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Companies Rethink Across-the-Board Pay Raises
- sgt101 10y agoSince recruiting excellent people costs nothing and is extremely easy this idea makes sense. Additionally team and corporate culture are valueless, so retaining these things is unimportant. Finally we can observe that consultants and executives are the fundamental creative loci in our economy.
- chris_wot 10y agoLol!
- VikingCoder 10y agoAn axiom of Poe's Law is that if you want to express sarcasm, you need to be explicit. Otherwise, people may think you honestly believe what you say.
- empath75 10y agoTo play devils advocate, I've quit a few jobs who offered small annual raises because other companies offered me a lot more money to leave. Honestly a few percent raise a year for a competent programmer is insulting, assuming you're increasing your skill set all the time.
- vonmoltke 10y agoAssuming you have the good fortune to live in an area where changing jobs is easy (or are interested in webdev).
- deleted 10y ago[deleted]
- duaneb 10y ago> Honestly a few percent raise a year for a competent programmer is insulting, assuming you're increasing your skill set all the time. This is wishful thinking. Your skill set (learning new technologies + critical thinking) is unlikely to improve over time. Furthermore, you're constantly competing against new graduates in a world where your "skills" are a generic commodity. Good luck.
- wcummings 10y agoEventually programmers will realize they're not special and "union" will stop being a dirty word.
- stale2002 10y agoWould you rather make 50k a year and get a 5 percent yearly raise or would you rather be "perpetually stuck" making 150k? IMO, being a commodity ain't so bad.
- Pdxred 10y agoIf your skill set is not improving over time, you are in serious trouble. When the next lay off bus comes around, they gonna throw you under it.
- duaneb 10y agoThe only skill you need is to read man pages. I don't think you'll become a better reader every year. But if you master this, you could change jobs tomorrow without worry about adapting. If you're calling technological knowledge a skill, you've already lost.
- clifanatic 10y agoI'm almost positive he was being sarcastic. I hope...?
- mgkimsal 10y ago> Honestly a few percent raise a year for a competent programmer is insulting, assuming you're increasing your skill set all the time. Huh? Expecting raises of any sort from an employer is insulting to them, unless you're increasing the value you bring. There are loads of devs I know 'increasing their skills set' yet not bring any actual value to the business they're employed in. The two points can be quite orthogonal, and the business is really only going to care about what value you're bringing to the table.
- gph 10y ago"Additionally team and corporate culture are valueless, so retaining these things is unimportant." Honestly I've never felt all that connected to any of the forced attempts to create a corporate or team culture where I've worked. I'd much rather be motivated by money. Though I recognize that likely means I'm not an ideal employee.
- chadgeidel 10y agoI would argue any "forced attempts to create a corporate or team culture" signal poor culture. I've worked at "good culture" and "bad culture" places and the "good culture" places had events but they were never labeled as such - they were just "events".
- sportanova 10y ago"These are you new values and reasons for being!" Shocking that that doesn't work. And I don't understand how people take seriously the "need to be passionate about x industry". No, you just need to pay money and the employee needs to do acceptable work
- pdpi 10y agoThat's a fundamental misunderstanding of what corporate culture means (and that misunderstanding is, in my experience, a sign that the culture is actually pretty bad). Comparing my previous and current positions, there's clear differences in what sort of behaviour is acceptable, what sort of behaviour is frowned upon, and what sort of behaviour is praised. This both in terms of the work product itself, and in the way we relate to each other as colleagues. I can also tell you in no uncertain terms that a culture I'm happy with is much stronger than money at producing the sort of motivation that keeps me producing "acceptable work".
- sportanova 10y agoIt might originally have been a misunderstanding, but like how "literally", now also means "not literally" it's the meaning of "culture".
- raldi 10y agoDe-sarcasming your comment, I get "Recruiting people is expensive and difficult, and maintaining company culture is important, therefore this proposal is a bad idea." However, I don't see how the conclusion follows from your premise. Are you saying this idea would lead to recruiting difficulties, or that it would increase unintended turnover? Are you saying it would destroy company culture because of employee departures, or in some other way?
- stale2002 10y agoWould you want to work for a company that has this policy? I certainly wouldn't.
- sgt101 10y agoThank you for replying and debating - it's good! I think that this would increase the turnover of employees who are are not strongly motivated by reward vs. the current practice because the current practice is aimed at preventing reward from being a key issue. People join at a level that provides a lifestyle that they find liveable, they remain or try to upgrade. Those that remain are rewarded with the maintenance of their lifestyle and some small increments. If that goes then long term employees will see a decline of their lifestyle and likely will then be moved to churn. In addition the provision of reward by bonus will increase competition between employees and corrode team relationships. That's fine for sales, where team is nowhere, but ruins everything else.
- krisdol 10y agoThis article discusses the benefits of providing few significant raises to high performing individuals rather than a nominal raise to all. From the employee's (my) perspective: * If I get a small nominal pay raise, I might stick around for up to the rest of the year, depending on how recently I started at the company. I don't know if this is a good idea, but sometimes promotions and raises aren't on the same schedule. * If I get no raise, I'll be leaving ASAP. * If I get a significant raise, I'm more likely to stay stay until next year's raise. Having nearly doubled my salary in a short time by "hopping" at good offers, there's little reason to stick around in companies that value manager bonuses over employee retention.
- ryanSrich 10y agoI imagine this is only possible in a limited number of locations. Job hopping in smaller markets is very difficult.
- pasbesoin 10y agoAdditionally, in BigCo, metrics versus actual performance continues to be often a toss-up, at best, and not infrequently just wrong. My stomach still clenches at the memory of managers greenlighting all the goals on their own performance reviews. Basically, if they liked you, you "passed" your review. If they didn't, they'd find something or other to pick at. The whole process was so weasel-ly, and in HR's pocket, that it was hard to find a place to start challenging it. Manufacture paperwork to "substantiate" whatever result we've already picked. P.S. If you start feeling this way about your own workplace, it is a primary sign to GTFO. Even if you are one of the "favored", if you're smart and a straight-shooter, you are not going to enjoy the dis-function around you.
- clifanatic 10y ago> Having nearly doubled my salary in a short time by "hopping" at good offers Watch out, though, because there's a catch-22: if you hop too many times, you can end up being rejected for too many hops.
- lochlan 10y ago
- susan_hall 10y ago"For most of us, yearly pay raises are a fixture of corporate life" Was this article written in 1955 and then accidentally drawn out of the archives and posted in 2016? The annual pay raise died a few decades ago. There were countless articles about it. You can go back and re-read early issues of FastCompany, from the 1990s, where they talk about "you" the worker needs to make themselves essential to the company, because annual raises are dead and only real promotions bring real money any more. And of course, at some point there emerged in the USA the odd habit of top managers, such that to get a pay increase an employee needs to quit and go elsewhere, or at least has to get a real offer from somewhere else, and only then will "your" company give you a pay increase, to match that competing offer.
- chris_wot 10y agoDunno about the U.S. but in Australua they are definitely a fixture.
- gambiting 10y agoUK here - agreed. I don't know anyone working at a corporation where annual raises aren't a thing, they might be small(3-4% if you aren't doing well on your performance review) but they almost seem mandatory.
- robin_reala 10y agoUK as well, pay raises have fluctuated between 1.5% and 15% during my career. Only one year (2009) did I not receive a raise and that was down to the small agency I was working for at the time having a mortgage lender as a primary client. Not the easiest of years for them.
- dwc 10y agoThey are a fixture in the U.S., too, in my experience.
- vonmoltke 10y ago> Was this article written in 1955 and then accidentally drawn out of the archives and posted in 2016? The annual pay raise died a few decades ago. This is the first year in my 14-year career I did not get an annual raise.
- rileymat2 10y agoOne thing I missed is any mention of inflation. If you are doing a satisfactory job not deserving of merit or demerit, wages should still be adjusted.
- andyfleming 10y agoWhat if the larger economic climate in a country is worsening and increasing costs for both the business and its employees?
- rileymat2 10y agoOf course you will have times of economic trouble with no raises.
- monknomo 10y agodepends on if there is still inflation. I'd say the Weimar Republic had a worsening economy, but when you need a wheelbarrow of money to buy a loaf of bread, raises should probably be given, lest your employees become bakers...
- qdog 10y agoI have had some 0% years during the early 2000's. A couple times I've seen companies slash 5% across everyone to not do layoffs. Just nit happening right now in the US, enjoy the good times while they last!
- luma 10y agoAny year that the purchasing power of the currency in which you are being paid goes down, and in which you don't get a raise to accommodate that loss ("cost of living raise" or whatever), you have effectively been given a cut in pay. I can't speak to other countries, but the USD is intentionally inflated as a matter of monetary policy and it has done so consistently in good times and bad for my entire adult life (I'm over 40)[1]. If the company is not doing well, and they choose not to give me a raise each year, that is still an effective cut in pay so long as the consumer price index is rising. Your reaction to that is yours to make, but you need to recognize it for what it is. [1] https://en.wikipedia.org/wiki/Consumer_price_index#/media/File:US_Consumer_Price_Index_Graph.svg https://en.wikipedia.org/wiki/Consumer_price_index#/media/Fi...
- banach 10y agoThe working class should similarly rethink annual pay raises and instead demand annual cuts in working hours.
- ilostmykeys 10y agolove it
- banach 10y agoFor a development of this idea, see https://www.versobooks.com/books/1989-inventing-the-future https://www.versobooks.com/books/1989-inventing-the-future
- st3v3r 10y agoWhy would bonuses, which are 1) Taxed higher than income most of the time, and 2) Not guaranteed to happen, be more of a motivator than salary?
- dragonwriter 10y agoBonuses aren't taxed higher. They are, when paid separately, subject to a different (flat) withholding rate, which is often higher than your average withholding rate and, when paid together, they are subject to a higher withholding rate than your average withholding rate because regular withholding rates are shaped by progressive tax structure. They are actually just regular taxable income, and are taxed exactly the same as additional non-bonus income.
- acjohnson55 10y agoFirst of all, cost of living goes up gradually, so at the very least, it makes sense to have your satisfactory performers not literally lose purchasing power in their base salary year to year. Or if that's not compelling because a corporation doesn't concern itself with its employees' finances, at the very least, it should be tracking the market, which is liable to change from year to year. When it comes to me, policy is whatever; at the end of the day, no matter how my comp package is arranged, I'll be looking after my bottom line. If I'm not happy, I'm confident in my ability to seek a better deal. I'd have to really believe bonus-based comp is likely to work out in my favor, at least on the timescale of a few years. Longer than that, it's not appealing, due to the lack of compounding of bonuses. But I feel like as a developer, I'm a bit insulated from concerns of the mainstream labor market. I just worry that for people without a whole lot of mobility, this is just another step toward institutionalizing wage stagnation. > Moreover, managers are reluctant to increase base pay further because higher payroll costs could result in heftier prices for customers, says Tom McMullen, a senior compensation partner with Korn Ferry Hay Group. That's rich.
- jomamaxx 10y agoMaybe they could give an x% baseline inflation increase, and then y% bonus for quality of work.
- snuxoll 10y agoThat x% inflation increase is already what most employers have right now. I get a ~3% raise every year in November, my manager has the ability to +/- it to distribute the total allocation based on merit to an extent, but everyone gets roughly between 2.5-3.5% which keeps up with inflation - this is fairly standard practice from what I've seen.
- wuliwong 10y agoI can't speak for other large corporations but Oracle does not follow this practice. My experience with small businesses (which employ more Americans than large corporations) is that they too have not followed a practice of guaranteeing a minimum wage increase every year to keep pace with inflation.
- a3n 10y agoThis probably works for C-levels, but for rank and file up to first and second level manager it's just more friction in the job search and recruiting areas. Because now, besides salary, you have to negotiate bonuses.
- dunkelheit 10y agoB.F. Skinner has demonstrated in his famous experiments that animals react much stronger to rewards that are highly unpredictable. Recently this principle has been applied with much success to the design of addictive online games. Time to apply the same principle to employee motivation?
- ryandrake 10y agoIf you want people to not always be looking around to hop to the next salary tier, then ideally people's salary should be ratcheted yearly to "what they could get elsewhere", not blindly based on some simplistic formula like starting * 1.xx^year + performance. Labor is a market just like any other service, and prices (compensation) are set by what the market can bear.