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Management Debt (2012) (a16z.com)
87 points by howlgarnish 4 days ago | hide | past | favorite | 22 comments





Ha ha, "overcompensating" - interesting to note that it happened because she was initially under-compensated. Also interesting to compare to Netflix - pay everybody at the top of market for their role.

Yeah- that part of the article was not that good. Its clear in 2021 that the companies that win at compensation are the companies that win full stop. Its also telling that California, which has exceptionally robust legal protections around salary transparency and freedom of movement (illegality of non-compete clauses), has become a technology powerhouse.

I always like to keep in mind what Patrick McKenzie (aka patio11) like to say: "everyone's preference space is N dimensional".

I mention that because a lot of people see "compensation" and think only money but that is just one of many dimensions e.g. flexible schedule, career growth, benefits etc

This is a great blog post about using those other dimensions when "just throw more money" is not an option: https://web.archive.org/web/20130409033601/http://www.articu...


As the CEO of a company with 180 employees working full time, I can tell you that the advice to avoid overcompensating is outright wrong. I made the mistake of undercompensating for too long and suffered severely for it. More damage will happen from undercompensating your best employees than by overcompensating.

I am of such mixed opinions on this. I've been the undercompensated employee that was going to walk and got a great package in return. I stuck around for another 5 years and consider my salary to be my own business, and no one elses. (disclaimer: I'm in my 40's)

As VP Eng supporting a team of 30 at a startup. I had a similar situation. One employee was absolutely crushing it by performing above level and when compared to peers, despite earning about 5% less than the median (zero prior experience before being hired, so it was a bit of a gamble for the company). At annual comp adjustment time, I gave him a bump that brought him a percent or two above peers (including their own adjustment).

Well, did that unleash a shitstorm. One of his teammates complained that it wasn't fair that he made more money. She was solid and consistent and was squarely in the "meeting expectations" bracket. It was irrelevant to her that he was overperforming. She had been at the company 2 months longer and therefore, should make more money.

However, what really blew my mind was when the employee who got the raise complained about this as well. He also felt that it was unfair that he made more money than his teammate. They both then brought up that they felt that they felt it was an issue of sexual discrimination, which was especially ironic since our CEO, COO, and VP Finance were women (yes, I was on the management team of a tech company where women outnumbered men).

In any case, the agreed upon solution to make the problem go away was to a) bump the teammate's pay to match and b) completely eliminate any discretion or performance components to annual pay increases. Everyone simply got 3%.


Throwing merit out of the window is not a valuable argument on this discussion. The situation you described is mind-blowing on how out of reality the 2 people were, probably firing both of them would have been the sane solution for everyone else.

The worst part was, it wasn't just the two of them. It was essentially everyone on the team aged < 30 years. As a footnote, they both ended up leaving within a year, and just in time to avoid a nice cash bonus resulting from the company being acquired.

Some folks are irrational; probably not a good reason to throw out rationality.

Unfortunately, as a smallish company, even the hint of having to deal with such a lawsuit made it the most expedient solution. We didn't have the cash to spend on something like that.

Note that the bullet point was not just “overcompensating”, but rather “overcompensating... because she gets another job offer”. I suspect the author would agree that appropriately compensating the employee in the first place would have avoided this problem.

For people on the other side of management debt (individual contributors), try your best to figure out what pieces they would be happy if you maintained a reasonable level of output on.

Your key goal in life at that stage is cash-flow, keep the checks coming. But in terms of how you fit or how they see you, that ship has mostly sailed and you will need to leverage the market to find the better role. This is not a apocalyptic scenario, and can be managed maturely over months or years.

Everything is a long game.


I like this idea though prefer the term "managerial debt" just because it more closely reflects the original "technical debt".

My own favourite are the swashbuckling, resume-impressing "transformation" programmes in big corporations and their corollary "consultancy debt" which involve much scratching of heads by the hoi-polloi at the time of execution, and often severely depleted and inadequate services long after the debtors have fled the scene...


Is that where they go through a "digital transformation", fire existing IT staff, and try and rebuild all their software? I've been in a few projects like that (as consultant), I have no faith that those were successful in the long run because the consultants were all high-flying ambitious characters who don't like to be in the same spot for too long (max 3 years, but often the restlessness starts after 6-12 months already)

>>because the consultants were all high-flying ambitious characters who don't like to be in the same spot for too long.

Are you outing yourself doing a bad job? :P

My big take away from being given a management job on a sinking ship IT transformation was: You've got to kill and eat your pets. If the IT transformation really is that important than a lack of success should be an existential threat to the business and everyone doing it. Maybe this means that big projects never happen, and maybe that'd be a good thing. But where I work, we just did 7 years to have the last 2 be a death march where everything delivered was under cooked.

I feel like the lack of a real embrace of a burning deck is what did it.

I'd try and win success with a 'too good to pass on' bonus that's paid 2 years after delivery. But I know in this Agile world, getting a set of agreed on requirements is just impossible.

So I'm back to championing roadmaps and small projects with small teams.


I'm not the person you responded to, but "doing a bad job" as a consultant is relative. At a lot of gigs, they neither expect nor allow you to think. So even when you do have expert advice on why something is a bad idea, management will be unwilling to listen.

The job is only as good as the decisions made.


I'm not trying to look down on anyone doing work for money. I know that's a fact of life.

I know your right, that consultant is a fancy word for contract staff. But what I would expect form consultants is consulting. Even if it causes grief. I've had very good experiences with performance and database engineer's who came onboard and set us all straight. The advantage of being an outsider is not drinking the koolaide.

I'm surprised, but also not, that that's not more latitude given or taken.


The putting two in a box isn't a mistake if it is handled correctly.

Understanding the technical architecture and managing and building teams as well as reviewing budgets and aligning to plans aren't two skill sets that are intertwined. It's very common to have one person great at one and another great at the second.

If it's made clear who is responsible for the architecture then it is clear who makes decisions there.

Likewise, that person can focus on the technical architecture and someone else is doing the people management, timelines, budgeting, and so forth.

What's the alternative? Promote the architecture person into a managerial role and have them be unable to scale the teams?

Or promote the other person, scale the teams, but run into technical issues and debt because there isn't a person owning the architecture and keeping the mental blueprint in their head how all of the pieces fit together?

It really comes down to getting the right people on board, clearly explaining the responsibilities, ensuring compensation is equal, and then having the two parties see each as allies on the same team.


I think the "overcompensating" can also happen when you hire, doesn't have to be an existing employee. Invariably other employees will find out what new hires make, and if you don't stick to loose compensation bands, you're going to have a tough time trying to justify this.

I think this happens more often than overcompensating employees who threaten to quit. Everyone I know has stories of a new person hired, making 10% - 20% more than existing people in the same position, and that person honestly not being worth while for the position in the first place. It produces a lot of hurt feelings / egos.

these are just management mistakes. the only similarity to tech debt is the delay in consequences.

Just like technical debt, these make your management job easier now but create problems down the road.

Tech debt, like financial debt can be the right thing to do over a period to be paid off. These examples of management debt aren't.



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