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^This. I've always had the philosophy that if you want to retain good employees, pay them more before they ask for more. If they have reached a point where the

^This. I've always had the philosophy that if you want to retain good employees, pay them more before they ask for more. If they have reached a point where they had to ask for more, they're probably going to leave soon. I don't understand how do companies fail to realize this. Say an engineer leaves because you didn't get him that 20% pay bump. Even in the highest ranks of engineering, that's like what a 100k? 30k-40k on an average. Now imagine you go through the whole recruitment cycle. You have anywhere between 8-12 weeks of productivity loss of an engineer. Then you waste time from the productivity of recruiter, hiring manager, hiring engineers on the team, etc., all of whom are highly paid. You cycle through 8-10 candidates. Then you finally get the person you need. In my experience, it takes at least a month to get onboarded, usually more. And it takes at least 6 months to get to productivity levels of the engineer that just left if your new candidate is good. All in all you wasted almost 6 months of engineering time worth of productivity, which easily exceeds the money you saved not giving that 20% raise. All of this, assuming the new guy didn't negotiate more than the previous one. Seriously, get your shit together.

missedthecue 6y ago
It's basic economics. Everyone acts in their rational self interest, including your boss. Your boss doesn't get in trouble if you decide to leave. Your boss gets in trouble if his budget gets way out of control by giving promotions and raises left and right. On the converse, your boss doesn't pay the cost of hiring new people. It doesn't come out of his pocket. But giving 20% raises to everyone he has the suspicion of leaving will get him canned real quick, imposing a real and sizeable cost on him. The tippy top dogs of the company aren't completely stupid for running things this way. Budgets would get out of control in a hurry if they let managers do whatever they want with wages. Nepotism would run rampant without costly oversight and surveillance. Employees would learn to take advantage of easy raises. So the company bears a smaller cost (employee turnover) rather than the bigger and unpredictable costs of frequent and decentralized wage raises. There's not a great solution to this. It's an example of market failure. Everyone acting in rationally on an individual scale does not lead to group rationality.
- mlthoughts2018 6y ago
  In every company I’ve worked in, a manager gets in much worse trouble if a good engineer reporting to them leaves rather than exceeding budget. Most typically middle managers are not allowed to significantly alter budget for bigger raises that retain important people, yet are then punished or admonished over the comparatively worse budget loss taken through recruiting and onboarding to hire a backfill, as well as getting a reputation for being a bad manager if you can’t work miracles and retain people who deserve raises without giving them raises. The economics don’t work out the way you describe at all, and few parties in the situation act rationally.
  - missedthecue 6y ago
    Acting rationally is not what I said. I said that they act in their rational self interest. That's a specific concept.
    - mlthoughts2018 6y ago
      You are trying to split hairs. “Acting rationally” and “acting in one’s own (rational) self-interest” are widely synonymous and it’s beyond unreasonable to expect readers to view them differently. My response to you was already treating them synonymously. It’s not acting in self-interest for executives to create unnecessary turnover due to withholding appropriate compensation. This leads to worse financial loss than paying high raises, and ultimately executives and managers get fired regularly by acting against their own self-interest by withholding meritocratic raises.
      - missedthecue 6y ago
        'Rational self interest' is a fairly widely known economic principle. Everyone acts in their own rational self interest, including infants, cats, and horseflies. Infants, cats, and horseflies are certainly not logicians, but when they want something, they will generally take the steps necessary to try to achieve it. https://courses.lumenlearning.com/wm-macroeconomics/chapter/reading-rationality-and-self-interest/ https://courses.lumenlearning.com/wm-macroeconomics/chapter/... A great way to think about this is voting. If we were all acting logically, everyone would vote, because in theory, we'd all be better off. But because of the principle of rational self interest, many or most people don't vote because the cost of researching candidates and policies and going to the effort of voting is very often higher than the benefit (a 1 in 100,000,000 chance of influencing the outcome of the election)
vehementi 6y ago
They're betting, correctly I think, that most people won't actually bother quitting. So the costly scenario you're saying doesn't play out as much as you must think, and it's cheaper to let that happen occasionally and keep the rest underpaid
- mlthoughts2018 6y ago
  How does this align with turnover being so high at so many companies?
  - vehementi 6y ago
    Is it high? Or is it in single digit percentages?
    - mlthoughts2018 6y ago
      Single digit percentages, especially if it is comprised of senior engineers trained in the complex firefighting it takes to keep the company’s inevitable shitty tech debt ball of mud working, is extremely high. “Is our turnover similar to peer companies” is a categorically wrong question to be asking. “Could I save more money by paying better compensation and realizing less turnover” is the only rational question to ask - yet business people who are great at pursuing rationally optimal outcomes in their business offerings to customers often fail tragically to apply similar simple cost/benefit economics to their treatment of employees, and either leave money on the table they could otherwise have had, or more often create conditions for completely failed business units, failed products and ultimately failed companies.

missedthecue 6y ago

It's basic economics. Everyone acts in their rational self interest, including your boss. Your boss doesn't get in trouble if you decide to leave. Your boss gets in trouble if his budget gets way out of control by giving promotions and raises left and right. On the converse, your boss doesn't pay the cost of hiring new people. It doesn't come out of his pocket. But giving 20% raises to everyone he has the suspicion of leaving will get him canned real quick, imposing a real and sizeable cost on him. The tippy top dogs of the company aren't completely stupid for running things this way. Budgets would get out of control in a hurry if they let managers do whatever they want with wages. Nepotism would run rampant without costly oversight and surveillance. Employees would learn to take advantage of easy raises. So the company bears a smaller cost (employee turnover) rather than the bigger and unpredictable costs of frequent and decentralized wage raises. There's not a great solution to this. It's an example of market failure. Everyone acting in rationally on an individual scale does not lead to group rationality.

mlthoughts2018 6y ago
In every company I’ve worked in, a manager gets in much worse trouble if a good engineer reporting to them leaves rather than exceeding budget. Most typically middle managers are not allowed to significantly alter budget for bigger raises that retain important people, yet are then punished or admonished over the comparatively worse budget loss taken through recruiting and onboarding to hire a backfill, as well as getting a reputation for being a bad manager if you can’t work miracles and retain people who deserve raises without giving them raises. The economics don’t work out the way you describe at all, and few parties in the situation act rationally.
- missedthecue 6y ago
  Acting rationally is not what I said. I said that they act in their rational self interest. That's a specific concept.
  - mlthoughts2018 6y ago
    You are trying to split hairs. “Acting rationally” and “acting in one’s own (rational) self-interest” are widely synonymous and it’s beyond unreasonable to expect readers to view them differently. My response to you was already treating them synonymously. It’s not acting in self-interest for executives to create unnecessary turnover due to withholding appropriate compensation. This leads to worse financial loss than paying high raises, and ultimately executives and managers get fired regularly by acting against their own self-interest by withholding meritocratic raises.
    - missedthecue 6y ago
      'Rational self interest' is a fairly widely known economic principle. Everyone acts in their own rational self interest, including infants, cats, and horseflies. Infants, cats, and horseflies are certainly not logicians, but when they want something, they will generally take the steps necessary to try to achieve it. https://courses.lumenlearning.com/wm-macroeconomics/chapter/reading-rationality-and-self-interest/ https://courses.lumenlearning.com/wm-macroeconomics/chapter/... A great way to think about this is voting. If we were all acting logically, everyone would vote, because in theory, we'd all be better off. But because of the principle of rational self interest, many or most people don't vote because the cost of researching candidates and policies and going to the effort of voting is very often higher than the benefit (a 1 in 100,000,000 chance of influencing the outcome of the election)

vehementi 6y ago

They're betting, correctly I think, that most people won't actually bother quitting. So the costly scenario you're saying doesn't play out as much as you must think, and it's cheaper to let that happen occasionally and keep the rest underpaid

mlthoughts2018 6y ago
How does this align with turnover being so high at so many companies?
- vehementi 6y ago
  Is it high? Or is it in single digit percentages?
  - mlthoughts2018 6y ago
    Single digit percentages, especially if it is comprised of senior engineers trained in the complex firefighting it takes to keep the company’s inevitable shitty tech debt ball of mud working, is extremely high. “Is our turnover similar to peer companies” is a categorically wrong question to be asking. “Could I save more money by paying better compensation and realizing less turnover” is the only rational question to ask - yet business people who are great at pursuing rationally optimal outcomes in their business offerings to customers often fail tragically to apply similar simple cost/benefit economics to their treatment of employees, and either leave money on the table they could otherwise have had, or more often create conditions for completely failed business units, failed products and ultimately failed companies.