Shopify Inc. SHOP-T is revamping salary-based incentives for rising employees, part of a spate of strategic initiatives taken by the e-commerce company to address challenges posed by its previous compensation framework.
Employees will be given a choice to become either a manager or a “crafter,” Shopify told The Globe and Mail, ahead of an announcement to the company’s staffers on Wednesday. The earning potential for the two different career tracks will now be equal. Crafters are non-managers who work in a variety of Shopify functions such as engineering, product development, or fulfilment and delivery.
Historically, many companies tend to disproportionately favour management roles for the highest salaries in their compensation structures, Shopify said. This has created concerns, particularly in the competitive technology sector, about who gets to progress further in their careers and which employees are not able to match the same pace, the Ottawa-based company noted.
“Some of our most talented crafters were burdened by the managerial tax, which distracted them from building and shipping. By removing the burden of management from crafters, they can now focus on what they and we value most,” said Tia Silas, Shopify’s chief human resources officer.
Prior to the new changes, the only way to build your career at Shopify was to take on management responsibilities, Ms. Silas said.
Initially, employees will be placed by the company into one of the tracks, based on their current responsibilities, she said. But at a later date, they will be asked to state their preference and move into the track of their choice. There are no cash upsides or bonuses provided for picking either of the tracks, Ms. Silas added.
Still, employees will have the opportunity to switch career tracks over time. “Tracks aren’t fixed – that’s the benefit of the new system,” Ms. Silas said.
“We anticipate this will be a draw for potential talent who want to spend their days building products.”
In January, Shopify began to introduce changes to its work culture that the company described as “chaotic,” such as cancelling all meetings between three or more people and those on Wednesdays, thus only allowing team events to be scheduled on Thursdays. These strategic shifts at Shopify are internally called “Chaos Monkey,” a play on a well-known term in software engineering that describes radical experimentation.
Last year, Shopify changed its compensation framework by launching a new scheme that gave employees choice about how much they are paid in cash versus equity. Dubbed “Flex Comp,” the initiative was part of a strategy to mitigate internal dissatisfaction stemming from a fall in the company’s stock, which had shrunk salaries for most staffers. Shares of Shopify fell nearly 70 per cent in 2022.
Now, Shopify is adding to those changes by “cracking the code” on a dilemma that it says has been plaguing tech companies for decades.
“We’re better aligning our talent system with company priorities,” Ms. Silas said. “We’re clearing even more obstacles from crafters, so they can focus on what they do best: building world-class products.”
Shopify, which provides businesses in more than 170 countries with tools to set up their online stores, has already cited its previous compensation changes as an operating expense that is holding back the company’s profits. In February, chief financial officer Jeff Hoffmeister said costs from Flex Comp were partly why Shopify’s adjusted operating income dropped to US$61-million in the fourth quarter of 2022 from US$130.2-million a year earlier.
Shopify operates on a digital-by-default model. Most employees have primarily worked from home since mid-2020, a few months after the onset of the COVID-19 pandemic.
Temur Durrani