7 ms·

Wow, what a sucker deal. Who on earth are they managing to pull in with bullshit offers like that?

hga 10y ago
Wouldn't it be unfair to offer a deal that's significantly different in structure than the one that's offered to other types of knowledge workers?
- NotSammyHagar 10y ago
  Why would it be unfair to offer a different kind of pay structure? It's all about how much they have to pay to get employees.
harryh 10y ago
Some people are willing to accept higher variance pay that has a higher expected value. That does not make them suckers, that just makes them less risk averse than you.
- marssaxman 10y ago
  I am a motorcycle-riding, mountain-climbing, pyromaniac daredevil adventure-instigator whose friends would burst out into astonished guffaws if they heard you call me "risk averse". The key is that I choose risks where skill and training give me influence over the outcome. I will hurl myself into danger when I can be reasonably confident that I am capable of triumphing over it because I know what the variables are and how to bias them for success. I have at various points in my life accepted 100% variance in pay by choosing to work freelance. It was an acceptable risk because I controlled not just the tech but also the nature of the business, and had reasonable confidence that I could make choices which would result in a satisfactory rate of return on my effort expended. Accepting employment as an engineer while also accepting the financial risk of other people's choices about how to run their business, choices you explicitly have no influence over?? That's not risk, that's an exploitation lottery.
  - harryh 10y ago
    That is a perfectly reasonable point of view for yourself and I totally get it. But I would take a job with a 50% chance of making 200k and a 50% chance of making 100k over a job with a 100% chance of making 125k even if the outcome was determined by a coin flip. +EV is +EV whether I am responsible for the impact or not.
    - marssaxman 10y ago
      It makes sense when you put it that way. I guess the issue is not so much risk tolerance as cynicism. It is a negotiation where the information asymmetry does not favor me. The potential employer must be offering a variable compensation package with a claimed EV of $X because they believe their actual cost will be less than $X. Otherwise, why make it complicated? They'd just offer $X. I conclude that the only actual knowledge I have about the value of the offer is that it won't be lower than the base salary. I therefore accept the offer if the base salary is high enough to make the job worthwhile, and reject it otherwise. Any additional money which might happen to come along later I treat as a windfall; it has no incentive effect.
      - harryh 10y ago
        Otherwise, why make it complicated? They'd just offer $X. The reason that this is done is because investment banks tend to have larger revenue swings than many other businesses. Due to this, they want to be able to more easily adjust their costs (of which people are a huge %) relatively easily. It's much easier to adjust bonuses up and down than base salaries.
        deleted 10y ago
        [deleted]
      - thedufer 10y ago
        That seems a little extreme. The reason they do bonuses is because in a bad year they can pay you 0.5x and in a good year 1.5x. You still get an average of x per year, but in such a way that they don't go out of business. Finance companies tend to see much larger revenue swings than other industries. My current employer gets over this hurdle by guaranteeing your bonus for 1-2 years, thus giving them time to build trust before the variable compensation gets going.
pc86 10y ago
How can you know it's a sucker deal without knowing the numbers? $80k + a $10k bonus is bad, sure. But $50k + a $500k bonus is great even if you only get it once every 3-4 years (and as other comments point out the bonuses happen more often than not and are significant figures even relative to yearly compensation).
- kchoudhu 10y ago
  120-140K base with a 60-70K bonus was about where the average was for tech programmers. This is barely competitive in NY during the good years -- it sure as heck doesn't fly in bad years. Quant technologists are a different beast. Like traders, they eat what they kill, and a 50/500 payout matrix may well make sense for them.
- marssaxman 10y ago
  It's a sucker deal because they're offering not to tell you what the numbers are, and you have no meaningful way to influence them. You accept a share of their risk without gaining any compensating control over the outcome.

hga 10y ago

Wouldn't it be unfair to offer a deal that's significantly different in structure than the one that's offered to other types of knowledge workers?

NotSammyHagar 10y ago
Why would it be unfair to offer a different kind of pay structure? It's all about how much they have to pay to get employees.

harryh 10y ago

Some people are willing to accept higher variance pay that has a higher expected value. That does not make them suckers, that just makes them less risk averse than you.

marssaxman 10y ago
I am a motorcycle-riding, mountain-climbing, pyromaniac daredevil adventure-instigator whose friends would burst out into astonished guffaws if they heard you call me "risk averse". The key is that I choose risks where skill and training give me influence over the outcome. I will hurl myself into danger when I can be reasonably confident that I am capable of triumphing over it because I know what the variables are and how to bias them for success. I have at various points in my life accepted 100% variance in pay by choosing to work freelance. It was an acceptable risk because I controlled not just the tech but also the nature of the business, and had reasonable confidence that I could make choices which would result in a satisfactory rate of return on my effort expended. Accepting employment as an engineer while also accepting the financial risk of other people's choices about how to run their business, choices you explicitly have no influence over?? That's not risk, that's an exploitation lottery.
- harryh 10y ago
  That is a perfectly reasonable point of view for yourself and I totally get it. But I would take a job with a 50% chance of making 200k and a 50% chance of making 100k over a job with a 100% chance of making 125k even if the outcome was determined by a coin flip. +EV is +EV whether I am responsible for the impact or not.
  - marssaxman 10y ago
    It makes sense when you put it that way. I guess the issue is not so much risk tolerance as cynicism. It is a negotiation where the information asymmetry does not favor me. The potential employer must be offering a variable compensation package with a claimed EV of $X because they believe their actual cost will be less than $X. Otherwise, why make it complicated? They'd just offer $X. I conclude that the only actual knowledge I have about the value of the offer is that it won't be lower than the base salary. I therefore accept the offer if the base salary is high enough to make the job worthwhile, and reject it otherwise. Any additional money which might happen to come along later I treat as a windfall; it has no incentive effect.
    - harryh 10y ago
      Otherwise, why make it complicated? They'd just offer $X. The reason that this is done is because investment banks tend to have larger revenue swings than many other businesses. Due to this, they want to be able to more easily adjust their costs (of which people are a huge %) relatively easily. It's much easier to adjust bonuses up and down than base salaries.
      - deleted 10y ago
        [deleted]
    - thedufer 10y ago
      That seems a little extreme. The reason they do bonuses is because in a bad year they can pay you 0.5x and in a good year 1.5x. You still get an average of x per year, but in such a way that they don't go out of business. Finance companies tend to see much larger revenue swings than other industries. My current employer gets over this hurdle by guaranteeing your bonus for 1-2 years, thus giving them time to build trust before the variable compensation gets going.

pc86 10y ago

How can you know it's a sucker deal without knowing the numbers? $80k + a $10k bonus is bad, sure. But $50k + a $500k bonus is great even if you only get it once every 3-4 years (and as other comments point out the bonuses happen more often than not and are significant figures even relative to yearly compensation).

kchoudhu 10y ago
120-140K base with a 60-70K bonus was about where the average was for tech programmers. This is barely competitive in NY during the good years -- it sure as heck doesn't fly in bad years. Quant technologists are a different beast. Like traders, they eat what they kill, and a 50/500 payout matrix may well make sense for them.
marssaxman 10y ago
It's a sucker deal because they're offering not to tell you what the numbers are, and you have no meaningful way to influence them. You accept a share of their risk without gaining any compensating control over the outcome.