5 ms·

How is that remotely fair? The company has the expectations for you to perform as an $800+/hr consultant, and your return for that effort is $50/hr?

• maxxxxx 8y ago
  It's definitely reality, fair or not.
• jenscow 8y ago
  There is a queue of people willing to perform the job for $50/hr. Also, there are overheads of running a company (assuming OP isn't the only employee).
• deleted 8y ago
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• tptacek 8y ago
  If they're reliably billing out at $800/hr to full-time utilization and feel they're being cheated in their take-home comp, they should set up shop on their own. They're a consultant, that's what consultants do. There's no easier structure in tech in which to compete with your erstwhile employer than in consulting. If they can't do that, whatever the reason they can't is the answer to your question.
  • unstatusthequo 8y ago
    Everyone is forgetting realization. What can you actually collect from end clients? What "discount rates" do certain companies get? That ~$800 is rack rate and after discounts, write offs/downs, you rarely realize that entire rate. Utilization is also important. If client doesn't allow charging for travel, and your talent is flying around, they aren't going to get high utilization. But when they are working the rate is higher.
• deleted 8y ago
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• ghaff 8y ago
  It's sort of how management consultants and big firm law works. They bill out associates for a lot of money--less than partners but not necessarily that much less--but it's the partners that make the big money. Of course, the partners have a lot of other responsibilities such as bringing in new clients and, frankly, a lot of the newly minted associates aren't all that useful. (Source: I've been on the client side of a McKinsey consulting job.) I can't speak to the exact numbers but that's basically how the math works. (And the reason you hopefully perform as an $800/hr consultant is that there is theoretically methodology and experience being provided by the firm behind you.)
  • logfromblammo 8y ago
    My personal rule of fairness is that 1/3 of the direct-value an employee brings to the company is probably the most that can safely be paid directly to that employee without hurting the health of the business and its indirect-value employees. But if the employee is getting less than 1/4, they have a good reason to look for employment elsewhere. At least in software dev. At 1/18th, the employee should probably be interviewing with competitors as often as they are billing hours. If that does not work out, it should be possible to go independent and undercut your former employer and their colluding competitors by charging only 9 times your former salary, giving yourself 1/3 of that, and investing the rest into growing the new business, such as by poaching former colleagues and business development personnel, and offering them 1/4 to 1/3 of what they bring in. It seems very dishonest to me to bill at near-partner rate for junior associate work. If the latter aren't that useful, making the client pay a rate as though they were doing vastly more or better work than they really are getting done is very unethical.
    • tedsanders 8y ago
      >My personal rule of fairness is that 1/3 of the direct-value an employee brings to the company is probably the most that can safely be paid directly to that employee without hurting the health of the business and its indirect-value employees. I personally don't think it would be fair if 1/3 of a supermarket's revenues went to the cashiers. Just because you're bringing the revenue in for a business doesn't mean your labor is irreplaceable.
• seem_2211 8y ago
  If they're flying you out, putting you in a hotel, giving you a meal allowance, handling your powerpoint presentations, and organizing the business operations, it does cut down the amount of money that they're keeping. 18:1 does seem like a pretty high markup, but if you're working at McKinsey/Boston/Bain, you're also being paid in prestige - just like if you're working at Goldman Sachs or Skadden Arps. Because you have had a prestigious job in the past, it's much easier to be in 'the club' for other prestigious jobs in the future. It's also a big part of the carrot of eventually being a Partner/MD where you make $1m + for the last 30 years of your career. It's hard to fathom, but as a recruiter, there's a massive inequality in the employment experience. Some people are battling to get into entry level roles, whereas others are recruited straight from college into highly paid opportunities that lead onto more of the same.
• tom_ 8y ago
  The $800 covers a lot more than just the person whose time it's ostensibly paying for.
• exolymph 8y ago
  Fairness is not at all how compensation functions.
• jpalomaki 8y ago
  In this case, the customer is likely not just paying for the actual work, but also for the consulting brand that is signing off the work.