13 ms·

I've always found it strange that companies don't give raises to current employees. A team I am on just lost a good engineer to another company offering him a $

by issa 8y ago

I've always found it strange that companies don't give raises to current employees. A team I am on just lost a good engineer to another company offering him a $30k+ raise. He would have stayed if our company had even given him half of that. Instead, they let him go, and how will have to hire someone else, probably at that higher salary. So weird, and seems to happen a lot.

brianwawok 8y ago
Companies give raises. Have you or anyone you know never gotten a raise?
- onion2k 8y ago
  It's very common for companies to give a cost of living raise in line with inflation, which is effectively just maintaining your salary at the current "purchasing power". Actual real terms raises that mean you can buy more are quite rare, especially outside of tech. Usually the only way to get a real raise is by changing job, either through promotion or by moving to a different company.
  - kzisme 8y ago
    This has been my experience as well - if you want to progress salary wise you are almost required to change jobs every ~3 years to get a meaningful bump in pay.
  - statictype 8y ago
    You may need to find a better company or try to do a better job of negotiating? While it's certainly true that jumping around between companies is an easy way to increase your pay, companies routinely do give significant raises to employees. (It may not happen often but even 100% increments do occur)
- kzisme 8y ago
  2-5% raises are all I've seen pretty much (which is just cost of living).
  - Cd00d 8y ago
    I see this sentiment often, but I don't quite understand. Inflation has been at <2% for a while, so how is a 5% raise cost of living? It's actually big. I'm in NYC and our trouble with the subway have highlighted that MTA workers get a standard 6% raise each year as cost of living. But, it's way more than that, and it's actually a salary doubling every 11 years or so, which is not at all in line with overall wage growth - it's huge. Sure, in tech you can jump jobs every 3 years for 20% jumps (until you're 40), but that also isn't reflective of normality and definitely front-loads early career experiences.
    - PeterisP 8y ago
      The big idea is that it's unlike e.g. MTA workers because in tech, after 3 or 5 years, you're not really doing the same job. If you've been hired as a junior dev, then the work that you're doing in year 5 is (or should be) worth much, much more that what you were doing in year 1. What people are expecting isn't a "I'm a bit more effective at my position and have some institutional knowledge, so I'd deserve a bit of a raise", but rather "I was hired at position X. Now I'm de facto doing position Y, so I deserve a salary appropriate to that position", and the appropriate salary to that new position may be 30%, 50% or 100% larger than the initial one. If your company doesn't provide these internal promotions (and the salary jumps appropriate for each tier), then your best people will take "lateral promotions" to other companies whenever they're ready to promote. You won't hire a senior dev by offering 20% more than a junior dev; so as a junior dev in your company becomes (over the years, and of course not all of them do) a senior developer, if their real (inflation adjusted) salary increased only by 20% over these years, that's not reasonable. I mean, it should be reasonable for a young person coming to your company at an entry level job to ask about the career path available. In tech (unlike, for example, fast food) they can start with an assertion that as they gain experience, in ten years they would like to earn double of what they'll be earning now as an entry level developer. It's not a given that they'll succeed, but it's likely, and a realistic plan to achieve if they put in the work. And your company (assuming it's large enough) should have an answer about what's the career path and criteria for them to double their (inflation-adjusted) salary in that time, and raises that are 2-5% (so, a bit above inflation) don't provide such an answer.
- auiya 8y ago
  Not in the same job role they don't. Not a meaningful amount at least, most times it's barely enough to cover inflation. If you want a meaningful raise you have two choices, play the company's ridiculous Game of Thrones every quarter come promotion time, or go elsewhere. Most of the time it's easier to just go elsewhere.
polpenn 8y ago
Current company knows his worth. New company doesn’t so your teammate has informational advantage and can negotiate a higher salary.
- ashtonian 8y ago
  If the market is going to give him that rate (assuming he can adequately perform the new job) that is his market value..
  - humblebee 8y ago
    That is basically the same thing the poster you replied to said, except from the perspective of the current company and not the new one. The current company knows his performance. The hiring company is making an educated guess from maybe 10 hours of interaction and a resume.
    - ntsplnkv2 8y ago
      > The current company knows his performance. This is a huge assumption that often times, probably more often than not, isn't true.
      - humblebee 8y ago
        I don't doubt that the hiring company may be able to get more value from the individual, hence offering a higher salary. Market rate is highly dependent on the market, and "Software Engineer" is not a market. The current employer is in a better position to understand the employees current value to the company. They may not be tracking it, but they are in a position that they could probably understand the value of the individual, and determine if an increase in compensation is worth the current value or future value they are getting from them.
- rileymat2 8y ago
  > A team I am on just lost a good engineer to another company Your analysis would be correct if they lost a bad engineer to a company giving him a 30k raise.
aidenn0 8y ago
Lots of places give raises; in fact one place I worked had the specific goal of after 10 years, the top performers should be making about 2x what the "okay" performers do; and the "okay" performers got at least a cost of living raise each year.
zdragnar 8y ago
I've heard from multiple managers that offering someone money to stay typically buys another 9 months or so of their employment. They'll soon find other reasons to be looking for a job. There are, of course, exceptions; it's just a general rule.
- wting 8y ago
  I believe grandparent was referring to proactive raises. Reactive counter offer raises typically don't work because the employee's mind has been made up to leave. Compensation is usually only part of why someone decided to leave.
  - rjp0008 8y ago
    If you pay everyone more that gets expensive quick. Seems like it could be cost effective to give almost rock bottom raises and just replace the people who aren't 100% into it.
    - BenMorganIO 8y ago
      I wouldn't agree since that creates horror stories and high employee churn.
    - henrikschroder 8y ago
      Sometimes, the cheapest way to pay for something is with money. If you want a good, happy, motivated, loyal workforce, you have to pay for it.
      - reallydontask 8y ago
        Let's say your work is dull, your line manager is a bully that shoots down most of your ideas and then takes credit for the ones that get implemented. All success is due to him/her all failures down to the team. There is no career path neither towards management nor towards principal engineer/architect The commute is 2 hours each way and there is a strict work from the office policy. HR is known to not provide generic references but to ask your line manager to provide references How much money would it take for you to work in such environment? The point is that money is only part of what makes people happy, motivated and loyal.
ashtonian 8y ago
I've worked for 5 companies and 3 of them had this behavior. Would get 5/5 on reviews, saved company hundreds of thousands, delivered a flagship multi million dollar in revenue product. Ask for more then 10k and was told to get an offer elsewhere and they would match. Got another job at 30k+ told them to screw off, if I have to apply and go get a job offer to prove my "worth" then I'm just going to go work for another company. Companies have a bad habit of negotiating for negotiating rather then paying for worth. It's because it's hard to track worth and easier just to always bottom out, that and much of non tech centered world still operates like that across the board.
- Aeolun 8y ago
  Honestly, if my company would tell me this it’d become a game to interview and get higher and higher salaries.
  - BenMorganIO 8y ago
    Until you receive an offer which has larger benefits and perks. I can certainly see the gaming.
- mcv 8y ago
  Yeah, that sounds like just about the worst way a company might go about this. They actively send their people to look for new jobs, and only once they've found one, you give them a raise, hoping they'll prefer this toxic attitude over some fresh new job. Also, relying on the opinion of other companies to determine the value of your own employees is completely backwards. Nobody had better data to determine the value of your employees than you do. Other employers basically have to make a stab in the dark at what someone's worth, and maybe not extend the contract if the new hire turns out to disappoint. As the current employer, you should know how good your people are.
ui-explorer12 8y ago
The same thing happens when you've been with a mobile/telecom/etc company for a long time. They milk you for every penny they can get and give all the promo pricing to new customers. The pay sales higher commissions for new sign-ups and treat existing loyal clients like garbage. It really bugs me to have to waste the time to change providers for everything every ~2 years, but I'd feel like an idiot if I left thousands of dollars per year on the table. It's a stupid game, and companies are not immune.
- davidbanham 8y ago
  Many companies have done the sums on this and have dedicated churn teams. If you call and tell them you're planning to leave because you can get a better deal elsewhere they'll often match or better it in order to retain you. It's a bit iffy since if everyone did this all the time the incentive to advertise low rates gets removed. As an individual bonus, though, it means you don't need to do all the paperwork it takes to change providers.
  - batiudrami 8y ago
    Most of the time it's as easy as calling and asking the first person you get connect to if you can "speak to retentions". I've always been put straight through.
  - mszcz 8y ago
    I was able to get a better deal when I started the move process. After starting that the churn team seamed more receptive to my arguments ;)
  - SuperGent 8y ago
    Some years ago, I accidentally ordered two new phones from different providers at the same time. AS I had a 14 day 'cool off' I phoned one company to cancel, as I didn't like that phone, and they offered me a much better deal. I then phoned the other to pretend to cancel and got a reduction in my bill there!
- KozmoNau7 8y ago
icelancer 8y ago
Negotiating raises via counteroffers is a very dangerous practice. The employee will tell everyone how they got their raise (and it will get out), and suddenly you have a much larger problem on your hands rather than a single engineer leaving. Set up a fair, proactive, and objective way to obtain more money, and never deviate.
- pixl97 8y ago
  Or, when you leave a company remember to send a company wide email to your old coworkers telling them how much more you make now : )
  - icelancer 8y ago
    Searching any listserv or salary database will get you that information.
    - mac01021 8y ago
      Not sure that's true. In most of the country/world local employer don't have salaries in a publicly available database. And there may not be enough of a tech scene in a city or region to bootstrap such a database easily.(assuming we're concerned specifically with tech/software salaries)
      - nitrogen 8y ago
        In the US, the Bureau of Labor Statistics can give a rough histogram of salaries by occupation for most metro areas. I can't ever remember how to find the data though.
      - giancarlostoro 8y ago
        In Orlando we have a Slack group for all the devs in the city and at the end of the year they do a salary / tech survey everyone fills out. Gives anybody in the city a good idea of what compensation looks like. Other cities could build similar surveys if they want to. You dont need a million devs just enough to be willing to pseudo-anonymously answer. Then based on pay by years of experience you can gague how low your salary is.
anotheryou 8y ago
jup, changing companies will yield me about 50% more pay, last raise was 6% (and than greedely rounded down a tiny bit further).
auslander 8y ago
> ..found it strange that companies don't give raises Because you'll tell your buddies about it, and they will try to get it too, having you as a proof it is feasible. New hires don't pose this threat to company coffins.
- michaelt 8y ago
  FYI a 'coffer' is a a strongbox or small chest for holding valuables. So a "threat to company coffers" is a threat to the bank account / bottom line. A threat to coffins is presumably https://youtu.be/KZ_7br_3y54?t=57 https://youtu.be/KZ_7br_3y54?t=57
  - auslander 8y ago
    Lol! Typo of course, i meant coffers. Wait ..
JamesBarney 8y ago
The company's thinking works like this. Your good engineer might have been worth a $15k raise. But once it gets out you can get a 15k raise by just getting a new offer then another 3-4 people will go get offers and asks for raises. This ends up costing the company an extra $60k-$70k to retain your good engineer, and he might not be worth that to the company.
- Ultimatt 8y ago
  Right... but the engineer who leaves still made that extra money with a good offer. They just had to follow through on leaving. So what happens is everyone immediately finds and accepts a better offer. This is quite literally what happened in a startup I was with. When people talk about "churn" Im not sure they have witnessed entire disgruntled teams paid like 60% market rate (at best) just drop tools because the "mission" of the company wasn't enough anymore.
- jdreyfuss 8y ago
  But on the other hand, churn sparks more churn. So you don't pay your "good engineer" and she leaves. Other engineers start wondering why, and start looking around the market. Another one leaves, and then all of a sudden you have a ripple effect where several people follow suit and leave in a short time.
- issa 8y ago
  I would say that an engineer leaving can cost a company much more than the $60-70k you think the company would spend to keep them. You have to: 1) Hire a new person (this comes with costs!) 2) Train the new person (this takes time to do AND takes time away from the team for other tasks) 3) Pay the new person the going rate salary anyway
a012 8y ago
A lot of places would give a raise too, but frequently attached to a fixed raise rates. It's bad too because they'd rather hire a new one than break the rates to keep the experieced employees.
golergka 8y ago
[deleted]
- varjag 8y ago
  > the company owner is a friend This has likely affected how much he was willing to go up in salary neg.
  - deleted 8y ago
    [deleted]
ido 8y ago
The general case may still make not giving raises (or only small ones) more profitable - you don't know how many other employees didn't leave despite not getting big raises, it may more than make the difference for the odd person leaving because of it. Or how long they got that guy's labour at a discount before he wise up & got a better paid position elsewhere. It may have been years of savings by then.
piokoch 8y ago
I guess such employers strategy is taught at business schools. My ISP or mobile operator also gives much better offer to a new customer as compared to the existing one. The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less or pay more for a service. Probably this is not that easy to verify, as, for instance, employee might indeed stay and get lower compensation, but would also be less productive (if they fire me, I'll just find something else, probably better paid) and less creative (they pay me less, I have no incentive to improve "their" company).
- ivanhoe 8y ago
  > The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less In IT I seriously doubt it since it's so easy to take a leap forward. And it's a huge question who are those people who choose to stay even when they feel unrewarded? If they do it for a fear of change or just being too lazy or unmotivated to bother with it, it can become a huge problem for a company. As those employees hang around and climb the hierarchy such bureaucratic mindset can seriously hurt company's agility and water down everything.
giancarlostoro 8y ago
One of my uncles used to work at a big defense contracting company. He told me sometimes they would give the advise of leaving the company and applying a few months later in order to get paid more money just to do the same work. It is stupid, but some have figured out stupid solutions to stupid problems.
- semi-extrinsic 8y ago
  I know some companies have solved this type of problem by computing some "seniority number" based e.g. on date of graduation / years of experience. So person A and B graduating at the same time -> A goes to work for FooCo, B works somewhere else for N years, then joins FooCo, both get the same salary for the same position. I.e. quitting and re-joining does nothing. Then the mechanism for rewarding high performers is to give them a better position (e.g. Engineer -> Senior Engineer -> Chief Engineer) instead of just raising their salary with the same title.
Spooky23 8y ago
It’s just smart business. When word gets out that the guy got a raise or he shows up in a new car, you’ll have a line of people with hat in hand. Comfort is valuable to people. About 30% of my people are making significantly less than their market value. Myself included. But, non-cash benefits are powerful as well.
- jdreyfuss 8y ago
  It's not smart business. It's often much more damaging to a company's bottom line to lose a strong performer and have to replace them than it is to pay them what they're worth. It's also damaging to culture when people just start disappearing because they got market-rate offers. It is worth calling out that compensation is more than just salary however. But if strong performers are consistently leaving your company due to compensation, then you're doing something wrong. The former head of talent at Netflix wrote a great article on hiring and compensation that touches on these points: https://hbr.org/2018/01/how-to-hire https://hbr.org/2018/01/how-to-hire
  - intelliderp 8y ago
    One quote says it all: > We decided we didn’t want a system in which people had to leave to be paid what they were worth.
  - Spooky23 8y ago
    If you provide regular raises and don’t treat people poorly, you’ll be fine. The bigger point in that article is that you need to look at people holistically.
systemspeed 8y ago
I'm guessing that on average the company saves money this way, since people aren't robots and tend to develop a sense of community with their coworkers. Companies possibly exploit this for savings.

by issa 8y ago

brianwawok 8y ago

Companies give raises. Have you or anyone you know never gotten a raise?

onion2k 8y ago
It's very common for companies to give a cost of living raise in line with inflation, which is effectively just maintaining your salary at the current "purchasing power". Actual real terms raises that mean you can buy more are quite rare, especially outside of tech. Usually the only way to get a real raise is by changing job, either through promotion or by moving to a different company.
- kzisme 8y ago
  This has been my experience as well - if you want to progress salary wise you are almost required to change jobs every ~3 years to get a meaningful bump in pay.
- statictype 8y ago
  You may need to find a better company or try to do a better job of negotiating? While it's certainly true that jumping around between companies is an easy way to increase your pay, companies routinely do give significant raises to employees. (It may not happen often but even 100% increments do occur)
kzisme 8y ago
2-5% raises are all I've seen pretty much (which is just cost of living).
- Cd00d 8y ago
  I see this sentiment often, but I don't quite understand. Inflation has been at <2% for a while, so how is a 5% raise cost of living? It's actually big. I'm in NYC and our trouble with the subway have highlighted that MTA workers get a standard 6% raise each year as cost of living. But, it's way more than that, and it's actually a salary doubling every 11 years or so, which is not at all in line with overall wage growth - it's huge. Sure, in tech you can jump jobs every 3 years for 20% jumps (until you're 40), but that also isn't reflective of normality and definitely front-loads early career experiences.
  - PeterisP 8y ago
    The big idea is that it's unlike e.g. MTA workers because in tech, after 3 or 5 years, you're not really doing the same job. If you've been hired as a junior dev, then the work that you're doing in year 5 is (or should be) worth much, much more that what you were doing in year 1. What people are expecting isn't a "I'm a bit more effective at my position and have some institutional knowledge, so I'd deserve a bit of a raise", but rather "I was hired at position X. Now I'm de facto doing position Y, so I deserve a salary appropriate to that position", and the appropriate salary to that new position may be 30%, 50% or 100% larger than the initial one. If your company doesn't provide these internal promotions (and the salary jumps appropriate for each tier), then your best people will take "lateral promotions" to other companies whenever they're ready to promote. You won't hire a senior dev by offering 20% more than a junior dev; so as a junior dev in your company becomes (over the years, and of course not all of them do) a senior developer, if their real (inflation adjusted) salary increased only by 20% over these years, that's not reasonable. I mean, it should be reasonable for a young person coming to your company at an entry level job to ask about the career path available. In tech (unlike, for example, fast food) they can start with an assertion that as they gain experience, in ten years they would like to earn double of what they'll be earning now as an entry level developer. It's not a given that they'll succeed, but it's likely, and a realistic plan to achieve if they put in the work. And your company (assuming it's large enough) should have an answer about what's the career path and criteria for them to double their (inflation-adjusted) salary in that time, and raises that are 2-5% (so, a bit above inflation) don't provide such an answer.
auiya 8y ago
Not in the same job role they don't. Not a meaningful amount at least, most times it's barely enough to cover inflation. If you want a meaningful raise you have two choices, play the company's ridiculous Game of Thrones every quarter come promotion time, or go elsewhere. Most of the time it's easier to just go elsewhere.

polpenn 8y ago

Current company knows his worth. New company doesn’t so your teammate has informational advantage and can negotiate a higher salary.

ashtonian 8y ago
If the market is going to give him that rate (assuming he can adequately perform the new job) that is his market value..
- humblebee 8y ago
  That is basically the same thing the poster you replied to said, except from the perspective of the current company and not the new one. The current company knows his performance. The hiring company is making an educated guess from maybe 10 hours of interaction and a resume.
  - ntsplnkv2 8y ago
    > The current company knows his performance. This is a huge assumption that often times, probably more often than not, isn't true.
    - humblebee 8y ago
      I don't doubt that the hiring company may be able to get more value from the individual, hence offering a higher salary. Market rate is highly dependent on the market, and "Software Engineer" is not a market. The current employer is in a better position to understand the employees current value to the company. They may not be tracking it, but they are in a position that they could probably understand the value of the individual, and determine if an increase in compensation is worth the current value or future value they are getting from them.
rileymat2 8y ago
> A team I am on just lost a good engineer to another company Your analysis would be correct if they lost a bad engineer to a company giving him a 30k raise.

aidenn0 8y ago

Lots of places give raises; in fact one place I worked had the specific goal of after 10 years, the top performers should be making about 2x what the "okay" performers do; and the "okay" performers got at least a cost of living raise each year.

zdragnar 8y ago

I've heard from multiple managers that offering someone money to stay typically buys another 9 months or so of their employment. They'll soon find other reasons to be looking for a job. There are, of course, exceptions; it's just a general rule.

wting 8y ago
I believe grandparent was referring to proactive raises. Reactive counter offer raises typically don't work because the employee's mind has been made up to leave. Compensation is usually only part of why someone decided to leave.
- rjp0008 8y ago
  If you pay everyone more that gets expensive quick. Seems like it could be cost effective to give almost rock bottom raises and just replace the people who aren't 100% into it.
  - BenMorganIO 8y ago
    I wouldn't agree since that creates horror stories and high employee churn.
  - henrikschroder 8y ago
    Sometimes, the cheapest way to pay for something is with money. If you want a good, happy, motivated, loyal workforce, you have to pay for it.
    - reallydontask 8y ago
      Let's say your work is dull, your line manager is a bully that shoots down most of your ideas and then takes credit for the ones that get implemented. All success is due to him/her all failures down to the team. There is no career path neither towards management nor towards principal engineer/architect The commute is 2 hours each way and there is a strict work from the office policy. HR is known to not provide generic references but to ask your line manager to provide references How much money would it take for you to work in such environment? The point is that money is only part of what makes people happy, motivated and loyal.

ashtonian 8y ago

I've worked for 5 companies and 3 of them had this behavior. Would get 5/5 on reviews, saved company hundreds of thousands, delivered a flagship multi million dollar in revenue product. Ask for more then 10k and was told to get an offer elsewhere and they would match. Got another job at 30k+ told them to screw off, if I have to apply and go get a job offer to prove my "worth" then I'm just going to go work for another company. Companies have a bad habit of negotiating for negotiating rather then paying for worth. It's because it's hard to track worth and easier just to always bottom out, that and much of non tech centered world still operates like that across the board.

Aeolun 8y ago
Honestly, if my company would tell me this it’d become a game to interview and get higher and higher salaries.
- BenMorganIO 8y ago
  Until you receive an offer which has larger benefits and perks. I can certainly see the gaming.
mcv 8y ago
Yeah, that sounds like just about the worst way a company might go about this. They actively send their people to look for new jobs, and only once they've found one, you give them a raise, hoping they'll prefer this toxic attitude over some fresh new job. Also, relying on the opinion of other companies to determine the value of your own employees is completely backwards. Nobody had better data to determine the value of your employees than you do. Other employers basically have to make a stab in the dark at what someone's worth, and maybe not extend the contract if the new hire turns out to disappoint. As the current employer, you should know how good your people are.

ui-explorer12 8y ago

The same thing happens when you've been with a mobile/telecom/etc company for a long time. They milk you for every penny they can get and give all the promo pricing to new customers. The pay sales higher commissions for new sign-ups and treat existing loyal clients like garbage. It really bugs me to have to waste the time to change providers for everything every ~2 years, but I'd feel like an idiot if I left thousands of dollars per year on the table. It's a stupid game, and companies are not immune.

davidbanham 8y ago
Many companies have done the sums on this and have dedicated churn teams. If you call and tell them you're planning to leave because you can get a better deal elsewhere they'll often match or better it in order to retain you. It's a bit iffy since if everyone did this all the time the incentive to advertise low rates gets removed. As an individual bonus, though, it means you don't need to do all the paperwork it takes to change providers.
- batiudrami 8y ago
  Most of the time it's as easy as calling and asking the first person you get connect to if you can "speak to retentions". I've always been put straight through.
- mszcz 8y ago
  I was able to get a better deal when I started the move process. After starting that the churn team seamed more receptive to my arguments ;)
- SuperGent 8y ago
  Some years ago, I accidentally ordered two new phones from different providers at the same time. AS I had a 14 day 'cool off' I phoned one company to cancel, as I didn't like that phone, and they offered me a much better deal. I then phoned the other to pretend to cancel and got a reduction in my bill there!
KozmoNau7 8y ago

icelancer 8y ago

Negotiating raises via counteroffers is a very dangerous practice. The employee will tell everyone how they got their raise (and it will get out), and suddenly you have a much larger problem on your hands rather than a single engineer leaving. Set up a fair, proactive, and objective way to obtain more money, and never deviate.

pixl97 8y ago
Or, when you leave a company remember to send a company wide email to your old coworkers telling them how much more you make now : )
- icelancer 8y ago
  Searching any listserv or salary database will get you that information.
  - mac01021 8y ago
    Not sure that's true. In most of the country/world local employer don't have salaries in a publicly available database. And there may not be enough of a tech scene in a city or region to bootstrap such a database easily.(assuming we're concerned specifically with tech/software salaries)
    - nitrogen 8y ago
      In the US, the Bureau of Labor Statistics can give a rough histogram of salaries by occupation for most metro areas. I can't ever remember how to find the data though.
    - giancarlostoro 8y ago
      In Orlando we have a Slack group for all the devs in the city and at the end of the year they do a salary / tech survey everyone fills out. Gives anybody in the city a good idea of what compensation looks like. Other cities could build similar surveys if they want to. You dont need a million devs just enough to be willing to pseudo-anonymously answer. Then based on pay by years of experience you can gague how low your salary is.

anotheryou 8y ago

jup, changing companies will yield me about 50% more pay, last raise was 6% (and than greedely rounded down a tiny bit further).

auslander 8y ago

> ..found it strange that companies don't give raises Because you'll tell your buddies about it, and they will try to get it too, having you as a proof it is feasible. New hires don't pose this threat to company coffins.

michaelt 8y ago
FYI a 'coffer' is a a strongbox or small chest for holding valuables. So a "threat to company coffers" is a threat to the bank account / bottom line. A threat to coffins is presumably https://youtu.be/KZ_7br_3y54?t=57 https://youtu.be/KZ_7br_3y54?t=57
- auslander 8y ago
  Lol! Typo of course, i meant coffers. Wait ..

JamesBarney 8y ago

The company's thinking works like this. Your good engineer might have been worth a $15k raise. But once it gets out you can get a 15k raise by just getting a new offer then another 3-4 people will go get offers and asks for raises. This ends up costing the company an extra $60k-$70k to retain your good engineer, and he might not be worth that to the company.

Ultimatt 8y ago
Right... but the engineer who leaves still made that extra money with a good offer. They just had to follow through on leaving. So what happens is everyone immediately finds and accepts a better offer. This is quite literally what happened in a startup I was with. When people talk about "churn" Im not sure they have witnessed entire disgruntled teams paid like 60% market rate (at best) just drop tools because the "mission" of the company wasn't enough anymore.
jdreyfuss 8y ago
But on the other hand, churn sparks more churn. So you don't pay your "good engineer" and she leaves. Other engineers start wondering why, and start looking around the market. Another one leaves, and then all of a sudden you have a ripple effect where several people follow suit and leave in a short time.
issa 8y ago
I would say that an engineer leaving can cost a company much more than the $60-70k you think the company would spend to keep them. You have to: 1) Hire a new person (this comes with costs!) 2) Train the new person (this takes time to do AND takes time away from the team for other tasks) 3) Pay the new person the going rate salary anyway

a012 8y ago

A lot of places would give a raise too, but frequently attached to a fixed raise rates. It's bad too because they'd rather hire a new one than break the rates to keep the experieced employees.

golergka 8y ago

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varjag 8y ago
> the company owner is a friend This has likely affected how much he was willing to go up in salary neg.
- deleted 8y ago
  [deleted]

ido 8y ago

The general case may still make not giving raises (or only small ones) more profitable - you don't know how many other employees didn't leave despite not getting big raises, it may more than make the difference for the odd person leaving because of it. Or how long they got that guy's labour at a discount before he wise up & got a better paid position elsewhere. It may have been years of savings by then.

piokoch 8y ago

I guess such employers strategy is taught at business schools. My ISP or mobile operator also gives much better offer to a new customer as compared to the existing one. The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less or pay more for a service. Probably this is not that easy to verify, as, for instance, employee might indeed stay and get lower compensation, but would also be less productive (if they fire me, I'll just find something else, probably better paid) and less creative (they pay me less, I have no incentive to improve "their" company).

ivanhoe 8y ago
> The question is if it works, that is if people indeed prefer stability and status quo so much that they are ready to earn less In IT I seriously doubt it since it's so easy to take a leap forward. And it's a huge question who are those people who choose to stay even when they feel unrewarded? If they do it for a fear of change or just being too lazy or unmotivated to bother with it, it can become a huge problem for a company. As those employees hang around and climb the hierarchy such bureaucratic mindset can seriously hurt company's agility and water down everything.

giancarlostoro 8y ago

One of my uncles used to work at a big defense contracting company. He told me sometimes they would give the advise of leaving the company and applying a few months later in order to get paid more money just to do the same work. It is stupid, but some have figured out stupid solutions to stupid problems.

semi-extrinsic 8y ago
I know some companies have solved this type of problem by computing some "seniority number" based e.g. on date of graduation / years of experience. So person A and B graduating at the same time -> A goes to work for FooCo, B works somewhere else for N years, then joins FooCo, both get the same salary for the same position. I.e. quitting and re-joining does nothing. Then the mechanism for rewarding high performers is to give them a better position (e.g. Engineer -> Senior Engineer -> Chief Engineer) instead of just raising their salary with the same title.

Spooky23 8y ago

It’s just smart business. When word gets out that the guy got a raise or he shows up in a new car, you’ll have a line of people with hat in hand. Comfort is valuable to people. About 30% of my people are making significantly less than their market value. Myself included. But, non-cash benefits are powerful as well.

jdreyfuss 8y ago
It's not smart business. It's often much more damaging to a company's bottom line to lose a strong performer and have to replace them than it is to pay them what they're worth. It's also damaging to culture when people just start disappearing because they got market-rate offers. It is worth calling out that compensation is more than just salary however. But if strong performers are consistently leaving your company due to compensation, then you're doing something wrong. The former head of talent at Netflix wrote a great article on hiring and compensation that touches on these points: https://hbr.org/2018/01/how-to-hire https://hbr.org/2018/01/how-to-hire
- intelliderp 8y ago
  One quote says it all: > We decided we didn’t want a system in which people had to leave to be paid what they were worth.
- Spooky23 8y ago
  If you provide regular raises and don’t treat people poorly, you’ll be fine. The bigger point in that article is that you need to look at people holistically.

systemspeed 8y ago

I'm guessing that on average the company saves money this way, since people aren't robots and tend to develop a sense of community with their coworkers. Companies possibly exploit this for savings.