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There's fundamental reasons why programmer compensation is high. It's hard to replace the work of one good programmer with many mediocre ones, and measuring the
by ThrustVectoring 7y ago
There's fundamental reasons why programmer compensation is high. It's hard to replace the work of one good programmer with many mediocre ones, and measuring the amount of programmer output is difficult.
These factors lead to tournament-style compensation. Instead of paying workers in proportion to their output, rank-order them and have a compensation bump on promotion that is large enough to incentivize efforts to compete for it. If workers are risk-neutral, this is as efficient of a way to compensate as piece work is, and has the additional benefit of only requiring employers to rank-order their employees, rather than generate an objective measure of their productivity.
Professional sports is the best example of this phenomenon - no matter how many applicants a team gets, they can only have five players on the court at one time. NBA player salaries are not materially threatened by additional entrants. Instead, the additional competition largely gets channeled into making it harder to remain an NBA player.
- tepidandroid 7y agoThis makes a lot of sense, which is probably the reason why Microsoft has implemented such a system in the past. Unfortunately, it does have the unfortunate tendency of creating toxic workplaces, which hampers productivity.
- ThrustVectoring 7y agoExplicit stack-ranking is the myopic version of this - I'm more talking about the pretty standard "if you distinguish yourself at work you can get a promotion with an associated pay increase" that goes on at pretty much every company. It's not called a rank ordering, but there's only so much room for employees to distinguish themselves, so in practice it's roughly the same for those above the cutoff.