Shopify on Monday launched Flex Comp, a compensation model that allows staff to pick either cash or stock for their service to the company. Calling it a “bold vision”, the Canada-based e-commerce platform challenged salary norms set by tech companies worldwide.
Flex Comp is based on three key elements: Agency, Clarity and Impact. While Clarity is aimed at making complexities of pay understandable to the employee and Impact ensures no “speed limits” to individual growth, Agency is the most important aspect that is making heads turn.
It emphasizes on allowing the employee to choose between cash or equity as per changing requirements.
Cash or Equity?
The prime aspect of Flex Comp discusses how employees can decide if they want to get paid in cash (the conventional way) or in equity. “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,” the company explained in a blog post.
Over 10k Shopifolk are on this totally new compensation system and it has proven hugely popular. It’s not an easy area to innovate in, especially if you are global. But the team got it done anyways. I’m really proud of them.
— tobi lutke (@tobi) September 16, 2022
More details here: https://t.co/9nnvwW9qA6
Shopify CEO Tobi Lutke also took pride in announcing the news on Twitter. “We totally revamped our compensation system this summer. In short, “Flex Comp” now gives everyone a simple UX where you see your total compensation and choose a mix of Cash/RSU/Stock via simple sliders,” he tweeted.
“Company building is an exercise in applied systems design. Occasionally, it’s good to go with the flow and take an off the shelf idea. But those are rarely ideal. There are opportunities that fit your company better. I think Flex Comp is a great example of this,” Lutke added.
More than 10000 employees of Shopify are now part of Flex Comp. “It has proven hugely popular. It’s not an easy area to innovate in, especially if you are global. But the team got it done anyways. I’m really proud of them,” concluded Lutke.
Tough Transition
Company news: We totally revamped our compensation system this summer. In short, “Flex Comp” now gives everyone a simple UX where you see your total compensation and choose a mix of Cash/RSU/Stock via simple sliders. pic.twitter.com/5ISYiNA6WO
— tobi lutke (@tobi) September 16, 2022
Transition is not easy, though Shopify has linked the compensation system tightly to its mission. Shopify hopes that more of its employees pick the unconventional option — RSUs or options with a 5 percent bonus. Going forward, the e-commerce giant is planning to introduce charitable donations and Shop Cash as additional options for employees.
“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,” Shopify states.
Company For People
Shopify is proud that its decision to allow employees to work from home was adopted by others. Calling it an initiative to build a company for people, Shopify is hopeful that other tech companies will also follow Flex Comp compensation model.
“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,” the company said.
