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"I view the stable/equilibrium compensation level as between 20 and 45% of the value created for the company. Want to get paid more? Create more value. I'm idea

by dmak 11y ago

"I view the stable/equilibrium compensation level as between 20 and 45% of the value created for the company. Want to get paid more? Create more value. I'm ideally paying for output not effort. The obvious problem is that you can't easily put a dollar value on the contribution of engineer A vs B or engineer C vs project manager D vs product owner E vs manager F, and if you survey people for their personal contribution and add it all up, the sum will be a significant multiple of the total enterprise value created. Even with these challenges, I think it's usually clear how to find the rough buckets of "well above average contributions", "average", and "below average contributions" Exactly, quantifying and justifying the value that you bring is difficult. Could you give me an example? I know this question will depend on person to person, but how aware are managers of the value you are bringing them?

sokoloff 11y ago
The easiest ones are solo (or near-solo) projects for cost-avoidance measures, so the easiest example for me to give as an example is "By my project, I cut our AWS spend by $40K/month perpetually." Unfortunately, cost avoidance projects don't actually help most companies all that much (as revenue growth is more important and I'd rather have $40K more operating income from revenue growth than from cost avoidance). You also are competing against a baseline. (Maybe a consultant could have saved us half of that, or "Yes, this year's contract for bandwidth is $50K/month cheaper, but the industry baseline also fell by more than half of that, so what was YOUR actual contribution?") For revenue growth results, those are more often many person projects and "results are more distanced from activities", which makes it harder to quantify an individual's contribution. In cases like that, I look to the project overall results: did it ship, was it well-received by paying stakeholders, did it ship at an appropriate time, with appropriate features, did it sell, and then within the team to understand who the key contributors were. That last bit mostly comes from peer review process, as the project team worked together for far longer and more closely than I did, and the project team is the primary unit of success/failure. You won't get far arguing to me that you should be paid more because you were a crucial contributor on a failing project. (One exception is if you were the crucial contributor to argue why that project should have been killed.) Likewise, there are people who are consistently associated with successful projects, even if I can't figure out precisely how they contribute. The team likes them, reports them as helpful, and the team with that person delivers successful projects. I don't have to understand the mechanism(s); I just have to believe it wasn't by pure chance to judge that person as contributing. No doubt that these factors play into why we don't pay more unevenly in the industry. Now, if the question is "I'm an engineer, and I want to increase the value I bring; what should I do?" To that question, I'd answer: Find out what your company's core value proposition is, what the few most important things to the company are, and how you can contribute to one or more of them. It's great if those things are also interesting and perfectly aligned with your passions, but if they're not, you may need to choose the balance between scratching your passionate itch and scratching the company's greatest needs. How you balance that is going to influence the company's results and your own results. (Note that I carefully chose "balance" wording; it shouldn't be 100% of either of those things, IMO.)

by dmak 11y ago

sokoloff 11y ago

The easiest ones are solo (or near-solo) projects for cost-avoidance measures, so the easiest example for me to give as an example is "By my project, I cut our AWS spend by $40K/month perpetually." Unfortunately, cost avoidance projects don't actually help most companies all that much (as revenue growth is more important and I'd rather have $40K more operating income from revenue growth than from cost avoidance). You also are competing against a baseline. (Maybe a consultant could have saved us half of that, or "Yes, this year's contract for bandwidth is $50K/month cheaper, but the industry baseline also fell by more than half of that, so what was YOUR actual contribution?") For revenue growth results, those are more often many person projects and "results are more distanced from activities", which makes it harder to quantify an individual's contribution. In cases like that, I look to the project overall results: did it ship, was it well-received by paying stakeholders, did it ship at an appropriate time, with appropriate features, did it sell, and then within the team to understand who the key contributors were. That last bit mostly comes from peer review process, as the project team worked together for far longer and more closely than I did, and the project team is the primary unit of success/failure. You won't get far arguing to me that you should be paid more because you were a crucial contributor on a failing project. (One exception is if you were the crucial contributor to argue why that project should have been killed.) Likewise, there are people who are consistently associated with successful projects, even if I can't figure out precisely how they contribute. The team likes them, reports them as helpful, and the team with that person delivers successful projects. I don't have to understand the mechanism(s); I just have to believe it wasn't by pure chance to judge that person as contributing. No doubt that these factors play into why we don't pay more unevenly in the industry. Now, if the question is "I'm an engineer, and I want to increase the value I bring; what should I do?" To that question, I'd answer: Find out what your company's core value proposition is, what the few most important things to the company are, and how you can contribute to one or more of them. It's great if those things are also interesting and perfectly aligned with your passions, but if they're not, you may need to choose the balance between scratching your passionate itch and scratching the company's greatest needs. How you balance that is going to influence the company's results and your own results. (Note that I carefully chose "balance" wording; it shouldn't be 100% of either of those things, IMO.)