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How Instacart Uses Data to Craft A Bespoke Comp Strategy

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First Round Review
First Round Review
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Jeremy Stanley, Udi Nir, and Guissu Baier, Instacart’s VPs of Data Science, Engineering, and HR, respectively, deconstruct how they are building a more transparent and trustworthy compensation culture.

Instituting a Data-Driven Approach to Compensation

  • Before a candidate meets a hiring manager at Instacart, the company has three types of information at its fingertips: market data, interview data from past candidates, and a rubric to help assess the contribution level of candidates.

Tailor Market Data

  • Give data to get data: If you are within your early funding rounds and most of your team is working on the product, run pre-made compensation surveys, aggregate the responses, and return them back to participants.
  • Gut-check with your peer group: If you have the time, go beyond fine-tuning filters in your comp survey databases, pick up the phone, and call your peer group to compare processes.
  • Fire up a regression analysis: Start with your own blend of sector data to determine your peer set—and cash versus equity formula, assign attributes to this data, build a regression model, and adjust your position and smooth out the data.

Define Your Market Position and Employee Leveling

  • Put yourself in a strong position to win a candidate, but do not expect to have the best compensation offer every time.
  • Make the level of roles, to which compensation is tied, clear to candidates.
  • Instacart uses six levels, and each level coincides with a certain depth of understanding of company values.
  • The traits of ownership, wisdom, knowledge, influence, and community are also attached to each level.
  • Comp is based on contribution, not seniority.
  • The levels are not a linear scale.
  • The principles reinforce the process—for and beyond hiring.

Stress-test Your Comp Strategy

  • Even with its firm position on compensation, Instacart still collects insights when candidates do initiate negotiations.
  • Collect information to calibrate how you give offers going forward.

The Art of Being Firm and Flexible

  • Give options on the equity/salary balance.
  • Let the market catch-up with overcompensated incumbents.

Make Equity More Accessible, Like Cash

  • Instacart uses a worksheet that outlines the entire benefits of a position’s compensation, so employees can ask questions.
  • Instacart extended the 90-day window provision, during which most departing employees at startups must exercise their vested stock options, to seven years or more.

Track Former Employees Like Alumni

  • Instacart uses any departures as opportunities to refine their compensation strategy, so that it can keep its attrition rate within the guardrails of peer companies.
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