6 ms·

This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit m

This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit margins are huge.

mister_hn 7y ago
Like Amazon, Facebook, Google, Apple or Microsoft?
- luckylion 7y ago
  Amazon has huge profit margins because they don't do this. If they paid their warehouse staff, drivers etc a minimum of $70k a year, their retail margins would look very different. For Facebook, Google, Apple and Microsoft, not much would change, they don't employ that many people below the threshold, I think, unless you count the outsourced contractors that do moderation, annotation etc. This company's policy doesn't extend to the company they outsource the cleaning of their office to either, so that wouldn't be a fair comparison.
fsloth 7y ago
Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employees increased. Now, without exact numbers, I can't say economically this or that. But effectively this was not a zero sum game. The company was not paying more for the same outcome, they were paying more for more output. The output of the company increased. This is how investments are usually supposed to work, you put money in, and reap profits. What makes this a bit more difficult to gauge that it's likely the increased performance does not come from individual output, but from a better cohesion of the team which generally makes things always easier and efficient. What people often get wrong is that they think about wages atomically - I pay this guy this much and he delivers this. Whereas when you are having a team of workers (whose job is not to be a mindless drone) and whose output depends on the co-operationnof the individuals, often the second order effects are more important. For example: rewards. You give a huge reward to the single top performer in your company. What happens? Everybody becomes jealous of him, and some will feel cheated since they contributed heavily to the projects the individual participated in. Future collaboration will likely suffer. In fields were output is purely of individual performance (some sales jobs, logging, etc) this calculus is of course different. In these situations the atomic cost analysis probably works.
- wyager 7y ago
  You have no skin in the game, so you should discount your (displayed) confidence a bit. Obviously if paying more money was a guaranteed way to increase net productive output, the people with skin in the game who think about this every single day would do it. > This is how investments are usually supposed to work, you put money in, and reap profits. You are using cargo-cult reversed-causality reasoning. Just because you put money into something doesn’t mean you should expect to get more money back out. If I dig a big hole in the ground and throw wads of cash into it, I don’t expect market returns.
  - fsloth 7y ago
    I think your reasoning is too atomic. Think about the call center worker who was stressed out. How well will he respond to out of script situations when he's stressed? When he's in top shape, fully emotionally invested in his work? What about his colleagues? In out of script situations he likely needs the selfless assistance of other employees. How well will this interaction go if the persons are co-operating in a friendly manner, fully invested in the customers problem, whereas if they are both stressed and unable in any high level thinking? I would guess customer satisfaction is greater if the call center interaction in exceptuonal situation is handled by a better performing team. This same analogue applies to most functions in a company who's output depends on the co-operation of it's employees and is not trivially automated. This is not cargo cult reasoning. Self guided teams are recognized to be a highly effective form of organizing a workforce. If you make everybody motivated and emotionally able to reach out as well as respond, you effectively create a situation where the team self organizes dynamically around incoming problems. Like I stated, this depends on the nature of a company. A lone logger has somewhat of a constant output. You can't increase the output of loggers suddenly by paying them more.
    - wyager 7y ago
      “This is how investments are usually supposed to work” is absolutely cargo cult reasoning and doesn’t make any sense. Cool list of reasons to pay people more - I guarantee you that every HR department in the universe has thought of them, as well as a countervailing list of reasons not to. If you see that everyone with money on the line is doing something different from what you propose, your response should not be “wow those people are dumb”, but “my model is probably not accurate because I’ve only been thinking about this for the duration of a low-effort HN post”.
benreesman 7y ago
Can you elaborate a bit about what you mean by inefficient? People mean a lot of different things when they use the word “efficient” in a financial/economic context.
- domlebo70 7y ago
  Well would you pay 10 dollars a liter to fill your car up, when you can get perfectly good fuel for $1.50 a liter?
  - mouzogu 7y ago
    very bezosian. not sure you could, or should, apply this analogy to a human being though.
  - benreesman 7y ago
    I’m not sure I follow the analogy, but I certainly pay extra for high-octane gasoline when I’m filling up a performance automobile.
    - uk_programmer 7y ago
      But you wouldn't pay £1.30 for high octane petrol when you could pay £1.25 across the road.
  - fsloth 7y ago
    There is a difference between a team of people, and the set of people working individually. An extreme example - there is a reason a SEAL team is called a team. This is the problem with wage discussions. People equate a measurable commodity like gasoline to the number of hours worked at a specific job. Sometimes this is a sufficient analogue, but often times reward mechanisms are more complex than that. There is a good reason rewards mechanisms in jobs are a lively field of academic study. People just forget this does not only apply to top managers.
    - uk_programmer 7y ago
ptah 7y ago
simple: cut the ceo's pay to keep payroll expenses the same

This is very nice of the owner, but extremely inefficient economically. Which means most companies can't afford to do something like that. Only if your profit margins are huge.

mister_hn 7y ago

Like Amazon, Facebook, Google, Apple or Microsoft?

luckylion 7y ago
Amazon has huge profit margins because they don't do this. If they paid their warehouse staff, drivers etc a minimum of $70k a year, their retail margins would look very different. For Facebook, Google, Apple and Microsoft, not much would change, they don't employ that many people below the threshold, I think, unless you count the outsourced contractors that do moderation, annotation etc. This company's policy doesn't extend to the company they outsource the cleaning of their office to either, so that wouldn't be a fair comparison.

fsloth 7y ago

Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employees increased. Now, without exact numbers, I can't say economically this or that. But effectively this was not a zero sum game. The company was not paying more for the same outcome, they were paying more for more output. The output of the company increased. This is how investments are usually supposed to work, you put money in, and reap profits. What makes this a bit more difficult to gauge that it's likely the increased performance does not come from individual output, but from a better cohesion of the team which generally makes things always easier and efficient. What people often get wrong is that they think about wages atomically - I pay this guy this much and he delivers this. Whereas when you are having a team of workers (whose job is not to be a mindless drone) and whose output depends on the co-operationnof the individuals, often the second order effects are more important. For example: rewards. You give a huge reward to the single top performer in your company. What happens? Everybody becomes jealous of him, and some will feel cheated since they contributed heavily to the projects the individual participated in. Future collaboration will likely suffer. In fields were output is purely of individual performance (some sales jobs, logging, etc) this calculus is of course different. In these situations the atomic cost analysis probably works.

wyager 7y ago
You have no skin in the game, so you should discount your (displayed) confidence a bit. Obviously if paying more money was a guaranteed way to increase net productive output, the people with skin in the game who think about this every single day would do it. > This is how investments are usually supposed to work, you put money in, and reap profits. You are using cargo-cult reversed-causality reasoning. Just because you put money into something doesn’t mean you should expect to get more money back out. If I dig a big hole in the ground and throw wads of cash into it, I don’t expect market returns.
- fsloth 7y ago
  I think your reasoning is too atomic. Think about the call center worker who was stressed out. How well will he respond to out of script situations when he's stressed? When he's in top shape, fully emotionally invested in his work? What about his colleagues? In out of script situations he likely needs the selfless assistance of other employees. How well will this interaction go if the persons are co-operating in a friendly manner, fully invested in the customers problem, whereas if they are both stressed and unable in any high level thinking? I would guess customer satisfaction is greater if the call center interaction in exceptuonal situation is handled by a better performing team. This same analogue applies to most functions in a company who's output depends on the co-operation of it's employees and is not trivially automated. This is not cargo cult reasoning. Self guided teams are recognized to be a highly effective form of organizing a workforce. If you make everybody motivated and emotionally able to reach out as well as respond, you effectively create a situation where the team self organizes dynamically around incoming problems. Like I stated, this depends on the nature of a company. A lone logger has somewhat of a constant output. You can't increase the output of loggers suddenly by paying them more.
  - wyager 7y ago
    “This is how investments are usually supposed to work” is absolutely cargo cult reasoning and doesn’t make any sense. Cool list of reasons to pay people more - I guarantee you that every HR department in the universe has thought of them, as well as a countervailing list of reasons not to. If you see that everyone with money on the line is doing something different from what you propose, your response should not be “wow those people are dumb”, but “my model is probably not accurate because I’ve only been thinking about this for the duration of a low-effort HN post”.

benreesman 7y ago

Can you elaborate a bit about what you mean by inefficient? People mean a lot of different things when they use the word “efficient” in a financial/economic context.

domlebo70 7y ago
Well would you pay 10 dollars a liter to fill your car up, when you can get perfectly good fuel for $1.50 a liter?
- mouzogu 7y ago
  very bezosian. not sure you could, or should, apply this analogy to a human being though.
- benreesman 7y ago
  I’m not sure I follow the analogy, but I certainly pay extra for high-octane gasoline when I’m filling up a performance automobile.
  - uk_programmer 7y ago
    But you wouldn't pay £1.30 for high octane petrol when you could pay £1.25 across the road.
- fsloth 7y ago
  There is a difference between a team of people, and the set of people working individually. An extreme example - there is a reason a SEAL team is called a team. This is the problem with wage discussions. People equate a measurable commodity like gasoline to the number of hours worked at a specific job. Sometimes this is a sufficient analogue, but often times reward mechanisms are more complex than that. There is a good reason rewards mechanisms in jobs are a lively field of academic study. People just forget this does not only apply to top managers.
  - uk_programmer 7y ago

ptah 7y ago

simple: cut the ceo's pay to keep payroll expenses the same