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A lot of these issues only arise if you're assuming you need to create some sort of master pay system that is "fair." We all know in practice that decisions lik
by dmd149 11y ago
A lot of these issues only arise if you're assuming you need to create some sort of master pay system that is "fair." We all know in practice that decisions like pay can be based on the environment at the the time of hiring, or other random variables.
For example, an engineer may get hired at a time when there is a high supply and relatively low demand, and is only able to negotiate a salary of $100k. 5 years later, because of the relative shortage of engineers, a junior engineer is hired at $130k, while the the more senior engineer is now only making $120k.
Of course, trying to come up with a master system to adjust for something like that will be impossible, as this article points out (using a hypothetical move from a higher cost location to a lower cost location). The company will not adjust the senior engineers salary until he puts up a fight and comes in with competing offers.
What this suggests is perhaps that the most effective and fair system is no system at all, one that remains dependent individual actors (or businesses) trying to get the best deal that they can for themselves. This is, in practice, what is happening now, but we wouldn't have any expectation of every company trying to create some sort of formula to determine what is "fair."
This means sometimes that you will be hurt by environmental factors (say you quit or get fired in a down market in your field), but other times you may cash in (maybe the senior guy at your company quits and you have the opportunity to leverage that into a much higher salary for doing his job).
Trying to make some master system that is "fair" and will work in all circumstances just seems silly. The market is perhaps a good arbiter of value on a broad scale over long time periods, but in more localized environments and shorter time spans, it is far more random. Thus, the best personal system in my mind is one in which we can take advantage of the randomness when possible, and learn to handle the inevitable downsides as well.
- sokoloff 11y agoI largely agree with you and think that fair is where you get cotton candy. However, employers who wait for their engineers to squawk and bring competing offers are playing a dangerous and inefficient game, IMO. I've absolutely given raises when the local market put my long-time employees under market. (And sometimes the way you find out is a competing offer, but if you're hiring, you generally know the market.)
- dmd149 11y agoSure, but again, that is a highly localized decision based on your judgement. There wasn't a formula that said you should give raises once market rates exceeded your payroll by x percent. I think tactical moves like the one you made are great. On your other point about companies being inefficient, I think we should stop worrying about whether employers or companies in aggregate are being efficient. In fact, I want them to be inefficient. It gives people more opportunities to take advantage of inefficiencies. I suspect we have some sort of bias in which we apply fairness rules that are good for individuals in a community and apply it to "the system" which is not just a scaled up version of individuals interacting which either. We like to think big companies operate as a unified entity, but really, there's a lot of shit going on under the hood that may lead to very weird "irrational" decisions, many of which an individual could take advantage of. Generally, I just prefer people to be more opportunistic, rather than trying to make sense out of non-sensical systems.
- NateDad 11y agoIt's this kind of thinking why I have left several jobs and immediately got a 20% more money at my next job - the company I was with didn't keep up with market rates. It's ridiculous, because my knowledge of their software makes me worth MORE than someone with the exact same skills and background who is new to the team. It is this short sighted "try to save 20k a year" that causes so much turnover at companies. If you have a good engineer, give them raises constantly, or they'll just leave for a new job that pays them more. The 20k you might save is WAY less than what you'll pay to get a new dev who doesn't have nearly the same institutional knowledge as the one you lost.
- dmd149 11y agoI think it's great you were able to get 20% pay bumps just by moving. Are you saying this is a bad thing? Did any of those companies end up being a better experience than the companies you had just left?
- NateDad 11y agoI'm saying it's bad for the company. They lose my institutional knowledge and have to pay the costs of getting a replacement, simply to try to save a relatively tiny amount of cash by not paying me more and hoping I don't notice.
- dmd149 11y agoIt's true they lose institutional knowledge, but it's possible they get someone better to replace you (you in the general sense). I think these shake ups are generally good for an industry as a whole, even though it may (or may not) be good for any individual company.