Don't get too caught up on which job role has more risk, responsibility, or communication skills.
Salaries are apportioned based on how close a job role is to the company's revenue stream. Executives come out on top because they control the money and payscales. Sales is often second because they can very easily point to new revenues and say "I brought that in". Profit center staff (most Valley engineers) would be somewhere up there because they are at least creating the actual product that the business sells. Support staff - cleaning, office managers, accounting - bring up the rear because they have the hardest time claiming responsibility for a share of the pie.
Within each of those groups you'll see normal salary dynamics based on wider market forces and hierarchy. Engineering manager's gonna make more than most of the line engineers. Comptroller will probably make more than a line engineer too even if she's considered a cost center because she's in a position of relative authority and individual responsibility.
Study questions:
- How close are you to the money?
- How legible are your contributions to the bottom line?
- Could you get significantly more elsewhere for the same role?
- Is management incentivized to retain top-shelf people for your job role?
I'm so glad this post is at the top vs. the other "it seems fair to me" replies.
I also find it illuminating to compare to three other careers that I consider intellectually similar to engineering in that they are not "management", and yet they capture way more of their value in their corporate zenith (or did at some point in time when their reputations as careers were made).
- Lawyers: Lawyers aim to make partner. They become owners. None of this "engineers are afraid of risk" stuff.
- Doctors: Doctors control supply. I have met many socially odd doctors, without "negotiation skills" or "business acumen", but they don't worry about their salary precisely because this "union-like" aspect to their profession.
- Finance people: a.k.a "bankers". Most people have no better proxy for their "value" than what they agree on a job interview ("the value of your work is what people are willing to pay for it"). But "bankers" do know what their work is worth, outside of this exchange. And they know how much their peers are making, and are basically immune to the collective cluelessness that is "I don't need to know how much my peer and my boss make to be satisfied with my salary".
Engineers? No union. Meek personality and culture plus cluelessness about labor economics means they are ecstatic making 200k even if their company is making 1M+ for their work.
Some scattered thoughts here, but thank you for your post.
Ok, so I've spent my career as a "line engineer" (aka programmer), but in my previous job we were heading for a crisis. I stepped up to manage because there was only so much I could do to avert the crisis by typing code. I (we) needed something done that was wider in scope than that role. I got a raise as part of that. We made things work and met our deadlines and obligations. I deserved that raise.
Now I'm back in the trenches (and happy about it), but I have a somewhat different take on management than I did before. I'm more sympathetic to management concerns, and that much more appreciative of managers who do their job well.
OTOH, I may be even more unhappy than before with managers who don't do their jobs well.
The ratio of investment per employee might not align up to the investment in function - the investment might be spread 20%/80% between both functions.
I've worked with (uh, "under" feels insulting) really good managers who truly earn their pay & it has given me a different perspective of what they do to make "things happen".
I've cut that down into literally four levels of management - delegation, negotiation, inspiration & vision. Those who merely delegate are hard to work with, those who negotiate for you are good, those who inspire you to pick up risks are great and those who can see ahead six months to realign/nudge a team to build new skills is just awesome.
On another note though, I'd rather have no management than bad management - there are those who do none of those things, while fulfilling Peter Principle.
Having been in the industry for 15 years, and having been both a hard developer and an engineering manager, my two cents:
1- managing a team of engineers WELL is really hard, and requires a broad range of skills. Granted, there are a lot of bad managers out there, particularly in engineering.
2- managers aren't getting paid for their productivity, or even their time. They are getting paid for judgment and accountability. They are accountable for the output of a whole team, and they can only indirectly influence productivity of each engineer.
3- I can say this because I'm an engineer- lots of engineers (in fact, many of the best ones) are immature and stubborn. That hurts teams, hurts feelings, and inhibits productivity. Don't underestimate the difficulty in keeping things running smoothly on interpersonal issues.
To the above points, I was a manager for 4 years. My team members said I did a good job. Yet, after sweating in that position for that amount of time, I gladly took a 30% pay cut to be an individual contributor again.
Good points. Anytime I hear a bunch of engineers talking about not needing a manager (not you, but in this thread) I cringe, and I'm an engineer. Managing personalities and getting people on the same page is hard. I liken it to a bunch of NBA players saying they don't need a coach. Phil Jackson made a career of taking the best players with the biggest egos and getting them to play together.
I'm surprised at how passive aggressive some of these answers sound. I imagine many of you have worked some poor managers who weren't very good at their job. That will make you question why they deserve to get paid so much. For the record, as a manager I've had staff members make as much as I have.
I believe a (good) manager gets paid a lot because they make their team more productive, focused, and happy. a good manager will... Increase the productivity and output from the team. She makes sure that each person has the tools and resources to do their job effectively. She ensures that roadblocks are moved out of the way and not a distraction. She mentors the team and helps identify projects that help improve their skills and peaks their interests. She sets a vision the team can rally behind and adjusts that plan and pitch as needed. Shes brings experience and prospective that no one else on the team has had. She hired an all-star team and fires the deadwood. She's the shit umbrella who protects the team from the rest of the company.
Hiring a good manager is hard work. It's even harder to promote within without the right training structure. One of the problems with management is many of us are self taught. Bad managers can often breed more bad managers. But a great manager can be worth every penny.
I find managers who see themselves as visionary hero's, who mentors subordinates often forget engineers are capable people with their own ideas, self motivated with skills they probably don't have themselves.
They dont need to be lead, but helped to self organise and to stop external interference.
"They dont need to be lead, but helped to self organise and to stop external interference."
That's quite a whole lot more difficult to be done, than said. I've been learning that first-hand for the past year, especially when it comes to subordinates that are not too keen on being dealt with in a "conventional" manner.
Why do you assume the manager is a woman? I've actually never seen a woman manager. If you're afraid of gender bias, why not petition the cosmetology industry to fix the female-centric gender bias? Men are under-represented in nail salons too..
Jeez. A long, fairly detailed comment like that, and all you had to say was criticize the choice of gender pronoun? There's no pleasing some people. :-)
One hypothesis, admittedly based on a premise I don't believe.
We've been told by a lot of sources that 10x engineers don't exist, and only the team matters [1]. Suppose this is true, or at least suppose the company decision makers believe this. In that case, there is no point paying any engineer more than 2-3X what another one makes - why pay more for the same productivity?
In contrast, management matters a lot. All your engineers might be more or less interchangeable cogs, but the manager is a force multiplier. A good manager might increase the productivity of 20-40 engineers by 25% each - as such, he's as valuable as 5-10 engineers.
(Having worked with engineers both 1/10 and 10x as good as me, I personally do believe that 100x engineers exist. But assuming you don't believe such things are possible, then engineers being wildly underpaid relative to managers is simply people being paid for their marginal productivity.)
I think you're right about the mental modelling that leads to these market outcomes.
I am perplexed by the weak arguments from sources -- comparing dev work to 9 mothers trying to have a baby in one month? What point are they trying to even make there? My crystal ball is cloudy but I think they mean delivery time is immutable? The other, saying productivity differences encourage lack of communication? That's not even relevant to the exploration of the fact of how much productivity difference there is!
The whole question is somewhat beside the point: I don't understand the benefit of homogeneity. I don't have amazing productive work every minute of the day, heck, I don't have good productive work every week of the year. Making a system that homogenizes output would limit _all_ employees, because we all have times we are 100x better than us at our worst.
And yet, in order to get predictability, we strive to build systems where engineers are cogs, because if things are predictable, targets are met, and managers get their bonuses. But it ultimately doesn't serve the best interests of the business.
Homogeneity in developers is useful in the same way that homogeneity in servers is; it reduces the dimensionality of the problem. Instead of having 1 unit of 20 different resources to allocate, you have 20 units of 1 resource.
That said, sometimes (read: 10-100x developers) you sometimes have only 1 unit of 1 resource. And if you don't pay for it, you wind up with 0 units.
In most companies, business knowledge is key. The more knowledge you have about how the business operates the stronger you are. Beautifully architectured applications are great, but you need to be able to make the right choices for the business, rather than simply complete task from start to finish.
On top of that, managers generally got into that position because they are solid communicators, work well in teams, and have organization skills.
" … because they are solid communicators, work well in teams, and have organization skills."
And, in my experience, because those communication skills result in them asking for more money more often - and having good explanations ready about why it'd be a good outcome for both the manager and the company. Engineers are, to a first approximation, all woefully bad at asking for more money.
But business/domain knowledge is at least as useful for the software engineers as it is for the manager, so I don't quite see how that explains the pay gap.
The answer is pretty simple and has broader implications than an immediate discussion about managers. The answer is people make more money because they have more leverage.
Managers make more because they're seen as having human leverage.
Start-ups can make more because they have technology leverage (think about this has changed with the advent of cloud computing)
Banks can make more because they have financial leverage.
Etc.
Managers are promoted to managers because the higher ups like them, and want to include them in their circle. They have the right face, fit in, agree on similar things etc.
They earn more money for the same reason.
If your are not the sort person, who can surpress your own values to fit in with the right crowd. Its best to just regularly reneogiate your salary.
Humans are humans after all. We run on emotions/friendships/tribes and not pure rationality.(although people like to pretend they do)
Regneogating your salary, is using the market to correct these irrationalities and bad perceptions about where the value is coming from.
Business knowledge comes after being given position where its possible to learn it, not before. If someone wants you as a manager because they like you, they'll find a way to train you.
Also engineering managers are often stuck between a rock and a hard place. Given imposible tasks and deadlines from people above them who don't have a grip on reality, and engineers from below who are saying it just can't be done. Often it is just impossible situations. Its there job to neogiate the team out of these situations.
Its very nice to be a manager when everything's going well. Absolute hell when it isn't.
Possibly because many (most?, nearly all?) engineers are extremely poor at contract negotiation and believe whatever lies HR tells them about how much money is available and how valuable their contribution is.
A possible reason: management career tracks in larger companies are among other things a mechanism for retaining senior engineers; in that sense, the "management" role is overloaded (most companies also need managers intrinsically, to do the management job), and the manager-managers benefit from the premium the company pays the (for lack of better term) vanity-managers.
Granted, I haven't worked for a lot of different companies, and haven't experienced a silicon valley style labor economy. What I've seen leads me to suspect that nobody would want to be a manager, if managers weren't offered more money and social status.
Every case that I've seen where someone got bumped up to management, was right after the birth of a child. Suddenly, their CAD screen doesn't look so green any more. One engineer was lamenting to me his lack of advancement, and I told him that he should become a project manager. His response: "Why should I work that hard? I want my evenings and weekends." I made the jump when my first kid was born.
Management seems easier and more social, but I think it's because the ease and social perks (private offices) are part of the package of incentives to make people want to do it. I was a manager for a few years. It was stressful for me because it was way more political. As an engineer, I could solve problems by innovating. As a manager, I had to solve problems by moving resources from one pot to another, or watching people negotiate over endless minutiae. If a company has a budget, then management is a zero-sum game. That's why it's stressful. Everybody is your competitor.
It sort of depends on what you mean by this. If you are asking why someone who manages engineers is making more money than the engineers they manage a couple of things come into play:
- Frequently engineering management plays a double role, both senior engineering roles (guidance, architecture, big design, project/product management etc) and "people" management (hiring, salary negotiations, compliance, etc). It is relatively easy to argue (though not necessarily correct) that someone with more things to be responsible for, "deserve" more compensation.
- Frequently engineering managers are elevated to that role because they either have aptitude, interest, or experience translating engineering feats into business relevance (ie revenue generation or cost reduction). It is relatively easy to argue (though not necessarily correct) that someone who captures more money for the business "deserve" more compensation.
- Compensation is also largely a market transaction. Managers tend to have more accurate information about both market rates and what the business can bear. This serves them in the form of more optimal negotiations, both in relation to the engineers that work for them and with their own compensation negotiations with other management.
Kind of like asking why those engineers still make +100x more than the workers at the factory in China that manufactures their computers and smartphones.
It's called capitalism and it thrives on inequality. Whoever can be exploited - will be.
Because those engineers produce more value for their employers than the factory workers.
It's not "inequality", it's just a cold, hard, fact no matter how much it makes us feel uneasy. I've seen this opinion a lot with individuals who don't understand that "creation" need not be linked to a physical product, or with manual labor.
Now, if you'd get back to comparing apples to apples, we'd compare those same "engineers" with "engineers" in third-world countries. And then you have to go back and ask yourself WHY companies aren't just moving their operations to those countries so as to make a bigger "cut" from that cheap labor.
Multitude of reasons can be chalked-off to for that. But one of them is government-enforced restrictions on immigration, free-trade and licensing. Both for skills, and of education.
And when you get to that point, you realize that this "exploitation" you speak of would actually benefit those third-world engineers. And the entity preventing said "exploitation" from occurring is the "noble" government. The thing that everyone loves to never blame for problems, but always worships when it comes to solutions, even if the problems those solutions are for are caused by them in the first place.
That's definitely a component of it, yes. But why do they have more negotiating power? For the sake of argument, let's leave out the trail regarding levels of education/intelligence.
I agree. They take on more responsibility for ensuring the business can operate as a business. Just like why sales people get paid more. There is no point in having engineers if they can't all collaborate on key ideas that will steer towards business goals to achieve profitability and long term existence etc.
There's no one answer. Instead, it's a combination of factors that others have touched upon - closeness or influence relative to the decision makers, "force multiplier" effect, good old supply and demand. Instead of reiterating the point, I'm just going to get right in the face of the commenters who think it's unjust that managers tend to make more. I'm just a developer myself, I've never been a manager, but come on, let's not be total a-holes about this.
(1) It's just wrong to measure managers by the same yardstick one would use for individual contributors. Of course people who perceive themselves as the most technically proficient believe that less technically proficient managers should make less, but there's no rational business case for awarding pay on that basis. What managers do and understand might not be as technical, but that doesn't mean it's less important for the bottom line.
(2) You're probably wrong about the technical-profiency thing anyway. Sure, managers might not understand your favorite two-year-old technology as well as you do, but it's highly likely that they know some other still-relevant technologies better than you and have a better "gut feel" for technology overall.
(3) Business sense and general technical judgement are harder to hire for than narrow momentarily-relevant skills. Also, what managers do is often a lot less fun than what developers do. Who wants to spend all day every day in meetings or dealing with budget/personnel issues or balancing long-term development with the fire drill of the day? Thus, even if what managers know were less intrinsically valuable than what developers do, the demand for good managers would still drive up pay.
To flip this on its head, think for a moment about what the world would have to be like in order for managers not to make more (in general - I know there are already plentiful exceptions). Then you would have less technically able managers, making worse decisions, not resolving interpersonal issues, pushing more work onto the team or onto HR. Whee. What fun. Instead of grousing about it, accept it as the way as the world and get on with getting ahead yourself.
Not sure that engineering managers even really make that much more than engineers, at least not at medium or large tech-focused companies. Salary ranges at this level tend to have a pretty large overlap. I've been places where the engineer salary range extended past the manager range. On average, I'd guess managers maybe make 10-20% more. But that's nothing compared to the 10X-100X more that the senior execs and CxOs make. That's where you really have to ask whether it makes sense.
Where I worked salaries were the same, but everyone above line manager generally got a 100% bonus. So while engineers might get $25k in stock, a line manager would get $150k, director $300k, and VP could get over a million for successful projects, CX0's 5-10 million. This makes perfect sense when you consider that management is setting salaries and bonuses. Of course no one out of the loop knew it. Engineers generally got disappeared when the project was over.
A good manager is able to negotiate much more comfortably than your average engineer, and they are able to apply this to their salary negotiations as easily as they can to a feature list.
Another contributing factor is that the upper management is also well versed with people skills, and so they are more likely to get along with, and are more willing to compensate people they get along with better.
The really good ones also act as productivity multipliers for those who they manage, giving them leverage and visibility.
I've had one really fantastic engineering manager (miraculously my first solely programming role, wish I was still there), and I have yet to have another good engineering manager. The degree to which time was spent improving the product under the good manager was phenomenally higher under the good manager than the others. Granted this seems to be rare but a good tech manager can deliver crazy outsized returns on the line developers and also make their days easier.
It turns out we can get numbers for how valuable managers are, and indeed, it is more value than the lower level employees, by a factor of about 1.75. In turns out that the difference in increased productivity is roughly in line with the difference in pay.
It makes sense if a manager is managing a big team of for e.g. 10 engineer and a product. But in a startup environment where there are only few engineers and mostly they are capable of self managing.
However in a startup I think there is lot more work apart from the engineering of the product but not all startups' manager makes more money than the engineer.
May be manager make more money, but the placement security preference would be more for an engineer (i guess)
In my experience in major tech companies, at the same levels of experience there is very little disparity between management and engineering salary.
This leads me to believe that this perception is the result of management being more tenured than the population of engineers. This same reason middle aged people make more than those out of school, and that the vast majority of wealth is held by seniors.
Simply because the boss of the manager trusts that one person with implementing their vision and strategy. Yes, you can have individual contributors underneath that are technically providing more value to the company, but they aren't responsible for the success of the team in the way a manager is. Frankly, that is just worth more to bosses and helps them sleep better at night.
Who is more useful, the guy who is capable of doing stuff, or the guy who is capable of talking other guys into doing stuff? Let's face it: Social engineering may not be particularly visionary and idealistic, but making other people do what you want is all you really need to get things done.
pay is aligned to hierarchy in the first approximation. people have a hard time accepting that they are overseeing someone who has a higher pay and the other way around.
At the end of the hierarchy, skill (& experience/age) counts. Engineering is one of the best paid "worker profession", i.e. you are not involved in managing the work of others.
Some jobs can be easily replaced, which usually means they are paid less.
Some jobs require trust by the employer (e.g. manager) and are better paid, because changing jobs would harm the employer.
Also some industries pay more than others, simply because their industry is more profitable than others.
Not always true. If you are a decent engineer consulting/contracting in a field like big data, data warehousing, analytics etc you will make far more than any manager short of C level.
If you are talking about normal salary jobs then it is simple. Managers take on risk and responsibilities. Engineers largely don't. If an engineer screws up the damage is largely minimal. If a manager screws up then serious money can be lost.
> If an engineer screws up the damage is largely minimal.
> If a manager screws up then serious money can be lost.
You're being downvoted, which is a shame, because you're absolutely right. You can screw up much bigger when you can cause 5 engineers to screw up in addition to pissing their expensive salaries up the wall.
And generally the manager will be held accountable, where the engineers will not, because they were just following orders.
Throughout human history, in all hierarchical work structures, people higher up been remunerated better.
The main reason it is this way is that the organization grows by adding "leaf nodes" at the bottom, as cheaply as possible.
For instance, say you have a business in which you're the only employee, consisting of laying bathroom tiles. You make decent money, but you do this messy work all day long. You want to work less and make even more money. Hmm, what to do? Your options:
- Move to Beverly Hills and be a "tiler to the stars", charging more.
- Get an assistant to work faster.
Usually, the second approach is selected (with the first possibility being kept in mind for the future).
The next step is to let the assistant work independently, while you go to a different site, or work on business activities like advertizing or consulting with customers.
Then, you get multiple such assistants working on multiple sites. Of course, these workers are not nearly as well paid as you are when you do the bathroom, because some of the revenue goes to you (remember your goal: make more money).
The workers are not well paid is justified because all they do is show up to a designated site, and do the work with materials and tools supplied by the company. They accept that if they want more money, they have to become independent, which means doing things like advertizing, consulting with customers and such. Some of them don't even see themselves making such a move.
Okay, so now you have multiple installations going on in parallel and you're not laying tiles yourself so much. You go from site to site during the day, checking on these workers, and from time to time you see they are doing some things wrong and so you teach them the craft. Everyone treats you with fear and respect, and so you think, damn, I want even more money!
To make more money, you expand the organization even more: more active sites at the same time. Now the problem is that there are too many sites. Previously you could visit each site several times a day to supervise work. Then it was just once a day, and now there are too many sites; if you visited them all, then you would spend all day going from site to site.
The solution is to get some middle management: supervisors. Just like you, they are paid more than the individual installers. If they were paid less, why would they do that job, instead of just working as installers? They are experienced installers: they know the craft and can tell if something is not being done right. Yet, they don't make as much as you do, otherwise what would be the point of all this expansion?
So the pattern here is that the bottom-of-the-org-chart installers do not make any more money as the operation expands; in fact they probably make less as the organization grows bigger, though their employment is more stable. They have to work to sustain the overhead of all these additional people.
In other words, an operation expands so that there can be higher levels that make progressively more money.
If you have any salary inversion in the tree, then people will not want to be at that position in the tree. Supervising people is a headache! Why would anyone take less money to manage some people, if he or she could obtain an instant raise just by dropping down one level and joining them?
Salaries are apportioned based on how close a job role is to the company's revenue stream. Executives come out on top because they control the money and payscales. Sales is often second because they can very easily point to new revenues and say "I brought that in". Profit center staff (most Valley engineers) would be somewhere up there because they are at least creating the actual product that the business sells. Support staff - cleaning, office managers, accounting - bring up the rear because they have the hardest time claiming responsibility for a share of the pie.
Within each of those groups you'll see normal salary dynamics based on wider market forces and hierarchy. Engineering manager's gonna make more than most of the line engineers. Comptroller will probably make more than a line engineer too even if she's considered a cost center because she's in a position of relative authority and individual responsibility.
Study questions:
- How close are you to the money?
- How legible are your contributions to the bottom line?
- Could you get significantly more elsewhere for the same role?
- Is management incentivized to retain top-shelf people for your job role?