5 ms·

At a recent all-hands about hiring, and wages for existing/future employees, my CEO blatantly said “we look around at the market and set wages based on the goin

At a recent all-hands about hiring, and wages for existing/future employees, my CEO blatantly said “we look around at the market and set wages based on the going rate”. Something totally innocuous to someone with his background. Weirdly revealing to many employees at a rapidly advancing startup without much background in finance: the company as a whole doesn’t even consider output when setting wages.

polskibus 5y ago
Everyone does it to a degree when they're buying a service or a product. It's the market that dictates the price, unless the company's lifeline depends to a high degree on a particular employee and his non transferrable knowledge and skills that are specific to the company.
- deleted 5y ago
  [deleted]
- malandrew 5y ago
  child comment I was replying to was deleted so adding this to this parent comment: Likewise I've met plenty of engineers that are not profitably replaceable. Almost every SWE is replaceable, but many it makes no sense to replace and that usually correlates with their tenure working on a particular system. I myself have several years of knowledge I've accumulated working in a specific problem space at the company. It would take a new hire minimum 2-3 years if not more to accumulate the specialized knowledge I have. So if I were to leave tomorrow over pay, they would have to hire a replacement at the market rate (salary and a 4 year equity grant). That replacement would be far less productive than me for minimum 2 years, so they pay out 4 years of equity now to see equal productivity 2 years from now and if they continue the same pay strategy, that new hire will leave after 4 years of equity has vested. They basically get 2 years of productivity 2 years from now for the price of 4 years of equity today. It's just stupid to play chicken with salary when there are considerable opportunities costs for doing so and you're essentially paying double for half. It's not just me either. I see it with folks across the board at the company. The only ones I consider relatively fungible are those that team hop every 1 to 1.5 years.
closeparen 5y ago
There seems to be a contingent of people floating around the internet with the idea that wages are "output minus," or more commonly that prices are "cost plus," and then getting all righteously indignant when they aren't. That is now how a market economy works! I mean, you can't usually sell for less than cost or pay more than productivity over the long term, but sometimes you do (loss leaders, R&D investments), and you can definitely do the reverse.
- wallacoloo 5y ago
  > That is not how a market economy works! Well, you're right. I'm not in disagreement with the way in which dispassionate markets are understood to behave. I'm in disagreement that such a dispassionate job market is any sort of ideal that ought to be embraced by the average joe -- and that we've largely accepted it as if it were (or at least as if it were "good enough"). Let's say I go to a potluck and bring store-bought cookies as my contribution. My friends say "come on, wallacoloo, we all worked our butts off preparing good food for you: we deserve better from you." I reply, "well then, find a new friend who's willing to make better food for you and show them to me. Once you show me that such a man exists, I'll contribute to you as much as he would." It's an absurd scenario. It's insulting. That's not any type of relationship we should aim for. But suddenly, once you introduce enough indirection (money, specialization, larger-sized groups), I'm supposed to think that making every such interaction into an adversarial one is somehow proper.
  - HeyLaughingBoy 5y ago
    I disagree. The difference is friendship vs commerce. Your employer-employee relationship is commercial, so it's reasonable of the CEO to think of your salary as market-driven, just as it is reasonable of you to leave when the market rate rises above what you're paid. It's business, you shouldn't take it personally. OTOH, the potluck is among friends. You're expected to have your friends' best interests in mind and to enjoy being around them, so it's not surprising that they'd be offended if they spent hours cooking and you just ran to the store and bought a cheap salad or some cookies.
deleted 5y ago
[deleted]

polskibus 5y ago

Everyone does it to a degree when they're buying a service or a product. It's the market that dictates the price, unless the company's lifeline depends to a high degree on a particular employee and his non transferrable knowledge and skills that are specific to the company.

deleted 5y ago
[deleted]
malandrew 5y ago
child comment I was replying to was deleted so adding this to this parent comment: Likewise I've met plenty of engineers that are not profitably replaceable. Almost every SWE is replaceable, but many it makes no sense to replace and that usually correlates with their tenure working on a particular system. I myself have several years of knowledge I've accumulated working in a specific problem space at the company. It would take a new hire minimum 2-3 years if not more to accumulate the specialized knowledge I have. So if I were to leave tomorrow over pay, they would have to hire a replacement at the market rate (salary and a 4 year equity grant). That replacement would be far less productive than me for minimum 2 years, so they pay out 4 years of equity now to see equal productivity 2 years from now and if they continue the same pay strategy, that new hire will leave after 4 years of equity has vested. They basically get 2 years of productivity 2 years from now for the price of 4 years of equity today. It's just stupid to play chicken with salary when there are considerable opportunities costs for doing so and you're essentially paying double for half. It's not just me either. I see it with folks across the board at the company. The only ones I consider relatively fungible are those that team hop every 1 to 1.5 years.

closeparen 5y ago

There seems to be a contingent of people floating around the internet with the idea that wages are "output minus," or more commonly that prices are "cost plus," and then getting all righteously indignant when they aren't. That is now how a market economy works! I mean, you can't usually sell for less than cost or pay more than productivity over the long term, but sometimes you do (loss leaders, R&D investments), and you can definitely do the reverse.

wallacoloo 5y ago
> That is not how a market economy works! Well, you're right. I'm not in disagreement with the way in which dispassionate markets are understood to behave. I'm in disagreement that such a dispassionate job market is any sort of ideal that ought to be embraced by the average joe -- and that we've largely accepted it as if it were (or at least as if it were "good enough"). Let's say I go to a potluck and bring store-bought cookies as my contribution. My friends say "come on, wallacoloo, we all worked our butts off preparing good food for you: we deserve better from you." I reply, "well then, find a new friend who's willing to make better food for you and show them to me. Once you show me that such a man exists, I'll contribute to you as much as he would." It's an absurd scenario. It's insulting. That's not any type of relationship we should aim for. But suddenly, once you introduce enough indirection (money, specialization, larger-sized groups), I'm supposed to think that making every such interaction into an adversarial one is somehow proper.
- HeyLaughingBoy 5y ago
  I disagree. The difference is friendship vs commerce. Your employer-employee relationship is commercial, so it's reasonable of the CEO to think of your salary as market-driven, just as it is reasonable of you to leave when the market rate rises above what you're paid. It's business, you shouldn't take it personally. OTOH, the potluck is among friends. You're expected to have your friends' best interests in mind and to enjoy being around them, so it's not surprising that they'd be offended if they spent hours cooking and you just ran to the store and bought a cheap salad or some cookies.

deleted 5y ago

[deleted]