Rewriting the story of compensationSeptember 16, 2022
When it comes to paying people for the work they do it’s generally straightforward. For tech companies, the story goes a little something like this:
- Company extends offer (in the form of a nicely bundled letter...kind of).
- Employee accepts offer (a forever contract despite any changes life throws at them).
- Employee does good work, and so company pays employee per agreement (except that nice bundled offer letter now becomes a confusing mess of paystub, equity portal, benefits portals, etc.).
And while the world and the people in it have changed, this story has stayed the same for decades. But at Shopify, it no longer made sense. We saw an opportunity to write a better story: Flex Comp, an approach to compensation that changes the very foundation of how we reward talent. Here’s how our story goes…
We built Flex Comp to help define the future of compensation at Shopify, and inspire it beyond just Shopify, with a focus on three key elements:
Bringing agency to our people was a foundational principle for our build. Why should a company decide for you how much of your total reward should be in the form of cash vs equity? This makes no sense. Now, our employees can choose exactly how they want to allocate their total reward. Saving to buy a house? Take more cash. Early in your career? You might want to take more restricted stock units (RSUs) or options. We also killed the one-year cliff on equity, so vesting begins right away, and, because life happens, allocation windows will open a few times a year. This means your equity will no longer be tied to the quarter you started, and you can adjust your choices as your needs change.
Under the old industry structure, it was annoying and time-consuming to understand exactly how much you earned. You’d find base salary on your pay stub and equity in another, made even more complicated by vesting schedules, stock-market unpredictability, and unreliable bonuses tied to company performance. Figuring out your annual take home pay was a pain. Flex Comp lays it all out, simply – our UX design bundles all aspects of total rewards for the first time so employees now have a one-stop-shop for understanding pay.
We’re a mission-driven company, and everything we build is in support of this mission – including this new comp system. We’re tying rewards to the mission, not the market or world events. As employees advance in their careers and have a positive impact on our mission, their compensation will grow (no speed limits here).
By Shopify, for Shopify
Armed with a strong vision of what we were building, we got to work. The ongoing industry-wide realities in which we had to operate were not uncomplicated: compensation tied to market value; geographic salary disparities for a global workforce; and the few making choices for the many. There were as many reasons not to pursue this as there were to dig into it. But this is peak Shopify territory. We set a bold vision for what can exist – and then we build it.
Turning our product-obsessed mindset on ourselves, we gathered people from nearly every team at Shopify to bring this massive overhaul to life. The team took on the ambitious build and timeline, even hunkering down in a two-week coding sprint that saw everyone from our Founder and CEO to developers in a war room, pair-programming late into the night. The commitment to build the best possible system that would work for a diverse set of employees in different jobs, geographies, and levels, each with their own unique needs was palpable. And it paid off, with room to build in the future.
Future of Compensation at Shopify: a foreshadowing
We linked our new compensation system tightly to our mission – and as we iterate we’ll bring the two even closer. For now, we thank our employees who support that mission when they pick RSUs or options with a 5% bonus on any extra equity they choose. In the future we’ll add in elements like charitable donations and Shop Cash – because dollars that travel (from us to our merchants to their employees and beyond) are better for the world than dollars that don’t. Our goal? A virtuous cycle that keeps everyone winning.
Just over two years ago we launched our remote-first, Digital-by-Design way of working. Others followed. Flex Comp was the next logical build for Shopify to continue building a company for people - based on flexibility and choice. We think the world we’re building will incentivize employees for the long term wherever they are. And our story is just getting started.