I've always found it strange that companies don't give raises to current employees. A team I am on just lost a good engineer to another company offering him a $30k+ raise. He would have stayed if our company had even given him half of that. Instead, they let him go, and how will have to hire someone else, probably at that higher salary. So weird, and seems to happen a lot.
The same thing happens when you've been with a mobile/telecom/etc company for a long time. They milk you for every penny they can get and give all the promo pricing to new customers. The pay sales higher commissions for new sign-ups and treat existing loyal clients like garbage.
It really bugs me to have to waste the time to change providers for everything every ~2 years, but I'd feel like an idiot if I left thousands of dollars per year on the table. It's a stupid game, and companies are not immune.
solid comparison. There's a parallel here to the employee/consumer side too.
A telco wants new customers. The way to do it is price, but lose if they cut everyone's price by 20% to gain 10% more customers. So price selectively.
Companies want to hire the most when the market is best (that's why the market is good). That might require 20% higher salaries, but they don't want the whole salary bill to increase. So, they selectively "price" new hires (and usually also people who get competitive offers).
In both cases, this also increases tension. Employees/consumers realize that they can get more if they switch. But switching is effort, and not everyone will make the effort. Not everyone will get completing offers either, so from the company's perspective it will always be more expensive to price match the best offer and offer it to everyone.
Btw, it also works the other way, in bad markets. In bad labour markets, the salary you have is probably better than the salary you can get, and new hires earn less.
Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board.
Overall, I don't think it's that bad a thing. It seems stupid when you're caught in it. Why do I need to change jobs/bank/plans just to get "market rate?" Systemically though, it helps create dynamism.
You aren't supposed to in a job or Telco plan for life.
"Btw, it also works the other way, in bad markets. In bad labour markets, the salary you have is probably better than the salary you can get, and new hires earn less.
Here, the company management hears about low wages their competitors pay and fume that it's impossibly hard to lower salaries across the board."
ohhh, you're a young one, no? Companies do that all the time, by closing entire divisions, calling it "restructuring" and making your above the market salary disappear over night by re-branding the positions. That's how they do it legally. Fire you because your position doesn't exists anymore and hire you again if you want at a lower salary doing the same job with same tools and even same PC/chair.
Many companies have done the sums on this and have dedicated churn teams. If you call and tell them you're planning to leave because you can get a better deal elsewhere they'll often match or better it in order to retain you.
It's a bit iffy since if everyone did this all the time the incentive to advertise low rates gets removed. As an individual bonus, though, it means you don't need to do all the paperwork it takes to change providers.
Most of the time it's as easy as calling and asking the first person you get connect to if you can "speak to retentions". I've always been put straight through.
Some years ago, I accidentally ordered two new phones from different providers at the same time. AS I had a 14 day 'cool off' I phoned one company to cancel, as I didn't like that phone, and they offered me a much better deal. I then phoned the other to pretend to cancel and got a reduction in my bill there!
Take groceries as an example. My sister in law wants convenience. She rolls into Whole Foods on the way home from work and drops $50 on stuff for dinner. My wife is price sensitive... she does coupons and shops aggressively. Last year those savings yields almost $15k.
Over the ~8 years I've been a customer, my mobile provider has upgraded my free SMS/MMS plan from 5 hours and 5GB to unlimited hours and 40GB. The price has gone from ~$15 to ~$20 and that's it.
There's no way for me to get the same plan at that price if I was a new customer.
You are lucky. Sadly, this is very much the exception, although we can only hope it becomes more common. Human nature being what it is, people hate change, so companies can gouge existing users and offer incentives to new users to get them to change.
Recently my telecom has starting sending me regular texts (~3-6 months)
"We've improved our service, you now have X more mb/month"
"We've strengthened our infrastructure, your bill has been reduced from x/month to y/month, if you'd prefer more data you can reply with MOAR DATA to this text and we'll keep you at the same price and give you X more data."
Knowing that I'm continuing to upgrade while doing nothing increases my satisfaction and I haven't even shopped around since I switched to them.
I always call and ask politely for the latest offer to new customers, they always give it to me.
I did find it strange that I went to an energy rate comparison site and my current provider offered met 150 euros to stay for another year. Guess I should also call them every now and then.
I've worked for 5 companies and 3 of them had this behavior. Would get 5/5 on reviews, saved company hundreds of thousands, delivered a flagship multi million dollar in revenue product. Ask for more then 10k and was told to get an offer elsewhere and they would match. Got another job at 30k+ told them to screw off, if I have to apply and go get a job offer to prove my "worth" then I'm just going to go work for another company. Companies have a bad habit of negotiating for negotiating rather then paying for worth. It's because it's hard to track worth and easier just to always bottom out, that and much of non tech centered world still operates like that across the board.
Yeah, that sounds like just about the worst way a company might go about this. They actively send their people to look for new jobs, and only once they've found one, you give them a raise, hoping they'll prefer this toxic attitude over some fresh new job.
Also, relying on the opinion of other companies to determine the value of your own employees is completely backwards. Nobody had better data to determine the value of your employees than you do. Other employers basically have to make a stab in the dark at what someone's worth, and maybe not extend the contract if the new hire turns out to disappoint. As the current employer, you should know how good your people are.
Negotiating raises via counteroffers is a very dangerous practice. The employee will tell everyone how they got their raise (and it will get out), and suddenly you have a much larger problem on your hands rather than a single engineer leaving.
Set up a fair, proactive, and objective way to obtain more money, and never deviate.
Not sure that's true. In most of the country/world local employer don't have salaries in a publicly available database.
And there may not be enough of a tech scene in a city or region to bootstrap such a database easily.(assuming we're concerned specifically with tech/software salaries)
In Orlando we have a Slack group for all the devs in the city and at the end of the year they do a salary / tech survey everyone fills out. Gives anybody in the city a good idea of what compensation looks like. Other cities could build similar surveys if they want to. You dont need a million devs just enough to be willing to pseudo-anonymously answer. Then based on pay by years of experience you can gague how low your salary is.
In the US, the Bureau of Labor Statistics can give a rough histogram of salaries by occupation for most metro areas. I can't ever remember how to find the data though.
I use it as leverage at performance review time. Non-emotional, but “hey I like working here and contributing to the goals of company x, but I want you to know I’ve received an offer for $z. I believe that’s a fair evaluation of my market rate. I’d like to see a commitment from (current employer) that matches that in the near future. Do you think that is workable?”
You clearly need to be someone your manager is willing to fight HR in order for this to work. But it’s been effective for me.
If money is more important to you than the culture/non-monetary things the current job offers, then leave. You can try bringing it up to your manager and get into a higher position, where a raise would be appropriate, but when people try to leverage other positions against our business for higher salary, I deny them 100% of the time unless we are talking about a promotion that makes sense.
This is true generally. But the difference in money has to be appreciable. You wouldn't leave a job you loved for $5 extra per year. You might for $50k.
The people that want it both ways are stuck, generally. You can't like the job you are at and also demand more money if you aren't willing to leave. BATNA and so forth.
While I kind of agree, culture is essential. I have the feeling for some people there is no cultural fit in any company.
While I liked some people at some companies, I never liked company cultures. So I based decision there on the kind of work I had to do and the payment.
It depends how confident / you are with the relationship with your boss. If they are someone you can tell that you are seeing way more money elsewhere, then you may want to tell them. If you are uncertain you could be taking a gamble, but if they are looking to replace you, you may not want to work there anyway.
Lots of places give raises; in fact one place I worked had the specific goal of after 10 years, the top performers should be making about 2x what the "okay" performers do; and the "okay" performers got at least a cost of living raise each year.
I guess such employers strategy is taught at business schools. My ISP or mobile operator also gives much better offer to a new customer as compared to the existing one.
The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less or pay more for a service. Probably this is not that easy to verify, as, for instance, employee might indeed stay and get lower compensation, but would also be less productive (if they fire me, I'll just find something else, probably better paid) and less creative (they pay me less, I have no incentive to improve "their" company).
> The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less
In IT I seriously doubt it since it's so easy to take a leap forward. And it's a huge question who are those people who choose to stay even when they feel unrewarded? If they do it for a fear of change or just being too lazy or unmotivated to bother with it, it can become a huge problem for a company. As those employees hang around and climb the hierarchy such bureaucratic mindset can seriously hurt company's agility and water down everything.
I've heard from multiple managers that offering someone money to stay typically buys another 9 months or so of their employment. They'll soon find other reasons to be looking for a job.
There are, of course, exceptions; it's just a general rule.
This is true if the reason to leave was something else than money to start with. If someone asks a raise because he feels like he's not getting paid what he's worth, giving a raise will definitely help him stay.
Or, if he has regular raises, he'll be less likely to get in the "why am I not paid my worth" mentality.
Typically I've seen companies paying high salaries for newly hired senior developers because the market was favorable, but not giving raises to developers hired in a less favorable time or acquired seniority internally. Those are typically people who left because of money (and rightly so).
It's funny, it feels like this is the kind of thinking that pushes managers to make the wrong decision and refuse a raise to a deserving employee.
I left my last job because of money, and I definitely would have stayed if they'd made a solid offer, probably even if it was lower than what I make now. But although I got great performance reviews and had plenty of internal domain knowledge they wouldn't even entertain the idea.
I believe grandparent was referring to proactive raises.
Reactive counter offer raises typically don't work because the employee's mind has been made up to leave. Compensation is usually only part of why someone decided to leave.
It's a myth spread out by recruiters. They do not get paid when the developer doesn't change job. They'll say anything to get you to leave.
Truth is, counter offers happen and work out. When it's about compensation, not toxic workplace/coworker, or relocating elsewhere to live with your wife/children.
A former manager - and friend - of mine told me that, when switching jobs, former employer made a handsome counter-offer, I think basically doubling his compensation; it was more than he got at the new gig. His reaction? "Now I also feel insulted. So that's how much I was worth to you, but you waited for me to leave before adjusting my pay?"
It strikes me as a reasonable attitude, and one that I've adopted too. I don't have time to be constantly checking the market; if I get a better offer, either you can't afford a counter-offer, or if you can, well, screw you anyway.
Wow. I have never thought about it that way. But now I read it, I will never be able to not think about it that way.
Thanks for that nugget of wisdom.
Personal "fun" fact. I now get about 28% more then when I startet 4 years ago. That is quite a hefty increase and something to be very happy about.
But on the other hand, due to a change in my role I now have insight into how much others in my company doing the same work make. Often with way less senior roles. And I can see, that they got hired at a lower level for about what I make after 4+ years in a more senior position.
So now I feel insulted, because I know - even after having risen in money, that I am still being not payed adequately.
For comparison: I am talking about 1/3 less then others in my seniority level. That equals about what intermediate colleagues two levels down the ladder make.
So I went from feeling being treated good to being treated unfairly with more insights into what everybody around me gets. I love other countries (think Norway) for making this information public, as it gives a clear lever for everybody to demand fair pay.
Your salary information in Norway is not public and never was.
Your taxes paid were public until 2007. Tax paid on the same income can vary up to 2x depending on your personal situation so really it was very approximate.
Since 2008 you can still request personal tax data on anyone, but not anonymously.
> Your salary information in Norway is not public and never was.
While technically true "taxable income" or something was public as well.
For most people in ordinary positions that would give you a reasonable idea. (It would however include everything reported in one lump sum so if you had multiple jobs and/or other taxable income that would show up as well.)
I believe the taxable income also depended on things like skatteklasse you had, one-time tax deductions (e.g. for newly arrived foreign workers), BSU, parental/guardianship deductions etc. So sure, while it would give you a rough idea, using that to compare yourself with coworkers was not trivial.
This wasn't an exact science, but you could get an idea if you were underpaid compared to your colleagues.
On the flip side, when I was younger and tried to refuse to say my current salary the recruiter would point out they would find it anyways, so it wasn't always and advantage.
So that's how much I was worth to you,
but you waited for me to leave before
adjusting my pay?
Doesn't everyone already know that?
I mean, the business benefits that pay my salary only exist from the combination of my efforts with the company's existing business. A marginal improvement in X only makes money when combined with an X business, so of course the owner of the business and the owner of the improvement have conflicting interests about how to share the value.
Um, I don't think it's a good idea to take it that personally.
As a talented professional, you are constantly in the market.
What sets the market price? Market.
Your compensation is not about how much revenue you make to your employer, but what is the market price for the resource (you) and is the employer ready to pay the market price.
When you get an offer that is way above your current rate, your explicit market price suddenly increases. Before you get the concrete offer your market price is likely lower.
Big companies have salary policies that are not necessarily about what your boss would like to pay you. When you get an offer to leave your boss gets more leverage as well to offer you more comp.
"I know what our salary policy is, but this individual contributor would be really hard to replace and his cost just doubled. It's really expensive to replace him. Can I make a counteroffer that makes him/her stay?"
A work contract is a simple supplier-consumer relationship. You are the supplier, and you essentially set the rate at which you offer your work hours.
When someone suddenly offers you the double rate, you should not feel insulted, but you should realize that need to work on rate negotiation skills. Then, if both offers are equally fine with respect to non-compensation aspects, simply take the higher offer.
Suppose you are willing to pay $4 for a coffee, and the café around the corner sells it for $2. Would you voluntarily pay $4?
I don't view myself as coffee - if your employees are fungible resources, I don't want to work for you (99.9% of the cases, there may be exceptions, but they're just that - exceptions).
It was a generic "you" - and yes, you did make an analogy that does not apply since employees are not fungible.
You also present now a distorted view about business relationships - they're about trust far more often than they are about squeezing the best price. That's it really - once I learn that I can't trust my employer to compensate me fairly, that business relationship is broken, and short-term money can't fix it.
My example is about supply and demand, in particular if you are willing to pay a higher price than the supplier asks. Fungible or not doesn't matter at all, the only relevant factor for the discussion is the difference in price you are willing to pay and the supplier is asking.
Indeed, all business relationships are about trust. But they also are about business. I know of no other business relationship where the supplier expects that the consumer will pay him fairly. So what is so special about an employment contract, compared to all other businesses?
> So what is so special about an employment contract, compared to all other businesses?
Oh, this is really easy to answer. For example, the fact that purchaser dictates the price, not supplier - to such an extent, that purchaser voluntarily and periodically decides to start paying more, without explicit intervention from supplier. Oh, and also decides to reward supplier with bonus payments when receiving good-quality merchandise.
But it's not about that - if you think about it, it's probably related to the expectation of exclusivity. Is there any business that is expected to exclusively supply to only one customer? If so, I'd suspect they'd be very concerned about that consumer paying them fairly.
Cool, but then you end up with less money overall.
The smart move is to accept the counter, then keep looking for something better with the negotiating position that you're paid $salary x 2. Better yet, push for a title to go with the salary that'll help you land an even better job.
This is assuming all else is equal. If you're moving on for better future propsects, because the company culture is stressing you out, or because of a lack of trust, it might be better moving on anyways.
But there's no guarantee the new lot is going to treat you any better either, and companies do what's best for them, so there's nothing wrong with playing the same games yourself.
> Cool, but then you end up with less money overall.
Highly debatable, because in the real world you need to do multivariate optimization and most people can't (don't have the skills and/or desire) to be constantly optimizing their salary. Thus, choosing a company that is actively trying to fairly compensate existing employees tends to pay off in the long, on multiple fronts, not just immediate salary.
But you don't really know if the new co is trying to "fairly compensate" you if the old co is now offering significantly more? Did you think your salary was fair when you joined old co? You probably did.
But I learned that they don't care about that, didn't I? Would it not be stupid to ignore this information? I have a chance higher than 0 at the new co...
Right. So it is a world in which everyone is for themselves.
Companies shouldn't blame employees having no loyality then.
Having survived a few rounds of layoffs and saw colleagues let go, I said to myself "On a scale of 0 to 10, I will love this company as much it loves me -- 0".
I think market worth as perceived by the employer is shortened to "worth to you" in that sentence and then confused with how much the employee is making for the company. Every employee should create more value than they cost, for some relevant definitions of "value" and "cost". That doesn't mean they should get paid less (money, total benefits and whatever other vague upsides to coming to work) than what's reasonable in the marketplace for their job and their abilities.
That is exactly the point. I'm not constantly optimizing my salary, so if I do get a significantly better offer, it'd better be because you couldn't afford to make me one that was competitive. Otherwise, screw you, I no longer want to work for you anyway.
I always heard horror stories about accepting counter offers. But I accepted one and it turned out to be a very good decision. I nearly doubled my salary over the next two years and made some fantastic professional connections.
I'd be willing to bet that for at least 90% of people making 6 figures it's not _just_ compensation. For me it never was. I mean, I did make sure that I'll make more in the new job, but I have never specifically taken a job _just_ to make more money. Most of the time there were two things that caused me to leave jobs:
"Compensation is usually only part of why someone decided to leave."
Bullshit. When you have a family to feed and loans to pay compensation absolutely is a critical part of why someone might decide to leave.
Any employer who tries to shame employees into accepting lower compensation than what the market offers by appealing into loyalty or misplaced honor are absolutely just trying to screw the employee over.
Best employers are nice and human, but also totally understand how the market works and are ready to play in it using fair negotiation tactics that involve only financial figures and no confidence tricks.
I think the issue is that feeling underpaid is an issue that grows in importance with time as your spending power decreases and your hard work is not rewarded so that at some point it doesn't matter any more what the company offers.
If you are doing interesting work, are treated well and keep getting regular raises then it's going to be a lot harder to want to leave even if you might be underpaid according to market rates.
Granted this will only work if you are within a certain small percentage of market rate, ~10% and your financial circumstances allow it.
If you pay everyone more that gets expensive quick. Seems like it could be cost effective to give almost rock bottom raises and just replace the people who aren't 100% into it.
Let's say your work is dull, your line manager is a bully that shoots down most of your ideas and then takes credit for the ones that get implemented. All success is due to him/her all failures down to the team.
There is no career path neither towards management nor towards principal engineer/architect
The commute is 2 hours each way and there is a strict work from the office policy.
HR is known to not provide generic references but to ask your line manager to provide references
How much money would it take for you to work in such environment?
The point is that money is only part of what makes people happy, motivated and loyal.
I really, really want my current company to keep giving raises that, if not exactly in line with what I might get if I moved, are at least enough to feel they value me enough to keep me.
Switching companies is a pain, and I just don’t want to keep doing it every 2 years just to keep my career on track.
The general case may still make not giving raises (or only small ones) more profitable - you don't know how many other employees didn't leave despite not getting big raises, it may more than make the difference for the odd person leaving because of it.
Or how long they got that guy's labour at a discount before he wise up & got a better paid position elsewhere. It may have been years of savings by then.
It's very common for companies to give a cost of living raise in line with inflation, which is effectively just maintaining your salary at the current "purchasing power".
Actual real terms raises that mean you can buy more are quite rare, especially outside of tech. Usually the only way to get a real raise is by changing job, either through promotion or by moving to a different company.
This has been my experience as well - if you want to progress salary wise you are almost required to change jobs every ~3 years to get a meaningful bump in pay.
You may need to find a better company or try to do a better job of negotiating?
While it's certainly true that jumping around between companies is an easy way to increase your pay, companies routinely do give significant raises to employees.
(It may not happen often but even 100% increments do occur)
I never had a raise as an employee more than 5%. I only once moved jobs as an employee for less than 50% and I tended to stay for 18 months to 3 years.
I've been contacting for 8 years now, have nearly doubled my rate over that time mostly with the same client and never been told they won't pay the rate rise (number of employee devs who been there longer is zero - they haven't had pay rises). I've probably nearly found the limit without calling myself something other than a developer, or giving up being remote.
Someone told me at the start of my career that dev jobs don't tend to give pay rises and to just suck it up and move every couple of years if you want the rewards. I think they were about right, short of contracting which changes that relationship. It sucks but companies are wired to take advantage.
I see this sentiment often, but I don't quite understand. Inflation has been at <2% for a while, so how is a 5% raise cost of living? It's actually big.
I'm in NYC and our trouble with the subway have highlighted that MTA workers get a standard 6% raise each year as cost of living. But, it's way more than that, and it's actually a salary doubling every 11 years or so, which is not at all in line with overall wage growth - it's huge.
Sure, in tech you can jump jobs every 3 years for 20% jumps (until you're 40), but that also isn't reflective of normality and definitely front-loads early career experiences.
> On November 18, 2017, The New York Times published its investigation into the crisis, with over 1,000 readers having submitted stories about the effects of the past year's subway delays. It found that politicians from both the Democratic and Republican parties, at the mayoral and gubernatorial levels, had gradually removed $1.5 billion of MTA funding. ...
> The New York Times described MTA funds as a "piggy bank" for the state, with the issuance of MTA bonds benefiting the state at the MTA's expense.[16] By 2017, a sixth of the MTA's budget was allocated to paying off debt, a threefold increase from the proportion in 1997. The city's $250 million annual contribution to the MTA budget in 2017 was a quarter of the contribution in 1990.
> This lack of funds was not only due to the gradual reduction of funding. Other actions by city and state politicians, according to the Times, included overspending; overpaying unions and interest groups; advertising superficial improvement projects while ignoring more important infrastructure; and agreeing to high-interest loans that would have been unnecessary without these politicians' other interventions.
I fail to see how any of that has any impact on the fact that the workers get a 6% raise per year as cost of living. That's higher than how much cost of living increases per year in NYC.
While what you said is interesting to read, none of it speaks to that point.
I have not been able to verify the 6% raise per year. What I have been able to find is that the raises from 2010 to 2017 have been in 2-4% range. Here are my sources:
> The contract for thousands of New York City transit workers expires in a few days, and union officials negotiating a new deal with the MTA are seeking salaries on par with other divisions the agency operates.
> The 44,000 transit workers affected by the collective bargaining agreement that expires Jan. 15 are hoping to receive more than the existing 2 percent pay increase,
> A deal reached between the MTA and the Transport Workers Union will give unionized subway and bus employees 8 percent raises over five years — while sparing riders fare hikes.
> “We have a fair wage settlement but most importantly, no impact on fares,” said MTA boss Thomas Prendergast.
> Transit workers will get retroactive pay hikes of 1 percent for 2012 and 2013, followed by 2 percent increases in 2014, 2015 and 2016.
> Despite recent fare hikes and the punishing recession, transit union officials argued that they deserve a 12% hike over three years, partly because city employees have received similar increases.
What is your source for a 6% raise per year? Is it for one year, or over a period of multiple years? Does it include a retrospective raise for a year where there was no salary increase? Does it include an increase in employee contributions to, for example, retirement or health care?
In any case, if it is 6% increase per year then it sounds like the union did a great job in negotiating, compared to previous years where they only managed to get 2-4% increases.
Wouldn't you want to have union representation which is that effective for your job? I would.
The big idea is that it's unlike e.g. MTA workers because in tech, after 3 or 5 years, you're not really doing the same job.
If you've been hired as a junior dev, then the work that you're doing in year 5 is (or should be) worth much, much more that what you were doing in year 1.
What people are expecting isn't a "I'm a bit more effective at my position and have some institutional knowledge, so I'd deserve a bit of a raise", but rather "I was hired at position X. Now I'm de facto doing position Y, so I deserve a salary appropriate to that position", and the appropriate salary to that new position may be 30%, 50% or 100% larger than the initial one. If your company doesn't provide these internal promotions (and the salary jumps appropriate for each tier), then your best people will take "lateral promotions" to other companies whenever they're ready to promote.
You won't hire a senior dev by offering 20% more than a junior dev; so as a junior dev in your company becomes (over the years, and of course not all of them do) a senior developer, if their real (inflation adjusted) salary increased only by 20% over these years, that's not reasonable.
I mean, it should be reasonable for a young person coming to your company at an entry level job to ask about the career path available. In tech (unlike, for example, fast food) they can start with an assertion that as they gain experience, in ten years they would like to earn double of what they'll be earning now as an entry level developer. It's not a given that they'll succeed, but it's likely, and a realistic plan to achieve if they put in the work. And your company (assuming it's large enough) should have an answer about what's the career path and criteria for them to double their (inflation-adjusted) salary in that time, and raises that are 2-5% (so, a bit above inflation) don't provide such an answer.
CPI and RPI don't always reflect real world inflation (don't include housing costs) and they are subject to gaming by the Government by tweaking what is included in the basket of goods.
This is UK based from an off the record briefing from a ONS staff member.
housing, healthcare, food, clothing. How the CPI works is that necessities are mixed with nice to haves. Like large TVs and smartphones. LCD TVs price is down, smartphones price is down (and they will include things like size of the TV or speed of the smartphone to proof it's cheaper even when it isn't). Healthcare prices are tremendously up, food prices are up, yes housing prices are up, they have been going up for 10 years. And the salaries are the same. CPI is an useless metric. If my health insurance was 500 bucks and is 1300 bucks, childcare was 1,100 usd and is 1,500 usd -- what do I care about LCD TV being down? Or being able to get 5 times faster smartphone for the same price compared to 3 years ago?
In the USA the middle class and white collar (middle upper class) now too -- are getting poorer by the year.
Not in the same job role they don't. Not a meaningful amount at least, most times it's barely enough to cover inflation. If you want a meaningful raise you have two choices, play the company's ridiculous Game of Thrones every quarter come promotion time, or go elsewhere. Most of the time it's easier to just go elsewhere.
One of my uncles used to work at a big defense contracting company. He told me sometimes they would give the advise of leaving the company and applying a few months later in order to get paid more money just to do the same work. It is stupid, but some have figured out stupid solutions to stupid problems.
I know some companies have solved this type of problem by computing some "seniority number" based e.g. on date of graduation / years of experience. So person A and B graduating at the same time -> A goes to work for FooCo, B works somewhere else for N years, then joins FooCo, both get the same salary for the same position. I.e. quitting and re-joining does nothing.
Then the mechanism for rewarding high performers is to give them a better position (e.g. Engineer -> Senior Engineer -> Chief Engineer) instead of just raising their salary with the same title.
> ..found it strange that companies don't give raises
Because you'll tell your buddies about it, and they will try to get it too, having you as a proof it is feasible. New hires don't pose this threat to company coffins.
A lot of places would give a raise too, but frequently attached to a fixed raise rates. It's bad too because they'd rather hire a new one than break the rates to keep the experieced employees.
The company's thinking works like this. Your good engineer might have been worth a $15k raise. But once it gets out you can get a 15k raise by just getting a new offer then another 3-4 people will go get offers and asks for raises. This ends up costing the company an extra $60k-$70k to retain your good engineer, and he might not be worth that to the company.
Right... but the engineer who leaves still made that extra money with a good offer. They just had to follow through on leaving. So what happens is everyone immediately finds and accepts a better offer. This is quite literally what happened in a startup I was with. When people talk about "churn" Im not sure they have witnessed entire disgruntled teams paid like 60% market rate (at best) just drop tools because the "mission" of the company wasn't enough anymore.
I would say that an engineer leaving can cost a company much more than the $60-70k you think the company would spend to keep them. You have to:
1) Hire a new person (this comes with costs!)
2) Train the new person (this takes time to do AND takes time away from the team for other tasks)
3) Pay the new person the going rate salary anyway
But on the other hand, churn sparks more churn. So you don't pay your "good engineer" and she leaves. Other engineers start wondering why, and start looking around the market. Another one leaves, and then all of a sudden you have a ripple effect where several people follow suit and leave in a short time.
Or... they think they do. "Current company" is too amorphous. Direct manager and team mates may know value, but it's harder to make that judgement (or to believe someone making the case for it) when you're not in the trenches with that team.
May also be a situation where the new company is actually able to extract more value from the person than the previous company.
There's a lot of assumptions going on in some of the replies here. Old company is going down the pan - regardless of how much value an individual can bring, if the company is incapable of translating that in to market value, you'll never get the raise (and may not have a job soon). New company - taking the same person with the same skills - may be able to extract much more market value from that same person.
That is basically the same thing the poster you replied to said, except from the perspective of the current company and not the new one. The current company knows his performance. The hiring company is making an educated guess from maybe 10 hours of interaction and a resume.
I don't doubt that the hiring company may be able to get more value from the individual, hence offering a higher salary. Market rate is highly dependent on the market, and "Software Engineer" is not a market. The current employer is in a better position to understand the employees current value to the company. They may not be tracking it, but they are in a position that they could probably understand the value of the individual, and determine if an increase in compensation is worth the current value or future value they are getting from them.
When word gets out that the guy got a raise or he shows up in a new car, you’ll have a line of people with hat in hand.
Comfort is valuable to people. About 30% of my people are making significantly less than their market value. Myself included. But, non-cash benefits are powerful as well.
It's not smart business. It's often much more damaging to a company's bottom line to lose a strong performer and have to replace them than it is to pay them what they're worth. It's also damaging to culture when people just start disappearing because they got market-rate offers.
It is worth calling out that compensation is more than just salary however. But if strong performers are consistently leaving your company due to compensation, then you're doing something wrong.
The former head of talent at Netflix wrote a great article on hiring and compensation that touches on these points: https://hbr.org/2018/01/how-to-hire
I'm guessing that on average the company saves money this way, since people aren't robots and tend to develop a sense of community with their coworkers. Companies possibly exploit this for savings.
People have written books on this stuff. There's an entire field of research on this subject and I think tech people discount it for being "too MBA".
One of the most important findings is that pay generally will never motivate employees, but it will reduce their incentive to leave. Generally most job factors affect one of two separate but related scales: motivation to stay and reluctance to leave. Entirely non-surprising that devs are the ones who left because by hard capping their pay you are reducing their reluctance to go work somewhere else with higher pay.
> Entirely non-surprising that devs are the ones who left because by hard capping their pay you are reducing their reluctance to go work somewhere else with higher pay.
The surprising part is that their dev retention (article notes small sample size) of ~3 years matches Google at 3.1 years and surpasses Uber, Dropbox, Tesla, Facebook and Airbnb. [1] That suggests that the culture created by the one-salary experiment increases the motivation to stay enough to offset the incentive to leave.
Well, maybe. Or it shows that they hired people who were relatively comp insensitive, possibly due to being unable to command higher wages elsewhere. Hard to know.
The first comment said that the culture is so good that devs don't leave even with capped salary. The next comment said (politely) that maybe they don't leave because they are for some reason unable to command top-tier salaries.
They were saying this specific company might have a biased group of devs who are abnormally insensitive to salary, thereby removing its value for a generalized conclusion.
If their base salary is decent, then it might not be surprising at all. Determining whether an individual stays in a particular job involves multiple weighted variables. To give an example, once an individual has a base level of financial security, salary could easily become less important than time spent with loved ones. But there are some people who will give the maximum weighting to money no matter what, and companies which optimize for this variable will always need to outcompete all other companies on salary to retain employees. In this case, it's no surprise that their retention rates are relatively low. Looking at the article that you referenced, I notice that the companies with the highest retention rates aren't the ones with reputations as having the highest salaries.
iwantmyname says they've had ~20 employees. You can't compare a company like that to Google, Uber, Tesla, etc, who've got multiple orders of magnitude more employees.
20 employees is down in the range where noise dominates. I’m not sure exactly how many employees are required for statistical significance, but it has to be in the hundreds.
Totally depends on the effect size and the threshold at which you're evaluating statistical significance. If their churn were 10x higher than Google's, 20 employees over 10 years would probably be enough to confirm the difference at a high level of confidence. But if their "true" long-run churn is "only", say, 10% higher than FAANG and friends, you would need a much larger sample to identify that.
N.B.: Even a 10% increase in employee churn is expensive in general, and even more so when your recruiters make as much as your senior engineers.
Depends how senior the devs in question were and how competitive their interviewing abilities were. Junior devs who don't interview well are easier to retain for example.
Also, top companies have a problem because they are top companies. Working there is a signal to other employers that you're top talent as vetted by a top company. That increases the values of offers thrown at you and eventually one may be enough to pry you out.
The title says "here's how long the average employee stays at the biggest tech companies" (retention), but then it goes on to give stats about average tenure.
If your company doubles in size every year, then your average tenure is going to be very low--most people just started recently! You simply cannot use average tenure as a proxy for retention or turnover.
The OP makes the same mistake, which is where I stopped reading.
Note that they're also New Zealand-based - I don't know the numbers but I wouldn't be surprised if average retention there is a bit higher than the Bay Area. (Someone correct me if they have stats that say otherwise!)
I guess it depends on how much of the culture is generated by that point. It could be that the culture could be good _despite_ this, or some other angle.
I imagine that this policy is a consequence of some good internal culture
> One of the most important findings is that pay generally will never motivate employees, but it will reduce their incentive to leave.
Having talked to a crowd of senior people who were leaving their jobs recently, I think there's a lot to be said about money as a 3rd factor when switching jobs further down in your career.
Raising someone pay to match only works when the other factors for their departure are going to be addressed (and there, I've had people tell me "Deciding to leave was very hard and changing it back is even harder").
However, motivating people to perform at their best is entirely independent of that - most of the good people I worked with merely wanted to make an impact and receive the help they need in doing that.
Pay is one of those things, because money enables people - when someone is having a new baby & a salary bump helps her with daycare needs, can be a win-win.
I can see that. A business is in business to make money. If we’re making money and the executives are getting bonuses and raises and I don’t get raises, I’m out. And if you tell me I’m not getting a raise because we’re “family” Im gonna puke on ya on the way out.
Switch the topic to executive compensation, and all of the reasonable research-based arguments about how much does money really motivate a person go out the window.
I've been in the situation where I was able to build a team with salaries 20-30% over market. It was great while things were great, but after the commercial side of the business went to hell, the higher salaries kept a bunch of unmotivated people from seeking greener pastures. Double-edged sword to be sure.
Motivation to stay is being directly excited by the work you’re doing or the thing you’re building. You want to work where you are. If another opportunity comes along you probably wouldn’t consider it.
Resistance to leaving means you’re at a pleasant place to work, the money is good, and you like your job, but you’re not super excited about the thing you’re building. If another opportunity came along you might jump if it’s something you really want to do (this is harder if your current pay is high and job is pleasant).
Think about someone who works at an non-profit NGO versus someone who works an 80 hour week at an investment bank. The NGO worker might only be making $30k/year but he stays because he really cares about his work. The investment banker might hate his job and hate the long hours but stay because of the high salary he'd be unlikely to match elsewhere. The NGO worker has high motivation and low reluctance, the i-banker has the opposite.
The way I think about it is motivation relates to the things you actively enjoy about your job. These are the "here are the neat things I do at my work" type of items.
Reluctance to leave is the sum of things that make you want to stay where you currently when someone else tells you about all the exciting things they do at their work. It's more like friction keeping you where you are.
I think motivation to stay is the positive. Like you genuinely like going to your job.
Reluctance to leave is that even if you don't like your job, leaving is even more painful, maybe due to the loss of salary, or because the interview process is too much of a hassle, or other opportunities are just as bad if not worse, etc.
Right now I'm struggling with whether or not to leave. I'm currently at a well-known company, and I'm uncharacteristically happy because my WLB is the best it's been in my career.
However, I'm getting a bit bored and I also know I could make at least $50,000 a year more if I leave. Hell, even the new engineers joining my company at the same level are making more than I am.
But the culture and pay at my company is just good enough such that staying isn't a horrible decision. And I don't want to start studying dynamic programming again for my interviews (I've never used it except in interview environments, so I keep forgetting and losing the ability to quickly answer questions).
So yes, I could make a nice amount more (plus large sign on bonus) but WLB is good enough to keep me, at least for another year. I pick up my kids every day at school and I love it, it's worth the money for now.
What if you went to your manager, or whoever you feel is the right person, asked if you could speak one on one, and said...
"I really love working at this company. The work is interesting, I love the people, the culture, <one more legitimate pro goes here>. But I also know I could be making X if I went elsewhere. I love the work I'm doing, and I want to keep doing it here, but I also don't want to be leaving money on the table. What can we do?"
This phrasing, pretty much verbatim, has worked really well for me in the past.
I wish I worked at your firm. I once worked at a place and saved them millions in one year. At the yearly review, they said "well, that was some good work". That was the entire review. When I said "how about giving me an extra 1k a year (a bit less than others who had been there for a while were getting) I was told we had no extra cash. Well... wow, I just saved you like 1.5 million dollars. I am not asking for that, even spread out over 20 years I am asking for 20k.
I have been reading HN for years. I have no idea how you people have such nice jobs...
I think it's standard in this industry that you only advance by moving to another company. You can even move back after awhile and they'll suddenly be able to afford you at a much higher rate.
I think what's most telling is what you did after that meeting. Did you quit and go work elsewhere?
Don't get me wrong, I don't think companies should be so short sighted as to nickel and dime employees. But your one true source of leverage is to actually get up and leave.
There's a lot more leverage than that depending on the particulars of the story. It may have been OP that identified a saving that could be made and their leverage is a future unwillingness to identify such things. Maybe they'll stop questioning things and "code to spec" in future. Maybe they'll ignore those erroneous errors they notice throughout the day and wait for a bug report in production.
Companies that don't give raises can expect all of these behaviors.
None of this is leverage. You're wasting your own time at best and will have less achievements to talk about in your next job interview.
Same thing if your next advice is to stop working 60 hours a week and overtime. This was a huge mistake and you should never have done this in the first place.
It's immature to clock in, do exactly what you get paid for and clock out? If the company expected you to do more than that then they would compensate appropriately.
Yes, I did leave. The real problem is: the only method of pay increase is leaving. Well, so now I am the "new guy" every two to three years. I have no real investment in the company, and they have none in me. Right or wrong, is that the workforce that we want to cultivate? I have not been at any company more than a few years because of this (literally, not boasting, I do something great, they recognize wow this person is great, and I receive nothing so I leave)... the problem is that as one ages, this gets old (no pun intended). Job hopping as an old person in an IT/tech field is not pretty, and probably not fashionable.
My concern is, how do new, young(er) people get raises? I would use my time as a cautionary tale... job hopping seems to fine at the start, but as you progress it gets worse. My issue is that I am still underpaid by a long shot. If I stayed at the first company I would still be making 1/3 of what I am now, but I am also making 1/2 of what the "new guy" makes. Not sure where this is all going (on a large scale, not my story), or how this is helping the country/economy.
It's harder to get them to say yes, period, since that requires actual action on somebodies part.
So you might as well make the bigger ask, and then if negotiation ensues you can "settle" and still get more than you would have gotten by asking for a smaller amount initially.
"I have no idea how you people have such nice jobs..."
Crack one of the top 5 companies and you'll be set for life.
Most of them have offices around the world, although engineering tends to be focused in certain US and European cities. They might ask you to move there.
If you have the initiative and skill to identify a $1.5M cost-saving opportunity and execute it, you are probably good enough to work at Facebook (or wherever). Just practice interviewing for a couple weeks. Every class of question you could be asked is represented on Leetcode/Hackerrank/etc.
So I've been at places that literally wouldn't give me a title increase with no monetary benefit. I'd saved them boatloads of money and doing far more than my job description. Upper management had a bonus structure based on cutting costs. Not actually performing the job, just how much they could cut.
I left that place and immediately made nearly 20k more per year, then next job another 25k, then another 20k and I'm now in a job where I get to set my own hours, work from home and get paid stupid amounts of money getting raises and bonuses I haven't even asked for. To this day I have no idea how I've gotten so damned lucky.
Some general things that have helped me, and believe me I started from self taught tech skills, poor people skills, and massive introversion, so chances are you're smarter than I am and able to do just the same if you're willing to put in the work.
1. Luck - not much you can do to get lucky, but you can stack the deck in your favor by making sure you're ready when your opportunity does come.
2. Know what you're looking for in advance. That means the salary, type of work environment, and position you're working for. If you're comfortable where you are position wise figure out how you're going to improve your skill set through either diversification or specialization. Diversification makes you more useful at startups, specialization at mid to mature companies. Being comfortable means you're not growing which means you're losing value from an employee standpoint because you're probably forgetting something every day.
3. Know how much you're looking for. Don't value yourself low. one way I heard which seemed to help was to start saying amounts in a mirror. When you got to a point where you thought it was silly ask for slightly higher. Worst they can say is no and you've lost nothing.
4. Be willing to walk when opportunity comes. Nothing says you're serious like walking away. Let's be honest if you're unhappy enough that you're looking externally, it's probably a sign you're ready to go anyways.
5. Be able to sell yourself. Know your past achievements and be able to show how your past achievements will be able to help the company make more money. Know what the company desires to do, who their current customers are, and what they're excited about. Nothing impresses a new company more than a prospective employee who has done their homework. I've literally had people come into interviews being told they would be asked about the company and been unprepared, they didn't get the job. For your current company, show them how you want to grow into a role that can give them more for the money. Being excited about your company and what they do is genuinely hard to find. Some jobs make it nearly impossible to do so, especially mature or more often dying companies.
6. People skills, people skills, people skills. If you suck at talking to people, get better. Toastmasters is good for speeches, church meetings for general conversations, friends groups, networking events, etc. If you're looking for step by step instructions look into the classic "How to Win Friends and Influence People" by Dale Carnegie. It's old but it's a classic. Vanessa Van Edwards is younger but also provides really great information on learning to read people's body language, something which doesn't come naturally to me. Even if you're not in sales or management read books aimed at them. Chet Holmes is solid for sales information, James Collins for management. Knowing how your salespeople bring in clients and how your management thinks means you can often be the person who is solving their problems before they come up. Good salespeople and managers take care of people who make their lives easier, but they also lean on them more. Just never make the mistake of thinking that because they like you, compliment you, or take care of you that you're their friend. Unless a relationship exists outside of work it's a work relationship. Good salespeople and managers can make you feel great even when they are screwing you over.
7. Start doing good things for other people before they do them for you. If you know someone in your network is out of work and you're not looking but a recruiter sends you a job that you know they might fit, send it along. If someone left a job for different pastures, leave them a genuine recommendation or send them a personal message letting them know how much you appreciated them. People too often don't let others know how much they appreciate good people, and no one hates being genuinely appreciated.
I think I've blabbered on for long enough, but these are just a few of the guidelines I've worked through to get to have an amazing job. Hope you find yours. :)
Those are some great points. I am not going to boast, but I do know most of them, and I was a manager of an IT team at a great organization that gave us proper, informed training, so most of these points are very familiar (we thought about the employee perspective). My current location does not offer any "real" jobs like some previous posters were pointing out (e.g. the big 5 or 10 companies). Oddly, I think getting in now would be very difficult. I was a Sr IT worker, then a Manager of Sr. IT workers, in addition to an enterprise architect. But I am getting older, and I think they want younger.
Thanks, that's a perspective I never got. Shows how lucky I've been at the places I've worked. (Or perhaps, how underpaid I was at the time!)
I should also mention that before these conversations, I had also been interviewing with a few different companies and gotten offers, so I knew those numbers were real and I really, truly, was ready to leave if they said no. But I genuinely wanted to keep working there and be making the salary I knew I could get elsewhere, and it worked out.
Hey. I don’t know you so take this for what it’s worth. But you asked for less than 0.01% of what you saved the company. Every single one of the people who decided you don’t deserve an extra 1K earned more than that because of what you did, either through salary, bonuses, or stock price increases. It’s possible you signaled that you don’t think you’re worth much by asking for as little as you did. Whatever it is, they believe (right or wrong) that you’ll continue to earn them money even if they don’t give you an increase. Don’t let them believe that even if you have to leave to do it.
To add a third perspective where you're both wrong and unlucky.
People on HN do better jobs because many live in the major tech cities, where there are more and better jobs. In big part linked to the big companies and the high cost of living.
In most cases of raises, the employee could have got much better by moving to somewhere else. It's easier to give a few percent raise per year or one time than it is to match the 50-100% raise that high performer could get.
If you change jobs often enough, you will eventually end up in a good company with a good pay, where you can stay.
There is a very simple reason your employer doesn't give big raises to existing employees: they know that a year ago, you were happy with your salary. Why would you want a 30% raise today, no matter what the outside market says? You were fine last month, what changed between you and the employer? Nothing.
Of course, long term, if the market goes up a lot, people will be underpaid and eventually leave. If the market moves up, do use the parent's phrasing. Don't interview (too aggressive). Just state the fact that the market has moved and you want to stay.
A year ago I had 1 year of experience with the company's tech stack, product portfolio and clients. Now I have 2 years of experience. If that isn't worth an extra 30% in value to the company, I'd rather provide that value where it's appreciated.
Sure, after a couple years there are definitely diminishing returns, but the company (mistakenly, IMO) thinking they can get the same value from a fresh hire as from someone who's been there for a while already is what has set up this whole culture in the first place.
The WLB was awesome, good paycheck, good job, really good teammates. But that feeling of knowing you could do way more just by changing job is maddening.
But I had no recognition in my work which was really the worst part actually, for instance, over the course of a year, I increased the team efficiency by 2500%, working on the build/deploy time and feedback loop.
They just told me that they didn't care about tooling, so it couldn't play in my favor for a promotion.
I deserved a raise and a promotion, I complained, during one on one(s), like 10s of them, on the course of a full year. They just didn't care. Basically what they told me, over and over, is that they were already paying the most in the area.
I finally left, for a 40% raise and a job that is way more recognised and enjoyable.
Saying things like "I could make 50k more at blah" seems to be taken so lightly these days. I would party/panic/freak out like I won the lotto if you told me I could make 50k more somewhere else. 50k... do you have any idea what that does to your future earnings? Your 401k/retirement? Hell, even if you live the same as now, sticking 25K in the bank every year is worth a whole heaping spoonful of whatever hell they could possibly throw at you in the new position... but it seems almost daily I read about someone or hear about someone who says "eh, Ill pass on that 20/50/75/100k increase in salary, I'm not into "money"..."
I suppose all of those people already have their million in the bank for retirement... or are independently wealthy. Where do all of those people come from?
The Mexican fisherman story [1] is what it comes down to for me. You can work a little, play a little, and generally have a good time with life and get by (Mexican fisherman), or you can start a business, work long hours, build a fleet of boats that makes a ton of money, and then sell it all someday when you retire, at which point you can work a little, play a little, and generally have a good time. (American businessman).
For me, I make enough to get by and then some. Yes I could work harder, but life is pretty good this way.
The addendum is the Mexican fisherman doesn't have money in the bank if his boat gets destroyed in a freak storm, nor does he have enough to cover the insurance. He's also not taking care of his family or prepared if some oil company drilling in the Gulf of Mexico has a spill that completely destroys his livelihood. In fact the fleet of boats could effectively gain enough money to lobby the local government to set limits on fishing by private boats, setting the per boat fees more than the single fisherman could afford. None of what I've said has no legitimately happened to fishermen. I know it's analogy but the analogy fails on so many levels because it doesn't include preparing for external risks or things you can't control.
Or on the other side, the American businessman has ruined his health/personal relationships by overwork so that he can't enjoy the freedom he bought for himself. Or even more likely, can't bring himself to make the leap into the void and walk away from money, status and security and continues to burn away the little healthy youth he has left remaining working in the job he can't give up.
Not all job that pays more requires you to sacrifice your life. I would even argue the other ways that jobs that pay more usually require less from you, leaving you with more time to be with yourself and your family.
This has been my experience. The more money that I make, the more promotions that I see, even in face of the additional responsibilities, the more autonomy I enjoy.
You’re not living the same lifestyle. Take a few international trips every year or live in or near a tier 1 city, or pay for a nice private school for the kids. Dinner and drinks out at non-fancy places is easy $100/person in a big city, vacations are $2k+ per person, private schools are $20k+ easy.
I was in a very similar situation at the end of last year. Young kids and a work life balance that couldn't be beat. Had a couple expenses pop up that aggravated my irritation at being underpaid to the point that I looked for a different job. Calculated out how much I thought I'd need to offset the work-life balance bit, and went out and got an offer for that amount. Actually accepted the offer but my employer said they'd match that offer, which was a much better outcome for me given the work-life balance part. I figure if it doesn't end up working out, the worst case scenario is I'll feel comfortable asking a higher salary next time I am on the job hunt. For now I'm living in the best of both worlds.
I basically said, "Hey, I got this offer that is 50% more than what you're paying me, and I plan to take it." At that point I won whichever way things went down.
I really wish people could stop using so many acronyms in general. Even though it usually is possible to guess, or in worst case google, the meaning, it always slow me down. I didn’t immediately understand WLB and I don’t remember seeing ETA meaning anything else that Estimated Time of Arrival before.
It just doesn’t take that long to write out the whole words.
What happens when a skilled and very hard worker gets the same raise as someone who's not as skilled and not working very hard?
For example if the skilled one solves the hard problems the less skilled one cannot solve. And if the lazy one spends a bunch of time on facebook.
It isn't about the salary in absolute terms. It's about recognition and to be appreciated for the good work he's doing. But instead he gets the lesson that it doesn't matter.
Now there are two options:
1. Get a new job
2. Stop working so hard and stop caring about the work you do
Both are very bad options for the employer. This can only work if everyone are of similar skill and motivation.
It's interesting that apparently this effect you describe doesn't seem to apply just as simply as we'd expect, however convincing it sounds.
At least according to the book "Drive" by Daniel Pink (2011), for any cognitively demanding work, financial incentives have a counter-productive effect. People literally become less smart by dangling the money carrot in front of them.
I guess that wouldn't imply that people being just plain lazy are accepted, but I feel that's a different discussion.
The book concludes with recommending that cognitively demanding work should be rewarded loosely adequately, and then get the whole topic out of sight, in favor focus on the interesting work.
If the raise is "good" (well above inflation, at least as good as market rate), then it doesn't matter. Other motivations (pursuit of mastery, desire to do a good job etc.) have a more powerful effect than competition.
The problem comes when the raise is "bad" (at or below inflation, below market rate). At that point, the feeling of being undervalued kicks in and can have a more powerful effect than other motivators.
It is the difference between feeling like you are being treated like the best employee vs. feeling like you are being treated like the worst employee.
In a customer service job, I was once scolded for not doing someone else's work (in another department!) after finishing my own work early. I had been trying to go home early because I had a test the next day. I finished 15 minutes early and was on the way out the door when I was told to do someone else's work who had sat around most of the day.
I refused, and was called into the office the next day with 3 managers. By the end of the meeting, I told them that I would "work at the same, slow, plodding pace as all the rest of the workers and this situation will never happen again."
They actually accepted that as a success on their part. Amazed, I left the office and made good on my promise for the rest of the time I worked there.
This hurt to read, got hosed on my last performance review/raise because my supervisor threw me under the bus for things he never voiced as issues when HIS boss started asking questions he didn't know the answer to (because I do all the work).
Got the same raise/bonus as someone he referred to as "retarded", so I've been working on #1 because I've already caught myself doing #2 because even after voicing concerns and trying to fix communication issues, management hasn't changed at all.
The shitty part about #2 is that a lot of times you don't catch yourself doing it at first. It starts off as just having a bad productivity day, then you stop caring about busting your ass for a deadline because it's never recognized, then you stop trying to chase after people to answer your emails despite getting told that, rather than programming, I need to reply faster...Slippery slope of apathy. I think I liked my job at some point.
Yikes. Even if I had gotten a huge raise, 25% or higher, if I heard my manager say this I'd be looking for a new job that day. There's no way that person is fit for their position. If they're willing to say that about someone in front of you, you have to assume they're willing to say the same thing about you in front of someone else. The point being that that behavior is very toxic, very unprofessional, and is nothing but a giant red flag to get out.
In the same conversation, he said "You're friends with <coworker> outside of work, right? Look, don't tell him this, but we can get 10 of him, we can't find many of you" then still gave me a 2.5% raise. I literally don't get what sort of person you have to be to confirm that someone's my friend, then proceed to shit on them in a professional setting. Head of the department (his direct boss) was sitting there too. The co-worker in question has basically been single-handedly tackling security and busts his ass, but luckily his supervisor isn't terrible and goes to bat so he at least got the raise he deserved (he's still looking for other jobs too, don't worry).
Been looking (not as hard as I should be) for a new job since that review, unfortunately being stubborn about staying in central New Jersey isn't doing me any favors. Just trying to maintain my sanity in the meantime while I look around :/
That's honestly insane. I mean, you know that people like that are a dime a dozen, and that they're obviously out there in companies all throughout departments as rank and file and in management and executive positions. I guess it's just a little bit extra terrifying to wake up one day and realize it's your boss, and from what you're saying it's his boss, too.
> unfortunately being stubborn about staying in central New Jersey isn't doing me any favors. Just trying to maintain my sanity in the meantime while I look around :/
I know that all too well. I'm not dealing with managers who are as outwardly assholish as you are but there's more problems than solutions where I work. My current flavor of employment handcuffs are a full-time remote position. The job itself isn't that bad, but I'm underpaid and overworked. The full-time remote plus the little bit of autonomy that I have in my work keeps me from looking too hard. Complacency, by any other name.
A team of equally skilled and motivated people is bad as it can not achieve more than any individual in the team, the less skilled and less motivated should be removed.
A team works best when its different people with different skills and different motivations as they can achieve more than the sum of their parts.
The developer feels they are the one making the product and brining in the money for the business, obviously they contribute more than the janitor.
The janitor feels they contribute more as they shove their hand down a toilet to unblock it while the developer sits in a comfy chair on facebook.
How do you quantify the contribution of two different jobs? Salary is often used to justify contribution but generally based on supply vs demand it has little to do with contribution.
As an economist, you'd expect them to have trouble attracting highly skilled people seeking only wages.
On the other hand, also as an economist and from my own personal experience, there's a whole host of non-monetary benefits a flexible business can provide (which other businesses and corporates seem to balk at), and there's also the little talked about preference of some people wanting a negative correlation between pay and hours the job at the margin.
I've got my own stories. Issues I've had at previous employers include remote working, flexible hours, leave, intellectual property disputes over my own work, or non compete/ non publication issues.
When I left my previous job at banking, I actually interviewed for a lower paid position at uni of Melb. We got to the stage where we were all happy, only I said "I'll work for you if I can do 4 days a week, because I want to send time with my family and working on my own projects".
The bureaucracy said no.
I walked away and I'm back in a higher paying job again...(but with better hours and conditions than my previous ones).
Its always amazing to me the lengths businesses will go to in order to not hire the right staff...
In the Netherlands, if you have a child under 9 years old (it could be 8), your company is required, by law, to let you work 4 days a week if your want. It's actually really common with something like 28% of working men taking a "papadag" ("Daddy day" in English).
I wouldn't even consider a job that didn't allow me time to spend with my kids. Money is definitely not the primary driver for a lot of people.
80% of a good salary is still good. I have rejected one job recently because it turned out they were talking about a full-time salary while I assumed it was for my normal 4-day work week, so in the late stages of the talks, salary suddenly dropped 20% from my perspective. It wasn't the only problem with the job (it was a bit further away than I'd like), but it was the drop that made me look elsewhere. (I'm now doing something similar that's closer and pays better.)
I don't think a 4 day work week is 20% less productive than a 5 day one, but generally 80% of a full-time salary in this line of work is still more than enough.
No, there’s some confusion here. There are two distinct benefits you are entitled to when you become a father.
One is that you get exactly 1 week of paid leave.
The other is the right to take 26 weeks of unpaid ‘parental leave’ during the first 9 years, which is often used to e.g. start working 4 days a week (the leave is used at a rate of 1 day per week then; you could also use it for taking half a year off at once).
My wife's job pays 75% percent for parental leave days, but that's not a requirement.
Personally, I only apply for jobs that let me work 4 day weeks permanently; I hate having to count how many days I've got left for whatever. (It's the main advantage of being a freelancer to me: no limit on how many vacation days I take.)
>Also, it's pretty wild that you are effectively entitled by law to a 25% increase in salary if you have a child under 9.
That's incorrect. It's at a reduced salary.
If you're on a permanent contract and if your full-time function isn't in some way demonstrably critical to the business, you're also entitled to work fewer hours if you want, unrelated to children.
It's one of the reasons why the Dutch are world champions at part-time work. Most women work part-time, and quite a lot of men do too. Not even just for kids; my brother is single and has never worked more than 4 days a week. Gives him more time for his hobbies.
I was thinking the same-- I wonder if they compensate the more market-desirable engineers by giving them more freedom / spare-time than support people get.
The article justifies the higher-than-market wage their support folks get, because it helps retention and their support people do a lot more than support. That's fair justification for paying over-market for support people, but it still doesn't seem like justification for a salary that's exactly the same.
And I agree that it's silly how companies won't offer 4-day or more-time-off as part of an employment agreement. I'd be seriously interested in a job that allowed me to take extra unpaid vacation time.
With the average labor-leisure curves of most people being an inverted c-shaped, I would be more surprised if it wasn't beneficial for most people to choose improved life over pay.
All I want is the ability to get compensated for benefits I decline, particularly the company health plan. I've never been able to negotiate this successfully.
Considering how benefits are usually financed by employers I doubt that you will ever be able to get this. It's not as simple as "oh we won't need to pay $10k for your BCBS? Well, sure, let's give it to you".
Employers usually pay insurance ("stop loss") instead of health plans.
I believe that this is not possible in America. I'm a founder and we just started offering health benefits earlier this year. I tried really hard to figure out a way to let employees effectively pay 100% of their premium (either by paying them more if they opt out or just having the company share be 0%). I talked to a number of people, looked into different types of plans (HRAs, etc) and at the end of the day, I couldn't figure out legal way to do what you're suggesting.
I think the closest possible thing to this is for the company to offer to pay 50% of the cheapest plan possible and then let employees opt-in to better plans, add dependents, etc. at their own expense. That way the majority of the expense is "optional" to the employee, but whatever the company pays still isn't.
Note: this only applies to health benefits. We do compensate employees who decline other benefits e.g. a parking pass
Even if you had found a legal loophole to do this, just about everybody is going to want health insurance and I’m pretty sure if the company pays then it’s not taxed, plus you can get better rates that way as you get bigger. So it’s more expensive overall for the same plans if you make employees pay.
The tax benefits and better rates (which I think is a myth btw, but it shouldn't effect the argument either way) would be there regardless of who pays. It's still a group plan, the question is just about who is paying for it.
So given that, the difference between "we offer free health insurance" and "we pay you extra and let you opt in to health insurance" is purely academic for someone who wants to be on the group plan. Both the company and the employee end up with the same amount of money in the end, and the insurance is the same.
The reason I'd prefer letting people opt in is because it gives employees more choice. Maybe they want to use a different carrier. Or they get free insurance through their spouse's work. Or they're on Medicare. At the end of the day, it seems really paternalistic for a company to say to its employees "here are the things we want you to have, and instead of letting you choose, we're just going to buy it for you." All else being equal, I prefer a world where employees get money and spend it how they want.
Having said that, since there's no way to do that while also getting the convenience and tax benefits of a group plan, we decided to compromise and go with the employer-subsidized group plan rather than giving employees total freedom.
All the more reason to negotiate for the thing that you care about (that my W-2 box 5 says $200K at the end of a full year) and not whether you'd get more because you skip a given benefit or less because we notice that you really hit those Friday donuts pretty hard.
IMO, it's more productive to negotiate for what than for why.
Often times $10k is the difference between me accepting job A vs job B. So it would be better for the potential employer to offer that flexibility.
I also have an "icky" moral feeling about being tied to my employer via something like healthcare. So all other things being equal I would choose the company that offers this option over one that doesn't.
The first bullet point of the top comment from 5 years ago begins "As the company grows,...". The company has N=20 employees now. How many did they have 5 years ago? N is extremely low for making any generalizations, and it certainly isn't growing like a startup (in the sense Paul Graham uses the term).
Case studies are not irrelevant, but it's generally a bad idea to generalize from them without strong reasons. It's more like "Here's an effect I notices in my one-off example. Keep an eye for that to see if you notice it elsewhere."
> To me, the ideal workplace is one that lets me enjoy my own life… not one that tries to merge with it.
I don't think I can overstate how profound this is. I've worked for a couple of companies that tried to sell themselves with "You'll be part of a family", or "We do all sorts of department events". It always means the same thing: "We want you to stay in the office as long as humanly possible and we'll treat you strange if you want to work from home instead of commute 1.5 hours to the office every day."
Unfortunately, the "family" mindset seems to be growing more popular in many sections of the software industry.
If a job doesn't require physical presence in order to completed to a high degree of quality, remote work should not be treated as a privilege.
What's strange to me is that in most tech companies, having employees work remote could drive expenses WAY down considering that the company would not have to rent/lease/buy any office space, desks, coffee machines, etc. It also means that they will not need to pay an office manager or janitorial staff.
The approach seems fanciful - especially if applied to organisations with more diverse roles - for example would they really pay a janitor the same as a top level developer? The cynic in me feels the fact they don't have a broad spectrum of roles (20 total employees); the organisation is engineered to not be disparate in terms of expertise. More cynicism: most "lowly" roles would be outsourced to service companies and conveniently sidestepped.
I wonder how much of the perfect retention for non-developers is because of "gold-plated handcuffs"? It would obviously be nice to make X% of the market rate for your position for X >> 100, but it would not be nice to have to take a (1 - 100/X)% pay cut if you want to leave the company for whatever reason. Lots of people can't afford to take a substantial pay cut because they align their recurring expenses, particularly housing, with their salary.
Also, it's interesting to consider how much this would force "bullshit jobs" to be automated, either internally or through SaaS offerings. Note that "bullshit" != "traditionally low-paying" - customer support roles, which are crucial but traditionally low-paying, are the obvious counterexample.
Yeah, I have definitely noticed this... when I was younger, I felt a ton of freedom, knowing I could get another good job easily if the one I was in went south. As my career advanced and I kept making more money, I started to realize that there were fewer and fewer jobs available that could pay my salary.
Someone who makes pinwheel trinkets sold in a dollar store simply doesn't deserve the same compensation as, say, a skilled machinist. That's not my personal prejudice: the free market for the labor end products themselves decides that by pricing them differently.
When some workers with different skills are paid the same under the umbrella of an organization, it's shielding them from these market effects.
This concept simply cannot scale to an entire economy.
If you're paying everyone the same, you're implicitly saying you will not produce anything as valueless as pinwheel trinkets (at least not via a dedicated employee.) If your company needs pinwheel trinkets that badly, then it's probably worth paying someone a comparable rate to provide such a necessary service.
The article says that the top 10 % for software developers in SF is $136,000 (and they state that this is low). I thought that the top 10% is around $200k of compensation? Am I wrong?
$136k base, other incentives are usually at least $25k. After a few years experience $180k - $200k base is more common. I’ve been offered that a few times and everyone I know makes more than $136k base after some experience
You are correct, $136k is barely above entry salary, $200k I would say is the higher end of average for senior+ devs, salary only, not including bonus or equity.
yeah although people want to know "how much do people make" or "how much are people paid"
they - and the sources they find on google - quickly conflate income, salary, compensation while also having wrong and old aggregated information for all of it
this works for most people's fields, doesn't work for tech.
Base salary at the bigs starts around 150 +/- 10%. Total comp packages take your actual W2 income way higher, though (50% signing bonuses, regular old bonuses, RSU grants around 75% of base salary a year).
> the average software developer in Wellington NZ makes NZ$64k. We pay more than that, but when you become a remote company, people start looking for the $134k USD
These are two different scales, so for help I will normalize them:
"Skilled IT candidates are in high demand across the country and employers are offering more to secure talent with a 3.1 per cent increase in average pay to $110,657"
There's a lot of grads and intermediate developers dragging the average down. Also, Wellington has a lot of services companies that pay as close to the bottom of the range as they can get.
Fascinating! Thanks so much to the company for writing this followup -- every year or so I've wondered how this company was doing and if the experiment was still going. It's heartening to learn that it is.
I love iwantmyname's service. Super easy to use and been using it for years. One question I have is, does everyone have equal equity in the company there? And if not, does this not count as additional comp besides salary? Also, it would seem to me that this becomes less sustainable the larger your team gets.
Looking at the Companies Register the answer is no, employees do not get equity. That's likely due to how equity-based compensation is treated in New Zealand tax law. It gets complicated so it'd be unusual for a small company to do it.
yep, the biggest NZ startup - Xero - gave equity to all full time employees. The difficulty is accounting for it due to how income tax is assessed on stocks which makes US-style stock options unattractive. Most companies that offer stock do it through a related-party loan and a bonus to pay that but there are interesting tax implications.
Probably, but it's not obvious how to write software that gets that right, i.e. finds the interesting links that a human would find via searching, while omitting the uninteresting or unrelated ones.
Aside from pay, I find the anti-hierarchical aspects interesting.
How people interact in a small business is surely different than in a larger business, so I'd guess small business is more inclined to need a culture of "we're all in this together".
I think that "everyone is as important as everyone else" is in tension with "the market rate for developer and support roles are different than our flat salary".
I think they're right about some of the negatives about "traditional performance reviews and salary negotiation". But I'd be cautious about whether "everyone is as valuable as everyone else" brings more problems than it solves.
Yeah, I have a really hard time seeing how this would be a nice culture to work in. Everybody is clearly not as valuable as everyone else, and it seems pretty inevitable that people would come to resent each other and stop working hard, if you’re just as valuable whether you do amazing work or mediocre work.
I don’t think this can work on a larger scale. If you pay a doctor the same as you pay a medical technician, who is going to go through 4 years of med school? Some sure, for the love of it, and those will be the best. But we already get those. It seems to me that this company can exist, because everyone else has created the market that creates more developers. If everyone else did the same, everyone would already be scrambling for just as many devs out of a much smaller pool.
3. I’m not sure how the accounting would work, but if we kept the salary the same and tied it to a quarterly bonus structure based on company profits, it could create a more direct link between short-term productivity and income. (That’s not really a fundamental change though… more like a nudge.)
Don't do this. This is the first step towards stack ranking and your 2nd-best developer walking out the door. Followed by the new 2nd-best after that.
I've never seen it tried but I think profit sharing should be allocated along salary share lines. So if you pay 20 employees an equal salary they should all get an equal share of the dividend. If an employee is actually paid, say, 7% of the total salary pot then they should get 7% of the dividend and everyone else would get their %-age share correlating with their %-age of the salary share.
If any rock stars feel they're owed "their fare share" since they did more contributing, then they should negotiate a mutually agreeable salary or find another employer who values them more in line with their expectations.
I'm aware that successful pro athletes expect individual performance bonuses. As do successful Large Company" employees. Whether this is just survivorship bias in action or not, I'm not qualified to say.
I think it is supposed to mean that they do not want to institutionalize that some people are more entitled than others.
It's about basic human values, not about the organization. Of course, some people will be coordinating and some people will be more important than others for the organizational well-being.
Exactly. A power structure will always exist, and it's generally better (or at least fairer) when it is at least explicit and relatively transparent as opposed to implicit and hidden.
They can say all of the feel good stuff they want. I always have the same question - are there outside investors? If there are, by definition the entire purpose of the company is an exit strategy. Statistically, that exit strategy is to be acquired. As an employee without equity you should have no loyalty to the company above getting a check every two weeks and doing your best work during those two weeks.
The owners of the company are concerned with maximizing their returns - you should be also.
The “lifestyle businesses” are the only ones where I believe that there is any chance of the founders being truthful that they want to “have a different type of company.”
While I’m somewhat sympathetic to your point in general about loyalty, I think you’ve missed the point by a lot. This is more than “feel good words”, this is a concrete set of actions about compensation that affects how much money gets paid to whom. In the world of business it doesn’t get much further from “feel good words” than that.
I would also advise caution about loyalty for equity. Bery few startup employees are paid enough on exit event—if it ever happens—to compensate for the time, stress, and loss of wages that they incurred over a non-startup job. Most people would be statistically better off not working for equity, and just accepting cash.
Investors rightly want to get returns on their investment. That doesn't mean that the goal of the company is an "exit strategy." It means that the company needs to work towards a way to pay the investors the return agreed upon. Getting acquired is one way to get the investors their returns, but it could also be an IPO or another larger investment.
On loyalty, this really comes down to treating people how you want to be treated. If you always go to the wall playing hardball with a company, generally they will do the same to you.
The company in question is a domain registrar competing mostly on good service. I'm sure it's a profitable niche, but it's not the kind of thing that's aiming for a giant IPO or is likely to attract acquisition interest from a FAANG.
