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> Salaries don't go up and down with profits. It objectively the case that salaries vary with profits. Are you just saying you think they ought not? If the co
by asdfasgasdgasdg 7y ago
> Salaries don't go up and down with profits.
It objectively the case that salaries vary with profits. Are you just saying you think they ought not?
If the company is losing money, you can bet raises will be harder to come by. When Facebook was poaching a lot of Googlers in the late aughts and early teens, base salaries went up a bunch to make the job more competitive. But if Google hadn't been profitable there would have been no headroom to make that change. Those are two (of many) ways that salaries vary with profits.
- WalterBright 7y ago> It objectively the case that salaries vary with profits. Salaries are a function of the perceived value of the particular employee to the company. If the salary is too low, he'll be poached by another company. If it's too high, he's likely to be laid off or otherwise pushed out. For example, if an employee contributes $100 in value to the company, his ideal compensation would be $100 minus the opportunity cost of the money, which is about $15. This has nothing to do with the profit of the company as a whole. It is true that companies often have a lot of difficulty computing what the actual dollar value of a particular employee is, but there is no doubt that the company will do badly if it gets it too far wrong too many times. Companies falling on hard times that try to cut salaries across the board (or limit raises, same thing) do so at great peril - the underpaid (relative to their contribution) employees leave and the overpaid stay. I.e. this can result in a vicious death spiral. A much harder, but far more effective strategy is to identify the overpaid ones and get rid of them.