At SuperHi, we feel like we've introduced a newer way for fairer salaries. In the past, we have chosen salaries, in the same way, was 99% of companies – on the fly – but we've found that's led to the most extroverted people getting higher pay, so by making it more transparent, we've found that we're paying fairer. It isn't a perfect system and we'll explain where we could make improvements as we go.
Currently, the formula is:
salary = (cost-of-living multiplier) x role
Just two variables in here – we decided against adding more variables in here, such as "tenure multiplier" (e.g. you'd get paid more being at SuperHi longer than someone in the same role).
multipler = 1 + max(0, min(0.2, (index / 100) - 0.8))
This looks complex but essentially this means that the index given to us will convert to a number between 1.0 and 1.2 to then use in the salary calculator. This means the difference between someone in a very low and very high cost of living place will be 20%.
The multiplier will increase from 1.0x at Numbeo city indexes of 80 (hence the 0.8 in the formula) which equates currently to cities like Brighton, UK, and Jersey City, NJ, and stop at 1.2x for Numbeo city indexes of 100 and above (New York, Reykjavik, etc).
There's a little CodePen we wrote below so if you want to put your cost of living in to see the multiplier, we've tried to make it easy!
https://codepen.io/riklomas/pen/NWjYNBy
Again this isn't a perfect solution, we will be tweaking it as we go and as we bring on new members of staff, so there will be iterations to the formulas in the future.
We didn't want to unfairly compensate people who lived in cities like Lisbon (index: 54) or Berlin (index: 69) by being significantly lower salaries. 80 was somewhat arbitrary but felt fair when doing the calculations.
We went back and forth on this a lot...
We've read things about the same pay for the same work, which is totally understandable. This would also give staff incentive to move to a cheaper location if the pay was location-independent.
However, we know that not everyone can just up and leave where they live due to family commitments, for example their partners having a in-office job, and we know that people in higher cost-of-living places have higher costs (of course), so we wanted to make somewhat of a fair sliding scale.