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I am so fascinated at how my grandfather would spend decades at a company, my Dad would spend a decade, and now people decline jobs over the expectation that th
by MattGaiser 5y ago
I am so fascinated at how my grandfather would spend decades at a company, my Dad would spend a decade, and now people decline jobs over the expectation that they stay 1 year. And I was in my first job 51 weeks.
I don't think you are wrong in doing so as the market in tech moves fast while employers move like slugs, it is just such a shift from what I grew up to expect.
- endtime 5y agoThe problem isn't necessarily that the employee expects to want to leave in under a year, so much as they don't want the company to have an incentive to let them go in under a year.
- quelltext 5y agoNow they'd have an incentive to let them go in under a quarter, by that logic. Not sure if that's really their concern here. Companies don't just ditch reasonably well performing employees because they want to avoid compensating them. That would already mean that each time RSUs vest the company would have an incentive to fire.
- dodobirdlord 5y agoSure, and they do. It’s best to avoid that incentive by having stock grants vest frequently and fractionally. It’s essentially treated as salary, it might as well be paid out fractionally at the same frequency as salary so that no perverse incentives exist.
- ErikVandeWater 5y agoThis isn't complicated. If an employee is having a bad first year or the company is performing poorly it incentivizes firing.
- wpietri 5y agoMuch less so, because productivity is low in the first few months.
- achow 5y agoHiring is one of the most time sucking activity, and the whole notion of stocks/RSUs is to make people stay.
- MattGaiser 5y agoCompanies sure don't act that way given that people generally need to leave for a raise.
- fragmede 5y agoThat's fascinating reasoning. It makes sense, but that's the same sort of logic where employers will give hourly employees 39.5 hours a week because if you give them 40 they become "full time". Has that kind of short sighted thinking really invaded the software engineering industry? That's scary.
- ErikVandeWater 5y agoWhy would avoiding paying employees benefits be short-sighted thinking? If anything it was short sighted of the US government to ban increased wages during WWII - leading to employers paying benefits which gums up the labor market.
- wpietri 5y agoIt's short-sighted because employees are humans, which perform much better when healthy and excited to work. Stingy/hostile employers have high turnover and employees who treat work as a zero or negative sum game. A good example of this is the This American Life story on NUMMI: https://www.thisamericanlife.org/561/nummi-2015 https://www.thisamericanlife.org/561/nummi-2015 Toyota took one of GM's worst plants and turned it into one of its best by treating workers with respect. Hearing the workers talk about the transformation stunned me.
- qqtt 5y agoEmployers are also human, and prone to the fallible traps of responsibility that befall many people managers and executives, including but not limited too: * not trusting your team to do their work and by extension questioning whether they are working "hard enough" (or dreaming of ways to extract more blood from stones) * some flavor of impostor syndrome, needing to prove your value by making sweeping changes to the team process even if inheriting a successful team * not having either the back bone or clout to question status quo, including demoralizing cultural habits such as stack ranking There is a reason the majority of employers (including managers) are generally bad and the good ones are few and far between - it's human nature. I'm reminded of Microsoft Japan piloting a 4 day work week and announcing in 2019 that the trial ended up increasing productivity by 40%. They ended up not making the change permanent. One small company in New Zealand - Perpetual Guardian - did the same trial in 2018 and saw the same effect, they made it permanent. Most companies operate like Microsoft.
- riffraff 5y agoDo companies really fire people at week 51 to save some stock? Hiring is tough and you waste a lot of time onboarding people and getting them to a productive state, firing them just to save some stock after 50 weeks seems a bad idea, not to mention the morale implications.
- yroc92 5y agoHappened to me.
- ramphastidae 5y agoIt absolutely happens. I worked as an early employee at a company for its first 11 months … the founder was the main investor and a serial entrepreneur. He clashed with the CTO from the start and progress stalled … after a major disagreement, he decided he would rather sell the company to a competitor than continue to deal with the CTO. At the 11 month mark we were all told that we were fired, the company was shutting down, and and if we wanted severance, we’d have to sign away our rights to any claims from the sale.
- mathattack 5y agoCompanies do let people go to avoid granting stock. Banks also do it to stiff employees on their bonus. For startups it’s a forcing function to decide if they want to keep someone. (I’m not saying this is right, just explaining why it happens)
- ericpruitt 5y agoSomething I don't see mentioned in the sibling comments is that this can also put the employee in a bad position when they don't like their job but are in the mid to late stages if their first year. You either tough it out the remaining _X_ months or quit and take a huge hit in income because you're leaving before the equity cliff.
- celticninja 5y agoI could see that with a 2-5 year cliff but 12 months is not a long time in a job.
- ericpruitt 5y agoI wrote "... when they *don't like their job* but are in the *mid to late stages* ..." so in this case, it'd be 3 to 6 months which isn't a long time to hold a job in general, but it is a long time when you hate your job.
- Cerium 5y agoThings are very different in a field with long product cycles. If it takes 5 years to get a product into the field then the company has a huge incentive to retain employees.
- throwaway09223 5y agoSure, but if you're depending on the cliff for retention you're working against your own interests: Employees will leave the 53rd week, just after you've spent all that effort training them within your environment. Long term retention hinges on long term adequate compensation and long term quality environments. There's no need for cliffs.
- Cerium 5y agoSure, there is no need for a cliff, but if you are attracting the right talent with adequate compensation (that keeps up with market changes!) the cliff does not matter.
- kerng 5y agoHow can you attract the right talent when competing with companies, like Google, Amazon (with their cash bonus payment model to compensate their weird back weighted RSUs) or Netflix being able to hand out offers without any of these risks? An engineer with family is unlikely to take such a risk and rather join Google or even Amazon where compensation is guaranteed.
- deleted 5y ago[deleted]
- bogomipz 5y agoI thought the OP meant that since most of the time startups want you to sell you on taking less in salary in lieu of options it makes sense to start vesting those options immediately. I didn't take it to mean that they didn't intend to stay for at least a year. Looking at it that way I think it does make sense. The lower salary take place immediately.
- deleted 5y ago[deleted]
- ec109685 5y agoIt also smooths out when people leave by spreading grants out. Some companies have stock grants vest and bonus payout all at once, once per year.
- toomanybeersies 5y agoI was in a meeting the other day where one of the attendees had been working at the company for 20 years and another for 15. By my guess, I reckon people work here for about 7 years on average before moving on. In my experience, people tend to be either lifers and stay for 10+ years, or bounce between jobs every year or two. Lifers tend to accumulate in companies that cater towards them (good work/life balance and job security) due to low employee turnover, so if you're in the other group, it appears that everyone in the industry only works for a year.
- rightbyte 5y agoI believe this is right. Also, bad companies with high attrition like eg. Amazon hire alot more (hires/FTE/year). So you have a higher chance ending up at such places then their share of all companies. I mean, average tenure is probably the best indication of how good a employeer is (unless there are few companies at a location). I was pretty suprised to hear it was 2 years at Google.
- hintymad 5y agoThere's shift of context too. In our grandparents' generation, companies also promised to keep the workers around and sometimes to give them pension. There would be a steady career path based on seniority as well. Something along the lines of that you take of the company and we will take care of you. None of such promises exists nowadays.