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> Leaders are willing to take a 100x salary compared to their line employees because they know they can hustle hard enough to live up to the expectations. The
by maxlybbert 9y ago
> Leaders are willing to take a 100x salary compared to their line employees because they know they can hustle hard enough to live up to the expectations.
There are several reasons for the salary differential. But, fundamentally, one issue is that some things don't scale linearly.
To use a simpler example: Richard and Maurice McDonald created a hamburger stand in 1948. They created the original recipes, came up with the original ideas, and opened the original stores. Apparently, they even started offering franchises. But their ability to grow McDonald's was limited. Ray Kroc managed to make McDonald's scale. Without the McDonald brothers, there was no restaurant to scale. Without Kroc, there was no chance that McDonalds would eventually have signs saying "billions served." What is the fairest way to allocate their rewards based on their contributions?
What about Billy Durant and Alfred Sloan ( https://steveblank.com/2009/10/01/durant-versus-sloan-part-1/ https://steveblank.com/2009/10/01/durant-versus-sloan-part-1... )? Durant figured cars were going to be profitable. He managed to get loans to buy several car companies and called the combination General Motors. He actually created a good sized business. At some point, though, the banks lost their nerve and convinced Durant to turn over control of GM to Alfred Sloan. Sloan's book, My Years With General Motors describes his approach to R&D, accounting, marketing, and trying to organize the world's largest company in some sane way. Without Durant (and the bankers) there would be no GM. But without Sloan, GM would have never grown as large as it did. When a company gets that large and accumulates that much capital, how do you fairly divvy up the revenue? Without the people on the assembly line, there are no cars. But without the people in the board room, there's no assembly line.
I don't think Bezos is a god, or a saint, or even necessarily a good guy. But it is clear that without him, there would be no warehouses and no inventory. We live in a world where small teams of people can create hugely profitable companies. When it comes time to divvy up the revenue, how do you reflect the fact that companies don't necessarily scale linearly based on the effort and contributions of their founders and executives?
- jrimbault 9y ago> When it comes time to divvy up the revenue, how do you reflect the fact that companies don't necessarily scale linearly based on the effort and contributions of their founders and executives? Do I even have to spell it out? There shouldn't be a 100x factor between the lowest and highest salary. There's no degree of merit that should guarantee that privilege. Merit doesn't scale linearly, if I wanted to use your language, but there's no reason income should follow the same model. I really want to know what's the reasoning for allowing such ridiculous income gaps. If there's money left at the end of the year and the company doesn't want to invest more (which should be the first thing to do?), why pay the executives even more when the employees would benefit far more from the bonuses.
- maxlybbert 9y agoI'm not saying that a large income gap is desirable. I'm saying it's not obviously wrong to me. And it's somewhat understandable.
- jhall1468 9y agoThere isn't a 100x difference in salary. Bezos salary is something like 80k. His income is derived almost entirely by stock grants, which are awarded based on company performance. The fact that he's a billionaire is because he founded the company.
- jrimbault 9y agoThat's still income. If you want I can rephrase more generally. There shouldn't be a 100x difference in income between People.
- maxlybbert 9y agoDo you have any reason beyond "inequality!"? ( https://www.bloomberg.com/view/articles/2017-04-20/-fight-inequality-is-a-poor-rallying-cry https://www.bloomberg.com/view/articles/2017-04-20/-fight-in... ). ---- I found it from one of your previous replies: > There shouldn't be a 100x factor between the lowest and highest salary. There's no degree of merit that should guarantee that privilege. > Merit doesn't scale linearly, if I wanted to use your language, but there's no reason income should follow the same model. Which is interesting, because it assumes pay is based on merit, but that it shouldn't necessarily mirror merit. I believe that's a consistent world view; but, to me at least, it's not obviously The One Correct View.
- jhall1468 9y ago> There shouldn't be a 100x difference in income between People. That's a political argument, not a valid business argument.
- jrimbault 9y ago