the total hours to Dejan on Slack.
While many of us are good friends, we are still a business, not a family. Unlike a family, people join and leave us from time to time. Whenever we have to let someone go, this is how we do it.
- The person needs to know at least 1 month in advance that their position could be canceled in the near term.
- The person needs to know that if we will be hiring for the same position again in the future, they will have priority over completely new people.
- All Partners need to agree with cancellation.
- When cancellation is agreed, the person should be notified immediately by the immediate supervisor (usually the one doing the onboarding or has the most interaction with). From this point onwards, the person is no longer required to work, but is encouraged to take their time to hand off to other people in Niteo anything they feel is valuable. After hand-off is finished, they are free to do whatever.
- Every Nitean (except Trialists) is entitled to a severance package according to the following formula:
- up to one year: 1 month base salary,
- more than one year: 2 months base salary + 1 month for each additional year, up to max 12 months total.