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There's a particular failure mode that bears pointing out with regards to compensation: Suppose you have a person you've brought on, and they agree to do some

There's a particular failure mode that bears pointing out with regards to compensation: Suppose you have a person you've brought on, and they agree to do some amount of work at a salary and tiny equity split. After some amount of time, they realize that they've produced a good deal more value than you have compensated them for. They're going to feel jilted. It's not enough to say, "We'll take advantage of you less in the future"...you might have to say, "Wow, okay, we screwed you, how can we make this right?" And sadly, the optimal capitalist strategy is to just lay them off and enjoy the surplus they unwittingly made for you.

protomyth 11y ago
"And sadly, the optimal capitalist strategy is to just lay them off and enjoy the surplus they unwittingly made for you." Maybe for a dumb capitalist. The optimum strategy is to pick a level of compensation that works for them and you while realizing there is a transition cost to new people and talent is worth something.
- forgottenpass 11y ago
  No, the optimum strategy is to determine if compensating them to a mutually agreeable level is more or less expensive than losing their expertise and rolling someone new in. Just because parent said optimal strategy is to lay them off doesn't mean you have to act like that's _never_ going to be the case. For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy.
  - protomyth 11y ago
    > Just because parent said optimal strategy is to lay them off doesn't mean you have to act like that's _never_ going to be the case. I thought it went without saying that you cannot force someone into an agreement. Agreements sometimes don't happen and then you pay the additional costs out of necessity. > For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy. That might be someone's interesting play, but I think it is a poor strategy because it shows your employees and anyone else you are going to make agreements with that you are of the duplicitous sort and cannot be trusted. This will affect your long term prospects in a negative way. Never mind its a pretty poor way to go through life. Strategy should be thought of as long term.

protomyth 11y ago

"And sadly, the optimal capitalist strategy is to just lay them off and enjoy the surplus they unwittingly made for you." Maybe for a dumb capitalist. The optimum strategy is to pick a level of compensation that works for them and you while realizing there is a transition cost to new people and talent is worth something.

forgottenpass 11y ago
No, the optimum strategy is to determine if compensating them to a mutually agreeable level is more or less expensive than losing their expertise and rolling someone new in. Just because parent said optimal strategy is to lay them off doesn't mean you have to act like that's _never_ going to be the case. For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy.
- protomyth 11y ago
  > Just because parent said optimal strategy is to lay them off doesn't mean you have to act like that's _never_ going to be the case. I thought it went without saying that you cannot force someone into an agreement. Agreements sometimes don't happen and then you pay the additional costs out of necessity. > For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy. That might be someone's interesting play, but I think it is a poor strategy because it shows your employees and anyone else you are going to make agreements with that you are of the duplicitous sort and cannot be trusted. This will affect your long term prospects in a negative way. Never mind its a pretty poor way to go through life. Strategy should be thought of as long term.