4 ms·

Ineffficient? It would depend on the total value add of each employee. As stated, the performance of the company increased. The capability of individual employe

by 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”.
    - fsloth 7y ago
      "If you see that everyone with money on the line is doing something different from what you propose," But that's precisely what I don't see. There are lots of examples of small high performing teams with way above 'market rate' salaries. I know several in my smallish home town (Helsinki area, 1.5M population). Some of these are in consulting, others in gaming. Sure, they are all in programming, but still their compensations are way higher than the local market would dictate for the "positions". For non-programming examples, there are manufacturing companies who pay an excellent rate for their employees if you compare with the global market (... china ...) but their quality and output is so good it makes total financial sense due to smart automation. You can't pay your employees more than you earn, and you need to get a certain interest on the invested capital. But other than that... I don't really understand why there would be any hard constraints on how much you can pay your employees if the numbers add up.
      - wyager 7y ago
        Once again, you've inverted the causal relationship. The people who get paid more tend to be able to command higher fees because their economic output is higher. You can't take a random person, pay them 10% more, and expect to get 10+% more productivity out of them, ceteris paribus. It's not about "hard constraints"; it's about economic optimization, which involves getting the highest possible return on your capital. If paying everyone $70k were a reliable way to do that, everyone would be doing it.
- watr 7y ago
  > 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. You should just read the article again. It does actually mention the changes that were observed after the 70k minimum. Talent retention and employee satisfaction goes a long way productivity-wise.
  - wyager 7y ago
    > You should just read the article again. I wasn’t responding to the article. I was responding to a comment. You should just read that again.
kqr 7y ago
Even sales benefits immensely from cooperation over competition. Imagine e.g. holding on to more leads than you have time to follow up because you don't want to risk giving them away to "the top performer" of the sales team.

by fsloth 7y ago

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”.
  - fsloth 7y ago
    "If you see that everyone with money on the line is doing something different from what you propose," But that's precisely what I don't see. There are lots of examples of small high performing teams with way above 'market rate' salaries. I know several in my smallish home town (Helsinki area, 1.5M population). Some of these are in consulting, others in gaming. Sure, they are all in programming, but still their compensations are way higher than the local market would dictate for the "positions". For non-programming examples, there are manufacturing companies who pay an excellent rate for their employees if you compare with the global market (... china ...) but their quality and output is so good it makes total financial sense due to smart automation. You can't pay your employees more than you earn, and you need to get a certain interest on the invested capital. But other than that... I don't really understand why there would be any hard constraints on how much you can pay your employees if the numbers add up.
    - wyager 7y ago
      Once again, you've inverted the causal relationship. The people who get paid more tend to be able to command higher fees because their economic output is higher. You can't take a random person, pay them 10% more, and expect to get 10+% more productivity out of them, ceteris paribus. It's not about "hard constraints"; it's about economic optimization, which involves getting the highest possible return on your capital. If paying everyone $70k were a reliable way to do that, everyone would be doing it.
watr 7y ago
> 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. You should just read the article again. It does actually mention the changes that were observed after the 70k minimum. Talent retention and employee satisfaction goes a long way productivity-wise.
- wyager 7y ago
  > You should just read the article again. I wasn’t responding to the article. I was responding to a comment. You should just read that again.

kqr 7y ago

Even sales benefits immensely from cooperation over competition. Imagine e.g. holding on to more leads than you have time to follow up because you don't want to risk giving them away to "the top performer" of the sales team.