By L.J. Brock, Chief People Officer
In the spirit of transparency, I’m sharing an internal email that was sent to our employees earlier today:
In light of today’s New York Times story, I wanted to share some thoughts on the journey we’ve taken as a company over the last two years to ensure our compensation framework is transparent, fair to all employees, and built to scale with us as we grow.
I joined Coinbase as our first Chief People Officer in March 2019. In the year before I joined, the company had more than doubled in size. It was clear when I arrived that our comp framework was straining due to our rapid growth, and that we needed to revamp it to ensure it would continue to serve our needs.
This was not a surprise — every company goes through this journey at some point. Building a scalable compensation framework is hard work, especially at a hyper growth company.
Since Q1 2019, we’ve put in significant work to ensure our pay-for-performance philosophy is transparent and fair. We’ve made several major program changes which I’ve detailed below that have improved our comp framework over the last 2 years. I’m proud of everyone on the Employee Experience Team who has driven this work, and I’m committed to ensuring our comp structure remains fair and transparent as we continue to grow.
Step 1: Lay the foundation
In October 2018, we launched an industry standard leveling system across all roles in the company. As a result of this project, we went from 6 levels to 13. We did this to:
- Adopt a global leveling structure that is aligned to market standards and reflects the globalization of our business
- Create consistency for role expectations and contributions across the business
- Build a dual career ladder with parallel levels/bands for managers and individual contributors
- Ensure equal pay for substantially similar work
Following this work, in early 2019 we provided market adjustments in base pay to ensure that all employees were compensated within the new market range for their role. At that time, all eligible employees received a 3% compensation increase, and a subset of that group received additional adjustments to ensure they were within the range for their role.
Step 2: Reboot our compensation structure
In November of 2019, we took 5 steps to implement the Comp Reboot.
We changed our peerset from 85 companies to the 18 top technology and financial services companies we regularly compete with for talent. Aligning ourselves with this group was aspirational given most of this group is now public, with nearly 10x our headcount, so we recognized that we were punching above our weight. However, we wanted to ensure that we could attract and retain top talent from these companies and remain within a cash comparable position.
We implemented a Target Total Cash model for base salaries. Coinbase pays what other companies pay for base + bonus, but all in base. We benchmarked against those two numbers to create a single pay target for each role and level. In doing so, every employee is seeing some of their “bonus” in their paycheck.
In addition, as part of the Target Total Cash model, we do not negotiate base salary during the hiring or promotion process. Every role and level has a set pay target.
We made pay targets transparent: Every employee and new hire knows their own pay target, and can ask for the pay target for the level above them. We do not negotiate offers. We believe that the single pay target model drives equitable outcomes for all employees and candidates.
We implemented regular Market Reviews to ensure that our pay targets are at market rates. During our 2019 “reboot,” 70% of employees received a pay increase. Coinbase invested $9M in annualized compensation for the ~700 people at the company to raise compensation and ensure they were at the new pay targets.
In our mid-2020 Market Review, we found that we were at market rate and did not increase our pay targets. In our end of 2020 Market Review, we expect several roles to shift slightly, and we will increase pay targets accordingly. Impacted employees will be notified of any base salary increases in mid-January.
We gave every level equity. Prior to our reboot, Level 1 and 2 roles at Coinbase typically did not receive a new-hire grant. As a result of the reboot, 10% of our population, who had not previously received equity, were granted an equity award and now every full-time employee receives equity upon joining the company (with Board approval). In addition, we moved to annual refresh grants.
Step 3: Evaluate Pay Equity
Coinbase is committed to ruthlessly eliminating bias in all our internal processes. We also recognize that it is best practice to regularly check our work, and while pay equity is critical at any stage of maturation, we believe that we have implemented the framework to ensure we are driving equitable outcomes. We recently retained a certified woman-owned law firm to partner with an expert software solution, Syndio, to audit our global pay data. We will examine our pay through the lens of ethnicity/race, in addition to gender.
A Final thought
We are one year into our Compensation Reboot, and we continue to challenge our framework as we compete for top talent and ensure that it will stand up to the talent landscape as we scale. To that end, we continue to innovate on compensation philosophy and anticipate making further changes in early 2021.
Chief People Officer
Coinbase is committed to fair and equitable compensation for every employee was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.