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Why don't tech companies pay their engineers to stay?

• heisgone 5y ago
  You have to see this from the point of view of a middle-manager whose main concern is his own career and salary. First, it's much easier to manage junior than seniors, more so when you are not an engineer yourself. Also, it's more likely you get a better salary when managing a large team of junior than a small team of senior. Even better, you can become a manager of managers if there is a bunch of juniors to manage. Another problem is that an employee cannot earn more than his boss, and non-tech managers salaries cap at a certain point.
  • frankbreetz 5y ago
    >>Another problem is that an employee cannot earn more than his boss, and non-tech managers salaries cap at a certain point. This is only a problem in some places and is made up problem by management. Why can't someone make more then there boss, besides ego?
    • sparker72678 5y ago
      You're right on the facts, but this problem is still pervasive. People are gonna people, everywhere they go.
    • barry-cotter 5y ago
      It's a problem that reliably recurs everywhere because organisations are made up of people and people are unwilling to be managers over other people who make more money than them. They quit. You need managers and if you want to keep them they need to make more than their direct reports.
      • handrous 5y ago
        Another way this is done is with reinforcement of social hierarchy outside of comp. This is where you get blatant infantilization of developers and in my experience wildly untrue stereotypes (repeated uncritically as true all over most organizations) about "normal" developers being incompetent at design, UX, requirements gathering, communication generally, understanding business trade-offs and concerns, et c. Nearly all non-junior devs I've known have been at least decent at most or all of those things, actually. [EDIT] Oh, it's also why devs are compensated like professionals (they haven't been able to figure out how to stop that, yet) but work at open tables crammed together, under management's direct eye, like they're packing cocaine in Colombia or something.
    • yjftsjthsd-h 5y ago
      > Why can't someone make more then there boss, besides ego? I mean, maybe, but I've never seen anyone even propose a solution to ego so that's still a hard blocker.
      • ghaff 5y ago
        It's quite common in sales.
      • WJW 5y ago
        "Why is X already solved, except for maybe reason Y" is a HN staple comment though. A few months I came across "Other than nuclear weapons regulations, is there any reason this can't work to fix <blockchain project XYZ>?".
        • yjftsjthsd-h 5y ago
          ...any chance you have a link, or even just what the article was about so I can search back for an excellent addition to my quotes file?
          • WJW 5y ago
            Turned out to be about hydride tanks for hydrogen storage, but still: > Hydride tanks don't require those high pressures. Other than nuclear arms treaties, is there a technical reason they don't use those instead? https://news.ycombinator.com/item?id=27194023 https://news.ycombinator.com/item?id=27194023
            • yjftsjthsd-h 5y ago
              Thanks; it's a little less funny than blockchain, but still good.
    • jason0597 5y ago
      Some things in life are like the laws of physics. You will simply never make more money than your manager, no matter how many economic productivity arguments you can make.
      • frankbreetz 5y ago
        This is not one of those things: https://www.quora.com/Is-it-common-for-a-software-engineer-to-earn-more-than-their-manager https://www.quora.com/Is-it-common-for-a-software-engineer-t...
        • jason0597 5y ago
          I do not believe a couple of Quora replies are substantial enough evidence to prove an industry wide trend. How do we know those people on Quora aren't prone to sampling bias?
          • hnfong 5y ago
            To be pedantic, "laws of physics" are supposed to be universal without exceptions...
  • delaynomore 5y ago
    >main concern is his own career and salary. Wait...ICs do not care about their own career and salary? That's news to me (Sr. IC).
  • nharada 5y ago
    > it's much easier to manage junior than seniors, more so when you are not an engineer yourself I definitely have not found this to be the case. Good senior folks require very little active management.
    • flippinburgers 5y ago
      I believe they are saying that senior engineers will know what to do and give pushback when an ignorant manager gets fixated on unnecessary goals. Juniors are easily told. The product will be worse for it. In a good team trust and experience are essential parts of the formula.
  • deleted 5y ago
    [deleted]
  • toephu2 5y ago
    > problem is that an employee cannot earn more than his boss Actually this is quite common at FAANG companies. E.g., I make more than my boss.
• ukoki 5y ago
  > The hard truth that many companies struggle to wrap their heads around is that they should be paying their long-tenured engineers above market rate. From an ethical point of view, maybe. From a rational point of view, maybe not. Jobs are "sticky" — it's a pain to apply for jobs, arrange interviews, deal with the possibility of getting rejected. And if you do get an offer and accept you will be leaving colleagues that may be friends, risk your position being less stimulating, have to move house and/or deal with a new commute. There is a very real salary range between "low enough that I'll think about applying for other jobs" and "so low I'll actually start applying for jobs". Employers are aware of this and are paying salaries accordingly. It sucks for everyone in that salary band but — ethics and long-term viability aside — it's still the rational economic choice for employers. Every now and again someone will quit and get their deserved 40% increase, but many will delay leaving for years, or simply put up with it indefinitely, saving employers tons of money. Of course this may not be the case forever. It seems like recently the cohort of people who find interviewing and changing jobs more tolerable (the so-called "job-hoppers") is increasing in size. If you happen to be a part of this cohort, then congratulations, you're winning the job-market pain-of-change-vs-salary arbitrage game and will enjoy above-average year-on-year salary increases for at least the near future.
  • mauving 5y ago
    > [...] Jobs are "sticky" [...] My experience has been the opposite, in that sticky jobs are jobs held by people who aren't in demand. There's a balancing act for employers ("brilliant but flighty" is less desirable than "good but sticky") so it's certainly possible to argue that jobs being sticky for less-than-brilliant people is a good thing... but in my experience, jobs aren't sticky because of inertia for brilliant people.
    • sillyquiet 5y ago
      I mean, I won't claim the 'brilliant' label, but I am competent and in-demand, and my experience is just what the OP laid out. Once I started interviewing, opportunities came left and right. Getting starting interviewing was a hump though, and there IS always the fear of landing somewhere that seems good, but isn't, especially if your current job ONLY lacks for adequate compensation.
• black_13 5y ago
  And bring back the defined pension.
• vsareto 5y ago
  >I’ve watched talented engineers leave companies for greener pastures after painfully short tenures. I’m even guilty of this myself — I left an amazing company after less than two years to join Ethena as VP of Engineering. Engineers can leave after months and still get jobs. You're not guilty of anything for leaving after 2 years for a VP position.
  • ilrwbwrkhv 5y ago
    Also director and VP positions skip the leetcode.
    • sam_lowry_ 5y ago
      I wonder why.
    • _tom_ 5y ago
      Leetcode is one reason people don’t job hop. If you actually have a job, you don’t have time to spend on the silly, non-job-related problems. Leetcode doesn’t filter for skill, it filters for who has too much time on their hands.
      • ilrwbwrkhv 5y ago
        Absolutely. And is such a horrible metric because it let's in people who are essentially using their time to game the system instead of thinking deeply about programming.
• deleted 5y ago
  [deleted]
• Kranar 5y ago
  To chime in with my own anecdotal opinion that is likely to anger some people... in my experience most developers do their best work after about 6-8 months of starting a job at a new company, and that comes to an end after about 24-36 months of working at the same company. After that the vast majority of people just stagnate, get complacent, the job stops being interesting to them and they move on. After observing this I don't really mind hiring people to work for 2-3 years and then have them move on to another role, and most people I hire I do so with the expectation that I'll get a good two years of work and not much more. A very small percentage of people continue to improve over the long term, and those people I am happy to continue increasing their pay, but I don't really go out of my way to retain employees and I don't think it's particularly worth it to do so. This blog post mentions a kind of impact based compensation structure, and while I can respect the idea behind it, I am skeptical that they've managed to find a deterministic and impartial way of measuring "impact". I don't presume to have such a system so I pay based on what I observe in the market and let the market decide what the value is of software developers. For example, I genuinely don't know if software developers have more of an impact than the product designers, or the legal department even though I pay software developers much much more. What I do know is that it's much easier for me to hire a competent lawyer or UX designer than it is to hire a competent software developer and there are many more competent lawyers and designers out there... so I pay them less, regardless of whatever objective measure of impact may exist.
  • 535188B17C93743 5y ago
    While I think it's an organizational failure, even if folks aren't "growing" after 36 months, I definitely think there's institutional knowledge they have that helps them be more effective... the more time that elapses, the more of that institutional knowledge is lost and not documented. Obviously it's not great to have companies hanging on by the thread of a single person's knowledge over 10 years, but I feel like at a lot of companies (especially smaller companies), this is the reality.
    • sparker72678 5y ago
      > but I feel like at a lot of companies (especially smaller companies), this is the reality. Exactly. There are many small companies that will be far more impacted be one of their 2 developers leaving than they would be by the owner being hit by a bus, but they'll still balk at raising salaries.
• ChicagoDave 5y ago
  Finance departments set grids of pay that have varying degrees of complexity. The problem is that they tend to stick to these grids regardless of the impact of net talent loss. The thinking is, the company as a whole is better off sticking to the grid than overpaying any employee.
• sparker72678 5y ago
  Management tends* to undervalue software development in general, and see software developers as generally replaceable pieces. So, why bother paying above rate when even paying at rate feels like too much for many companies? Combine that with the fact that it takes a while for the impact of someone's loss to be truly felt (and the fact that developers who leave are often scape goated), and most managers just can't get their head around the idea that a competent software developer is worth $200K/year + benefits. Not to mention that turnover costs are mostly hidden costs; rarely will anyone attribute a problem to a single individual leaving, and then connect that fact to "we should do a better job retaining people." *Yes, there are great places to work where this is not the case. That's just not everywhere, even in SaaS companies.
• mensetmanusman 5y ago
  The flaw with this argument is the assumption that the value add of a given skillset is approximately equivalent in different environments. We see this for example on a larger scale in OLED tech, where a key OLED engineer in South Korea might be worth $250k to the Korean Economy but worth $2.5M to the Chinese economy, which is why poaching was halted by classifying the job as a national security interest. The profit/employee ratio at Apple is over a million dollars, so a valuable tech employee there should be making seven figures. That kills MBA’s brains (and the traditional power structure), which is why the cartel worked behind the scenes on wage suppression.
  • mattydoincode 5y ago
    Author here! I'm not arguing that software engineers should necessarily be paid in proportion to the end economic result of their employment. Although that's an interesting point for another article perhaps! Rather simply that companies tend to undervalue domain specific knowledge and forget how costly and time consuming it is to hire and retrain new team members. This should be taken into account when considering compensation structures to retain your top talent when considering the open market is always available to them.
    • shagie 5y ago
      Consider the question of "could you get into a bidding war with Apple or Netflix for a tenured developer?" Is there a point where another company can pay more than the economic product of the developer at the original company? Yes, hiring and training is expensive... and the loss of domain knowledge is costly too. There are a lot of places that aren't making that much money to be able to get to "market rate". I'd also like to put forth that the idea of a market rate for developers across all industries is one of the things making it hard to find developers. There are more than a few new grads out there that are discounting any job that pays less than $100k/y because they believe that the market rate is that and anything less is being underpaid regardless of industry, company maturity, or locale.
      • SauciestGNU 5y ago
• p0nce 5y ago
  > they gain domain knowledge that is specific to that company, and that stuff is incredibly valuable. The wild thing is that it’s only valuable to that one company! From the engineer point of view, this is a bad deal as the knowledge they get is precisely not transferrable to another company. So staying is a risk (these skills won't even exist elsewhere) and there is a lost opportunity for the employee. They could be at another job, learning actually transferrable skills, thus improving their standing on the market. Solution: minimize company-specific knowledge, make it easy to grok and not company-specific. To be a bit blunt: your flavour of pile of poo codebase isn't particularly interesting so why should I learn it if compensation doesn't match the missed opportunity?
  • mattydoincode 5y ago
    Author here! My intention with "domain knowledge" point is mostly about all the non-coding stuff. Things like how your company functions, who to talk to about different issues, deep product knowledge and understanding the customers. I actually think transferrable skills grow as well, usually more on the technical side but also on the soft skills side in a generic way. I think the non-transferrable stuff is somewhat unavoidable because of the nature of products, domains, and organizations being meaningfully different.
    • Eridrus 5y ago
      I'm looking forward to seeing the follow up post on what sorts of ranges this philosophy turns into. Most companies that I have seen post their bands massively underpay people.
• cryptica 5y ago
  Many big companies don't need 90% of their existing engineers so they don't care if most of them leave.
• CosmicShadow 5y ago
  I was working on a startup that could tell an employer if their employees were looking for a new job so they had a chance to try and retain them instead of paying the huge cost of having to hire, train, put strain on the team, etc. I talked mostly to startups between 10 and 400 people, but the problem I heard from most leaders was "if they are thinking about leaving, fuck em, they are dead to me already". I tried to reason with them, but it was fought as if held like religious belief. I mean if it's your baby they are unhappy with, I guess you can get defensive and maybe you are still in a scrappy mindset, but it was a bit frustrating for me as my idea was not hitting very well :/ My wife was considering leaving her job, but not because she hated the work, or the company, but because she wasn't challenged, given opportunity or paid for her effort, when colleagues got paid more to do 1/20th of the work. If she was managed and compensated properly, she would have been more than happy to be retained, and I imagine there are a lot of others in that scenario (but more who just want to escape their manager of course, which is also very good valuable for the boss to have when trying to retain people).
  • CoastalCoder 5y ago
    Were you troubled that the startup was trying to surreptitiously expose employees' job-hunting activities? I would think that if a manager was unaware of the job-hunting, that was intentional on the part of the employee.
  • deleted 5y ago
    [deleted]
  • licebmi__at__ 5y ago
    >I talked mostly to startups between 10 and 400 people, but the problem I heard from most leaders was "if they are thinking about leaving, fuck em, they are dead to me already". I tried to reason with them, but it was fought as if held like religious belief. I mean if it's your baby they are unhappy with, I guess you can get defensive and maybe you are still in a scrappy mindset, but it was a bit frustrating for me as my idea was not hitting very well :/ I've seen HR on several places referring employee changing companies as "treason", not only casually but on internal communication. So with that framing, and the expectancy of employee loyalty, I wouldn't expect retention to be a high priority.
• slibhb 5y ago
  They don't? I was given an 11% raise (without negotiating) this year because the tech company I work for wants me to stay. I could probably get more by leaving and finding a new job (15-25%) but 11% is more than enough to convince me to stay. Also, there are factors other than money at play, such as not having someone breathing down your neck, having coworkers who are nice, respecting your superiors, and so on. I have a friend who recently left a position at a startup paying ~200K (which is a lot here, we're not in SF/NY) for a 145K position purely to avoid dsyfunction, stress, and incompetence.
  • ggggtez 5y ago
    Your anecdote proves the point. If your friend was paid more, they might not have left. But in essence what you highlight also shows why companies don't pay to keep people to stay. Instead of paying someone money who hates their job, they might prefer paying less money to a new grad who isn't burnt out on their culture yet.
    • deleted 5y ago
      [deleted]
• hiram112 5y ago
  Maybe in FAANG world, salaries really do increase linearly like the graphs from the blog showed, but in the F500 corporate and contracting world, the slope starts leveling out after 10 years of experience. A decent and ambitious dev can definitely gain 30% salary increases after their first few jumps, but once you're at the "senior" level, it's just not happening. In the first 5-6 years of my career, I jumped about 4 times, each with a large increase: from $55K to $80K to $100K to $120K and finally to $140K about 7 years ago in a relatively high COL city in East Coast US. As expected, even though my knowledge and skills have really increased over the past 7 years at my current gig, the company gives only the typical 2% inflation raises each year, and there is no equity or bonus system based on seniority. So now I'm at about $160K, which is still okay for my area, but disappointing considering somebody with similar experience and absolutely no institutional knowledge would be hired for my position at $180K (maybe higher in this market). But I'm stuck. I can go and play the interview game. And based on what I've seen, at best I'm going to get a salary offer of maybe $180K, and of that $20K increase, I'll end up pocketing maybe $1K / month extra, as all of the extra income will be taxed at my max rate. Is that worth leaving a company where I've earned respect, have a lot of knowledge, know is tolerable, and where I've got "credibility" and a history with senior executives and management? It's not for $1K / month, which may even be less if it turns out health insurance has a higher deductible, or I end up having to spend $200 / month more on commuting costs. I think most seniors hit this same glass ceiling earlier and earlier in their career - by mid to late 30's. And unless they move into management or really strive to jump to the next tier (e.g. FAANG company or finance industry), then there's no real financial incentive to jump, and a lot of risks if your current git is tolerable. And employers know that.
  • hiq 5y ago
    > in the F500 corporate and contracting world Why are you stuck with this world if there's a clear ceiling? > at best I'm going to get a salary offer of maybe $180K If you get a $20k increase every 2 years starting from $160k by hopping jobs, that's way more than your yearly 2%. If you're in the right location, the only risk is to quit a job 2 months in because it's actually not what you expected and come back to a company you initially rejected, or start applying again. If you're a dev in your 30s you should have enough money to stay afloat for at least a few months, in which case this is not that big of a risk. There's also a risk staying in the same company for very long: if you keep doing the same, using the same tech, you can become complacent and your skills irrelevant. At which point staying at your company is not really a choice anymore.
• graton 5y ago
  I think the answer is relatively simple. It is cheaper for the company to let a usually small percentage of their employees leave than it is to give larger pay raises to all their employees.
• midnightclubbed 5y ago
  Established tech companies can and do pay their engineers to stay using stock grants. The upside to the company is they can modify those grants based on market forces and performance, the compensation is not (entirely) a fixed bottom line cost. The upside to the employee is they can earn some multiplier of their base salary for some number of years. If you are a smaller company or start-up where you cannot give tradable equity then you have to offer something else. But if Amazon are hiring in your city then best to not try to compete.
• donretag 5y ago
  How many engineers leave for salary as opposed to other reasons? When I started my career after the dotcom bus, salaries were quite low. At one point, I was making less at each position after yet another layoff. Then the market improved, and I was making considerably more with each new job. Nowadays, I still job hop, but primarily because I do not like the role I am in. Companies will over promise and then never deliver. Bad managers. Many many bad managers.
• ufmace 5y ago
  A few interesting thoughts in here. I had tended to think of the social stigma against discussing salaries as being detrimental to workers and probably encouraged by companies to save a few bucks. But on the flip side, if a company was to be scrupulously honest and made their best effort to pay according to actual value to the company and let everyone know openly how much that was, I expect there would be a lot of drama and hurt feelings over evaluations of exactly who was contributing how much. Maybe it's best to let those sleeping dogs lie after all.
• bravetraveler 5y ago
  I haven't read it yet but from the headline... They do, eventually - there's a term: "golden handcuffs"
• SpeakMouthWords 5y ago
  The Bridgerton example is silly and not comparable. His character is barely in the other books, so of course he's not in the other seasons. It's like asking why Professor Quirrell isn't in the second Harry Potter film.
• shados 5y ago
  Many companies do pay for people to stay, but its debatable if its worth it. The last company I worked for gave me significant golden handcuffs. Probably 30-40% more than I could get elsewhere. They had a "cost of replacement player" policy, where they count the cost of hiring, sourcing, training over the years, etc, and come up with a number thats almost always way above market rate for people who have been around a bit. Attrition was lower than industry average...but not by much. The reality is that in big tech, salaries are high enough that people stop caring. People left for a variety of reasons, the most common one being "I want to see how it is elsewhere" (especially from college hires who have been at the company several years). Others leave because they want to work at a startup. Some leave to join their friends. Some because they move to follow a significant other who got a job elsewhere (many prefer offices over WFH, so offering that only helps so much). In the end, again, retention is higher, but when you crunch the numbers, its very debatable if it's worth it for the company. Worse, sometimes companies end up "competing" over it, so even if you pay a lot, the next one offers more because they know your salary bracket, then you raise yours until one gives. That sounds great for the employee but there are budgets and limits at some point. And then there's the topic of counter offers. The uncomfortable truth is that there's very significant demographic differences when it comes to folks who use the "I got an offer elsewhere, pay me more and Ill stay". If you give counter offers when that happens (as opposed to across the board bracket increase), you quickly end up with statistically significant discrepancies, and that's not ok.
  • disease 5y ago
    Devs also leave after completing all the meaningful, interesting work and finding there is none left. It feels good to build and launch a product - or even add features that can have an impact on the bottom line. It is something very different to work on a list of features that you know very few people, if anyone at all, are going to use. Same goes for maintenance.
    • jwineinger 5y ago
      Exactly why I left a job and abandoned a $10k retention bonus. The work was interesting and fun, but approaching zero users.
• France_is_bacon 5y ago
  There are some great rationales from people here who hire, and gave me a different viewpoint, so I appreciate why companies do that. They do so because of economic reasons - people stop becoming productive after a year, as Kranar notes, or people don't want to leave because it's a pain in the ass to apply for a new job as well as leaving friends behind. . One thing I personally have said for a long time, is that when you are just starting your career, you should get it in your head to change jobs as much as possible - so through your 20s to mid-30s. The reason is because a job move will almost always increase your pay, much more than any company ever will. The trajectory of income earnings at your early stages will be the most dramatic because there is a ceiling, for the most part (there will always be outliers), on how much you can earn, no matter what. You'll never see a programmer making $2 million, doing programming, for example. So if you start up at $60,000, just for example, the faster you get to $150K or $200K, if possible in your specialty if you have one, the better, because incremental increases will slow down at that point, no matter what. It will be much more difficult to get a job at $200K, as it will be to get to $75K. (Don't worry about the exact numbers, I'm just using them as an example). When you're in your in the 32 years old to 35 years old, you can start looking for a long-term job that has your values and interests. It used to be that companies wanted people at their jobs for a long time because it showed stability, and that they would stay with the new company a long time. I'm sure there are companies like that still out there, but if you change jobs a lot, like every 2 years, hiring companies will more likely look at your history and think you are a "hot commodity" that everyone wants to hire which causes more competition from hiring companies. There's also the fact that if you go from $50K to &75K to $100K over 6 years, rather than $60K to $76K over 6 years, the hiring company will find it much easier to increase th pay the person making $100K to $130K, rather than pay the $76K person to $130K. Even if both have the same exact skill level. It's just human nature. And it is kind of true. The person making $100K knows their value and goes out and gets it, the other is more complacent, whether you think that or not or have all kinds of reasons why this is not true. Those are your reasons, not the hiring company's reasons. Finally, the other thing about changing jobs a lot at the beginning of your career and making more money is that when you do get a raise, let's say 10% raise for the two people in this example, the person staying at the same company for 6 years and goes from $50K to $78K will get a raise of $7,800 (and the same with a bonus), while the person going from $50K to $100K will get go get a $10,000 raise (and bonus). And that difference will keep getting larger the more money you make, obviously. Fuck loyalty to the company - they have zero for you. And your friends will still be your friends as you all disburse over time to new companies, and you will have a nice network over the country. Plus you will make new friends at your new company and expand your network even more. And, by the way, your absolute best way to get more job offers and higher pay, is by giving talks and publishing. I know one guy that gives technical talks twice a week, anywhere there's two or more people. I talked to him about it, and he said that he gets at 2-5 job offers per day sent to him. When you do public speaking, you become a thought leader, or industry leader. The same goes if you publish something - in a well-known website or a chapter in a book compilation, or whatever. You are again a thought leader.
• nell 5y ago
  Many flaws with the argument, here is one: It is hard if not impossible to attribute an individual employee's performance to company growth. Many variables can impact company growth - so even if engineering does their job,product many not and vice versa. Even if everyone does their job exceedingly well, a sub optimal strategy could kill the company. Or the market could shift. How do you account when company stops growing? If the spending will only go up, how will the company justify the increase in budget when there are bad times.
  • xtracto 5y ago
    > It is hard if not impossible to attribute an individual employee's performance to company growth. Many variables can impact company growth - so even if engineering does their job,product many not and vice versa. A somewhat related anecdote that I love: In an online lending company where I was a manager before, I had the Data Science team reporting to me. At some point, one of the interns created a variable that improved the ML risk scoring model in such a way that the loan default decreased in about 2%. That is HUGE for a portfolio that has something like 10% default. This intern's variable saved the company a tremendous amount of money... yet the company did not give him anything for an improvement that was 100% measurable in $.
• _trampeltier 5y ago
  I think special in the tech world, money is by far not the most important thing, because we all get enought money for a happy life. There are many other factors as well.
• trjordan 5y ago
  The biggest simplification that I disagree with in this post is that impact rises monotonically. It's true that long-tenured engineers (if they're good) can do amazing things. Things that other engineers don't have the implicit knowledge or political capital to do. The problem is that once that project is over, it's not guaranteed that the next project will be as impactful. So ... do you pay them for their impact? And promote them? Knowing you're guaranteed nothing the next quarter? Or do you put up barriers to promotion? "Sustained performance" or "multiple successful projects?" I'd love to see an approach to IC comp that's variable. Land a huge project; get a bonus. Everything past Senior Engineer is temporary; if you want to be paid like Senior Staff or Principal, do the work in that year. I suspect orgs could justify being more generous with bonuses because it's not recurring. It's at odds to a lot of the way engineers look at comp, but it would align money with what individual businesses need in a more interesting way than the current "plan on your RSUs going up by 50% next year" comp plans at FAANG.
  • bobsomers 5y ago
    > It's true that long-tenured engineers (if they're good) can do amazing things. Things that other engineers don't have the implicit knowledge or political capital to do. The problem is that once that project is over, it's not guaranteed that the next project will be as impactful. You hinted at this by mentioning political capital, but in my experience as engineers gain experience at the company their impact largely grows in ways that aren't obviously visible. It's not like they are churning out work or managing teams that have ever increasing product impact, it's that their job responsibilities expand to include things like: - Convincing potential hires they should join the company. - Speaking frankly to leaders when newer employees don't feel comfortable doing it. - Seeing large cross-cutting issues that require time and experience at the company to identify. - Mentoring newer employees so they get up to speed and become productive quickly. - Arbiters of information and documentation that tends to never get written down. "Person X can help you learn about Y, Team Z is responsible for that, etc." These kinds of activities are critical to highly efficient companies, but rarely ever acknowledged as impact. At least I've rarely ever seen these kinds of things show up in regular performance reviews, and yet it's painfully obvious when these activities are missing.
• asdff 5y ago
  There is also the near infinite pipeline of desperate undergrads taking the first decent enough offer that lands in their lap. Wring them dry for a few years and when they leave after realizing what they are actually worth, there are 10 more 22 year old applicants ready to take their place. I'd probably bet that most tech companies outside the most glamorous operate like this. It's just cheaper and that's all most companies care about quarter to quarter, not a deep mature efficient back end or anything that experience and expensive talent brings you.
• jnwatson 5y ago
  While I agree with the premise, this reads like the wishes of a budding new head of engineering that hasn't yet been ground down by HR. I wish him luck. The most successful company I've ever worked for had over 300 employees and 0 in HR.
• danielrhodes 5y ago
  A couple thoughts here: Using money as a mechanism for alignment is not always effective or useful in creative fields. Engineers join a company for a variety of reasons, such as wanting to be part of the mission, coworkers, personal development, brand/location/perks/benefits, and so on. If somebody wants to leave, it's because they have fallen out of alignment. When people are out of alignment they can grow resentful or hard to motivate, and that in turns creates a bad state of affairs for both an employee and the company. There's an opportunity cost here where somebody could join the company who has better alignment. Another way to look at this is that some level of turnover can be a good thing. In the same way that some universities will not allow former students to become professors in order to inject new thinking, companies benefit from new people coming in and injecting new ways of thinking into their organizations. So encouraging people to stay to maintain organizational memory is probably bad over the long term.
• omegaworks 5y ago
  Pay employees based on the value that they provide to the company and not the minimum amount that the market determines they should make? What are you, a communist? :)
• cproctor 5y ago
  What if a company actively encouraged its employees to interview at competitors, and to welcome, even expect, external offers as part of discussions around professional growth, roles, and compensation? They could call it "peer review." The company would offload the work of finding market rates onto its competitors while potentially gaining insights into competitors' operational logic. And as a machiavellian bonus, this arrangement might depress its own employees' market rates because other companies might be hesitant to extend offers to candidates they suspect are not serious.
  • Dunedan 5y ago
    That's what Netflix does: https://www.businessinsider.com/netflix-encourages-employees-to-interview-at-other-companies-2018-1 https://www.businessinsider.com/netflix-encourages-employees... (version without paywall: https://archive.is/mdMr9 https://archive.is/mdMr9). Also check out their culture document, which is quite interesting as well: https://jobs.netflix.com/culture https://jobs.netflix.com/culture
• ppeetteerr 5y ago
  Many engineers are on their way out when they announce their departure. If they said: "hey, I'm thinking about joining this other company for a better compensation", that would be a topic of discussion. Most engineers instead tell me: "hey, I signed a contract with this other company. This is my last day". The other point is that money is not the only motivator (esp. in our industry). People just like change, either more responsibility, or less responsibility, maybe more autonomy or more direction, maybe different leadership, etc. Last, signing bonuses are quite large...
  • cwbrandsma 5y ago
    Especially for younger engineers (I'm thinking of software engineers in this case), it isn't just about money, but also experience. It is really easy to get type-cast into a specific role in the company and it can be hard to break out. One developer I interviewed spent 10 years maintaining one pearl script. Just one. He wondered why he was having trouble finding a job. Don't be that guy. But it is also about the money. When you can get a 20% bump by switching jobs...hard to pass that up.
    • helsinki 5y ago
      20% used to be good. These days, it’s something like 35-80%, it seems, according to Blind. My last job swap resulted in a 100% pay increase (10 YoE).
  • yupper32 5y ago
    At the end of the day you were underpaying them, so I'm not sure putting the "blame" on the employee is the right way to frame this.
    • barbazoo 5y ago
      It's like being in a relationship and breaking up because one is unhappy but refusing to talk to the other person about it. If you're unhappy with your pay and that's the only reason you're thinking about quitting, bring it up, what's the worst that could happen? To the people that say "retaliation", I find that highly unlikely. Every single place I've worked at, at least tried to accommodate me.
• vbtemp 5y ago
  My all-time highest HN comment was this: https://news.ycombinator.com/item?id=23563997 https://news.ycombinator.com/item?id=23563997 Basically, why do I get such big raises when I switch companies, but getting a nontrivial raise when at a company is like pulling teeth? How come every company I work for is willing to give me a huge raise and reward me for my achievements at other companies, and not do the same for achievements at that company? The discussion that followed was illustrative. But I just came to accept it as a fact of life. I wish I could find a place to invest myself in long term, but that has yet to be found...
  • ryandrake 5y ago
    I remember that thread (and replied to it!). It's important to remember the whole "30-40% raise when you switch jobs" only really happens at the beginning of your career. Your next job switch will maybe be 20-30%, your next one 10-20%, etc. until you reach the inevitable compensation plateau. I'm over 20 years into my career and my last job change was for +1% or so. No company would offer more. If one could actually get a 40% bump every job change perpetually through their entire career, someone who starts at $100K would only have to change jobs seven times to reach >$1M. No way on earth that is happening for the vast, vast, vast majority of tech workers who job hop.
    • vbtemp 5y ago
      Of course, the idea is you reach that upper limit sooner, and making so much more earlier in your career - when properly invested - compounds upon itself dramatically and had enormous implications for one's own financial safety and lifestyle. And also, thanks for your reply there, nice to hear from you again!
  • madrox 5y ago
    The short answer is that this is how it is in a growth industry with high talent demand. If you were, say, a grocery bagger, you wouldn’t see that kind of salary jump. The moment coding is no longer an in demand talent, this won’t happen anymore. Hope you retire before that happens.
• tschellenbach 5y ago
  great content marketing campaign aimed at hiring for this company. paying engineers well is a concept as old as google.
• deleted 5y ago
  [deleted]
• sammyloso 5y ago
  The churn spurs innovation - people coming from elsewhere with new methodologies and perspectives.
• sammyloso 5y ago
  The churn spurs innovation - people coming into the team with new methodologies and perspectives.
• paxys 5y ago
  Articles like these vastly overestimate people's desires to switch jobs. Yes one good engineer left last quarter because they were underpaid and someone gave them a better offer, but a hundred others stayed put. Things still overwhelmingly worked in the company's favor overall. And add the fact that technical interviews are still designed to be as painful a process as possible, so much so that people I know have given up guaranteed raises just to not have to go through it again.
• maxk42 5y ago
  On the one hand Mr. Dean rightly recognizes that longer-tenured developers bring more company-specific and domain-specific expertise to the table and they should be paid attractively to prevent them from leaving and taking that knowledge with them. On the other hand he touts his use of a compensation formula, reducing engineering salary to a formula rather than taking into account an individual's background, experience, expertise, demeanor, and individual impact. (To be fair, he does emphasize that the formula will include "performance" in some way, but I've always been leery of boiling down performance to a simple equation. We've all been in roles where people have had material impacts other than lines of code committed, features completed, or KPI scores.) I suppose I fundamentally agree with the author's premise that tech salaries should rise with the overall market to keep institutional knowledge from walking out the door, but on the other hand I don't think following a simple equation is the best way to get there.
  • throwawaysleep 5y ago
    I think the market has demonstrated institutional knowledge is worth $0 at most companies.
    • maxk42 5y ago
      It might be valued that way presently, but that doesn't mean that's the worth. The companies that rightly assess the situation and determine that the cost of mistakes made because institutional knowledge is gone or the cost to productivity of retaining replacement personnel is high enough to justify an additional 2% - 6% annual salary increase across the board will outperform the companies that are constantly paying the training toll. How many times have you had a deployment go wrong shortly after the one guy who knew how everything worked left? What did it cost the company in terms of developer hours, productivity, opportunity cost? How many times have you witnessed a new hire take 30 - 90 days to get even halfway up to the speed and productivity levels of someone who's been with the company for a year or two? If you're swapping one employee for a small handful of failures plus a new, at-market employee who has half the productivity level for a full quarter then you're easily paying a 25% premium to let that employee go, when you could've retained them and made them feel appreciated for a 6% annual raise. It's frustratingly straightforward to determine which result is better for the company's bottom line.
• SavantIdiot 5y ago
  I don't really understand this article, or the current trend of job hopping. I'm from the generation where you have one job, maybe two, and that's it: I've had 7, but I really only ever wanted one good job. For some perspective: when I left Intel circa 2010, I was a Senior Staff Engineer fighting to get promoted to Principal Engineer (followed by Senoir Principal, then Fellow, then Senior Fellow, hahaha). FYI I loved Intel for the first 10 years, and hated the last 12. I made $130k base salary, $70k typical bonus (EB+ECBP), and stock options (most of which were worthless). This was after over two decades there, started in '88. Recently, a friend (12 years younger than me) was hired by Intel to work in one of the ML groups. He asked if the starting salary was fair: they offered him $400k. I was angry, jealous, and shocked. I have friends that are STILL there, grinding away at sub-200k base salary after nearly 30 years, and they are too scared to leave. So this idea of coders flitting from job to job just seems so alien to me. I'm obviously from a different generation. I don't even know what I would ask for pay if I ever left consulting. Headscratcher.
  • selimthegrim 5y ago
    I thought Intel was stiffing ML people too, maybe Gelsinger kicked some butts in management.
    • nurspouse 5y ago
      Management doesn't get a say in this. HR does. Gelsinger is the first CEO at Intel to openly admit Intel pays below market rate and when he joined he promised an 18 month timeline to improving compensation. Most of it involves negotiating with the board. Recently Intel paid a number of employees extra RSUs as a "first step". It does seem the ordering was ML > SW > everyone else (from anecdotes).
  • ctvo 5y ago
    There's a lot of implicit loyalty here. You're very loyal to Intel even when they didn't treat you the best. Why? What happens when you underperform, will they show you the same loyalty?
    • 5y ago
• austincheney 5y ago
  The most important phrase in that whole link: in proportion to their impact Perhaps if software teams didn't write such shitty software it would be easier to qualify things like profit sharing and equity. I would certainly prefer to have half the salary if that means I were earning a nice slice of the quarterly profit. Unless you are selling software to a customer software is always a cost center. It is a tool, a means to end, which may enable business down the road but at any moment is just a money sink. That said it is generally lower risk for all parties to allow developers to write shitty software than attempt to connect software releases to revenue change. In the world of web most developers I have worked with over my nearly 2 decades toil in configurations and composition. There is little or no application creation, and the application creation that does occur does so by a few internally trusted individuals irrespective of their pay or title. To be very clear shitty software decisions almost always come down to a single question: Is a given decision primarily focused on business goals or developer preferences. For example is Spring MVC, Angular, or whatever a consideration because it will save the company $10 million over the next 2 years or is it because the company is more invested in hiring developers than internally training them?
• haho4 5y ago
  This isn't really a tech issue. This is an issue in all fields. Companies just do not value their own employees over new ones.
• ctvo 5y ago
  Agreed with everything in this post. Engineering compensation at big tech is too rigid to award high performers adequately. Some folks double the impact of others in the same role / level, and make 20% more, at most. Leaving and joining a competitor moves you to market rate. You fall behind each year at the job / role in this market.
• yawaworht1978 5y ago
  Unless the engineer doesn't provide some business value way beyond expectations and a promotion is done, it will all come down to the cfo and HR, that's the reality. That pair has financial objectives and they have data and experience to know if hiring new(with all costs involved) or increase a salary makes more sense to their bottom line.
• 5cott0 5y ago
  Because the millenial MBAs that have taken over tech believe that software engineers are a commodity and not an asset.
• ChuckMcM 5y ago
  This isn't going to end well for Matthew, well if he doesn't work the back side of the curve, let me explain; The challenge is performance is transitory and pay is forever. Specifically, you will have engineers who happen to be on a project at a time when they can have a big impact, and they do and you want to reward that. But then the next few years might be polishing that project's stability and corner cases which will "feel" like very little impact. As a result if you change their pay to reflect their impact when they first deliver, and leave it like that, then the next few years will "feel" like the curve is inverted and your paying and not getting the impact that you would expect from that level of pay. This is why, invariably, engineer pay tends to evolve into "base pay" + "bonus pay" which can be thought of as the cost of keeping you around and the appreciation for what you have done for us this year. Many people make the "bonus pay" a fraction of your base pay, in that way an increase in your base pay will be reflected in larger bonuses later. Google famously did this and then added a twist which was called a "personal multiplier"(PM). This PM could range from 0 to 3, and the trick was it was kept secret. In that way you could never know whether or not your manager was "playing favorites"[1]. But it gave them a nice talking point about being "open" about how you would be compensated while not letting you convert the how into actual numbers. The second thing is that everyone is different. And even when they are a lot the same, they are different. Sometimes people will reach a compensation level that meets all of their needs, and lets them save for retirement, and they don't "need" any more than that. Tandem had a great term for that, it was called people who "retired in grade" which was code for someone who was not being motivated by pay any more so they weren't working as hard as it was possible to work them. The third thing is that sociopaths love a score. They really really do. All you have to do to get the most out of a sociopath is tell them how you are going to score them and let them see how they score relative to other people. (you'll say "pay" in your discussions but the sociopath will hear "score.") These folks will invest all of their time and effort in "winning", and because they are sociopaths they won't necessarily use that tactic of "work harder than those you are competing with." They may in fact spend all of their time developing schemes to sabotage other efforts in order that their effort stands out. Really not a great place to be, really. The bottom line is that compensation is hard, doing it well requires that you be honest about what you would pay someone to replace the person you are evaluating and verifying that you are paying them at least that much. And when people start going the other way, you need a plan for that too (you can fire them of course, but as the article mentions they have lots of domain specific knowledge that is handy). Generally successful companies move those people to working on projects that are important but not urgent. [1] To no ones surprise, the managers were playing favorites.
• scarecrowbob 5y ago
  I literally had this conversation with my boss yesterday, and I was a bit floored that they don't quite "get" it. I'm the lead dev at a small co that does work, mostly custom WordPress, for gov / edu / SMB (mostly NGO or trade groups). I'm the senior technical staff... there's a junior dev and a "project manager who codes but doesn't read log files". I've been working with this company for 7 years and never gotten a raise. We have "unlimited PTO" which really just means I have no idea how many days off I can take. I mostly work with the biz because it used to be quite flexible and was only a 30-hour-a-week commitment. That's become much less flexible as we lost the ability to stack hours without "approval", I've started to be the only person on-call, I now have a junior who more or less reports to me, etc, etc. I'm looking for work now, mostly because the cost of realestate where I am is outpacing my ability to save for a down payment. The thing that got me a bit worked up is that when I asked my boss if they'd ever done the math on what it'd cost to replacement (even leaving out the cost of training) and their response was that they were 100% sure I'd make more money at another company-- they are just paying me what they feel like they can afford. Then they gave me an immediate 5% raise and 1.5% cash bonus. None of this makes one bit of sense to me... if I leave, they are going to have to find someone (or several someones) who can operate containers in GCP, write WP/Gutenberg blocks, Figma->PHP WP themes from scratch, and write integrations/ imports/ scrapes for these sites they build. I've been interviewing and know what that kind of work pays, and how much the folks charge for that... but this boss of mine seems prepared to let me quit rather than up my pay. For full disclosure, I'm making 70K/yr+ health insurance and who the hell knows how many vacation days. It's fun to do job interviews after all this time, and pretty gratifying that folks are so interested to speak with me, but I'm a bit worried how this person is going to get the stuff done that I've been doing at the price they've been selling the work.
  • mcherm 5y ago
    If this is what they can afford to pay and you move on then they will get to decide whether they can eliminate your position (maybe they can focus on a different part of their business and quit building custom WordPress sites) or pay more. Or get by with someone too junior to be able to do the work but hope that customers won't notice. Or maybe close the company down.
  • 5y ago
• tedchs 5y ago
  Article is a thinly veiled recruitment ad for this tiny company.
• sigzero 5y ago
  "Pay to stay" is just a stop gap. More than likely they leave within a short time anyway.
• cblconfederate 5y ago
  What about non-engineers?
• encoderer 5y ago
  In urban tech centers, wages increased sharply over the last 10 years. Both due to base wage increase and tech stock appreciation. Once you are within a company you will be given catch-up raises but in a fast moving market you will always be able to create a bidding war for your talent and increase your pay beyond what the employer will offer you. You have 3 options. 1. Climb the ranks. Technical or managerial. This takes time and is rewarded generously at most tech companies. 2. Get lucky with insane stock appreciation. Stay four years. Leave when your income drops in year 5. 3. Leave every couple years for significantly more money, by combination of up-leveling and getting the now higher market rate. Number 3 is the easiest path.
• IanCal 5y ago
  What is the probability that the job you are currently in generates the most value for any company? Given that your skillset has changed too.
• flowerlad 5y ago
  > we intend to create a formula that takes into account title, years of tenure, and performance to create a compensation graph that scales with company impact as closely as possible. By making it predictable... Performance is hard to measure. It is highly dependent on the biases of the person measuring. So despite having a "formula", the outcome is not at a all predictable.
• majormajor 5y ago
  There was an interesting paradox last time I was a people manager. Sometimes people would leave and get a bigger raise than we'd budgeted for them for that year. But at the same time, we never took long to hire a replacement at the same budget we'd been paying them. This required us to be diligent at doing market adjustments when necessary, but also led me to some other thoughts on compensation: if we think employee A is worth $X, and they get a job offer for $X*1.2, neither company has to be wrong. Maybe there's a bigger need at the moment in the other company. Maybe they're going to be working on something more valuable to that company than they were working on here. Maybe to us they've been a solid but non-exceptional performer, but the other company sees potential for them to do more in the interview. Maybe the other company just has more to spend. Maybe they're the third best-performer on the team, and we chose to allocate more to the top two people, so can't do as much to keep them as they'd like.
  • hellisothers 5y ago
    I hadn’t looked at it this way before, this is a good lens, thanks.
  • light_hue_1 5y ago
    You're leaving out some serious costs incurred by your company and team. The loss of institutional knowledge, the loss of expertise, business process knowledge, personal relationships that could make hard changes much easier. Sure, you hired someone for $X instead of $X*1.2 but in terms of work done you probably missed out on a lot and came out way behind.
    • majormajor 5y ago
      I think you're both overestimating those costs and also underestimating the difficulty of just being able to suddenly pay 1.2X for people. Re: institutional knowledge and expertise, etc - we tried to avoid too much concentration. If all the institutional knowledge for system X is tied up in person Z, what if they want to take on to a new roll, or I want to ask them to work on a different system or a new project? I like people who focus on what they can do next, not solely what they've already done. Otherwise it's a bad place for the company to be even if someone doesn't leave. Change is a constant, flexibility is good. Re: personal relationships - morale is always something to keep an eye on, but someone having an exciting new opportunity never seemed to hurt the rest of the team's morale that much. I think you're also making an unspoken assumption that the new hire wouldn't be superior to the person who left in some areas! The most common case of this was "generalist who built a ton of stuff in an earlier phase of the company leaves, replacement is more experienced in the specialized area that that generalist was currently working on since the company was larger now and they couldn't contribute to everything as easily," but that's hardly the only way. And lastly, as I alluded to about budgeting more to keep the top two performers than the third - I think you're overestimating the amount of effort and/or success put into by the average developer at becoming the go-to expert on specific techs or business processes. If I tell my manager "I know the second most about React, the third most about Node, and the second most about the plugin system business logic" I'm not going to expect them to find me irreplaceable.
• darth_avocado 5y ago
  This hits home for me so hard. I just left a job after 5 years of playing the loyal soldier. It's been almost 2 years since I got a promotion without a raise. My manager has been constantly working with the HR to get me as much aligned with what I should get but his hands are tied by the corporate bs that he needs to work with. I got an offer from another similar revenue/size company and I was in two minds. The company literally asked me what I wanted and then just gave it to me (nearly twice what I'm earning today). It's a shame that my current company not only didn't keep up with the market, but also dragged its feet for 2 years to keep up with its own internal compensation structure.
• karmasimida 5y ago
  To answer your question, yes they do. Ofc this would be dependent on how critical that specific personnel to the group or company overall. One thing to note though, when the employer is handed over the 2 week notice, for the employee, the process has been at least months in making. I don't think at that point, it is merely a matter of money, sometimes people do want to shake things up.
• MentallyRetired 5y ago
  It's a sellers market right now, so jumping job to job is beneficial. Companies are willing to pay top dollar and salaries are on the rise. I like this approach. It incentivizes and rewards. Even if things changed and this turned into a buyer's market, it should help with employee happiness. Buyer's markets tend to drop employee happiness as employees feel trapped.
• locallost 5y ago
  > If a developer of a certain caliber is able to demand a given salary on the open market, why isn’t their existing company paying them that very same amount? One possibility would be it's because of the price point that the manager has in his head for that individual. I don't remember the actual term from Dan Ariely's book, but it was about becoming attached to the first price you hear. So if you know the current salary of employee X, and they want more, you could be reluctant. But an unknown person that you want to hire will ask for more, and that might be fine. Another possibility is that the management doesn't always know who they should keep, or simply they have a different perspective on who or what is valuable. So a regular employee might wonder that they let a person go, but their contributions were maybe either unknown or not as valued by the management.
  • ksaun 5y ago
    I think the term you may have been looking for is "anchoring."
• deleted 5y ago
  [deleted]
• xyzzy21 5y ago
  Strictly if they aren't pro-actively paying competitively, they either won't honestly match and or if they belatedly do, you shouldn't trust them because they will repeat it again. This isn't just for programmers or engineers - it's any job.
• madrox 5y ago
  To reply to the title and not the article, tech companies do pay engineers to stay…just probably not you. That’s the point of RSUs, LTI, and other grants that are unlocked through retention. More get released to employees during their tenure based on performance. If you aren’t being paid to stay, chances are that was a systemic consequence of performance. Not always, but usually. There are pros and cons to losing employees, and quite often it’s Pareto optimal to let people move on to bring in new talent. Engineers are generally paid pretty well, so money is rarely what a departure is about. I’ve seen a lot of engineers go, and only once was money the first reason.
• GuB-42 5y ago
  It is something I never understood. It happened to me, in my previous company, I was clearly underpaid, but the job was fine, people were nice, nothing to complain about except for the pay. Considering the situation, I looked somewhere else, found an offer for a similar job that was about market rate, went back to my company with the proposal and told them to match the offer. I was even ready to accept slightly less, but I didn't get anything, zero, no negotiation possible. I asked to see my boss the next day, he didn't even ask me why, I think I was already written off. And I am not an isolated case. The worst part is that I am sure they lose money doing that, because when they hire people at the same skill and experience level, they hire at or above market rate. It is very likely that they hired someone to replace me for more than what I asked them. Usually, everything else being equal, the more people move, the better they get paid.
• cletus 5y ago
  There are several factors: 1. Organizations will often see bumping up an employee's pay to match another offer as some variant of extortion and it's they view this as disloyal. Never mind that the other offer clearly shows they're now below market. I didn't say it makes sense; 2. There is friction in changing jobs and companies and people will generally have a threshold for making that jump (eg they won't switch for less than a 20% raise). So over the entire pool of employees it's cheaper to let a few go than give everyone a raise when many wouldn't leave; 3. Companies have a philosophy that you do the job you get promoted to first and then you get promoted to it and paid subsequently. Worse, often it takes time for things like equity to catch up. You may get a discretionary grant when you get promoted or you might not. And it can take years of annual refreshes to get to the total comp off a new hire at the same level; 4. Organizations seem to make the standards higher for existing rather than new employees. I think this is in part to avoid level and compensation inflation; 5. Up to a certain point there is an expectation of growth. Some of this is formal (eg up to T5 at Google). Some of it is more informal. They make the determination that even though you're at a terminal level and that's fine, if you've been there for years you're probably not going any higher so you won't be one of their future leaders or stars; and 6. Diversity. Tech companies have explicit goals around having certain minorities essentially over-represented compared to the demographics of, say, CS graduates. I guarantee you such explicit goals create perverse incentives that extend to how they handle retention.
  • dasil003 5y ago
    This is a great list, to elaborate on #4, I think there's another factor at play related to the social implications of Dunning Kruger. To be specific: ones sense of ones own productivity and value to the company is not very well correlated to actual performance. For new hires, management doesn't what their value will be, so it really comes down to market rates and negotiation based on the limited signal. If you make a bad hire you can chalk it to classic market-for-lemons problem and you deal with it via pip or letting them go. However once someone is established, their performance is more or less well-understood by their peers. It's at this point that the disconnect between ones own perceived performance and the broader perception becomes deadly, because peers talk, and if one of them gets a fat raise and the other doesn't then it becomes a whole can of worms. The merit of the situation will get lost in the individual perceptions and entitlements which is likely to result in an overall morale hit one way or another. Sure this can happen with new hires, but it's more easily explainable, especially in the current climate where market rate has shifted a lot and so you literally won't be able to hire if you don't play the game.
• SergeAx 5y ago
  First of all, there ARE engineers companies are paying to stay. Those are anecdotal 20%, doing 80% of impact. But this is actually irrelevant. The point is that companies should compensate their top-impacting engineers with equity, not money.
• datacruncher01 5y ago
  Probably because it doesn't work long term. Sure a bit of extra money can keep someone around for a short duration. Eventually that person is going to leave for the underlying reasons that aren't financially motivated.
• fshbbdssbbgdd 5y ago
  I’ve changed jobs a few times and achieved great compensation. But each hop required arduous months of networking, study, and interviewing, all on top of a full time job. I know other engineers who are more talented than me, older, and get paid half as much, because they don’t have the personality type to go through that gauntlet. Some of these people work at companies that pay very well, but their managers have successfully cowed them from demanding promotions they deserve. Their employers are getting an amazing value. Why would they rock the boat? In short, the software engineering interview (and leveling) process is designed to discriminate between employees with different levels of competence signaling and negotiation skill, so each employee can be paid as little as possible.
• nokya 5y ago
  The analysis looks very reductive and seems to ignore the scientific knowledge about what motivates employees to quit/stay. One thing we know for sure: most people don't quit a company, they quit a manager. Companies are traditionally bad at identifying good managers. I think poor loyalty is mostly symptomatic of poor management.
• Trias11 5y ago
  Companies consider any employee who is not selling (not bringing in dough) and who is not an exec - a liability. HR's exists to keep minimizing liabilities - maintaining set of excuses to enforce minimal possible pays, ensuring employees have little or no say over important matters, prioritizing diversity over talent and painting a good face over all the necessary corp BS to maximize profits. Engineers are necessary evil that "cost lots of money but doesn't bring any revenues". This of course an idiotic point of view but that's how execs are thinking.
  • metalex 5y ago
    What world are you living in? Engineers are treated like royalty at almost every good tech company. Heck, most of the founders are engineers by trade.
    • Trias11 5y ago
      Keyword is: "good" (tech company). Majority are not. The moment engineer became founder - tables are turned.
• robertwt7 5y ago
  > then for whatever reason find that it’s much easier to get recognition for that growth outside that company. It is interesting that 99% opinion out there between engineers community is always the same. For you to get a better pay rise / career leap, you have to move company. I'm not sure why this is always the case, I guess it is different for those who joined startup like Netflix, Stripe, etc before they go viral. Actually at this point because I'm still young, I'm sure I can do career jump many times for the next decade. But yeah, at one point having 1 company that appreciate you with good compensation is kind of like the end goal when I'm pretty old and don't have the energy to keep moving
• stakkur 5y ago
  Because they’re a commodity.
• ChrisMarshallNY 5y ago
  I dunno. Maybe it's not "all about the money." I was a manager for 25 years (and stayed at the company for almost 27). When my team was finally dissolved, in 2017, the person with the least tenure had a decade. The person with the most had almost 27 years (he and I started on the same day, in 1990). The pay was...not so good. The corporation had some fairly lousy HR policies. I'm told that I was the reason that these folks stayed. Apparently, I was a half-decent manager. I hated the job, but did it well. These were a different breed of engineer from what seems to be the benchmark, these days. They were very experienced, senior-level C++ engineers. We did image processing pipelines, and various forms of "engine" code (like that BASF ad: "We don't make the software you use. We make the software you use better."). A lot of my management style involved abstracting the corporate HR policies, and working with my team. They all had families. One actually had a serious medical issue, during his tenure. Most had to deal with various emotional and family issues. I also completely supported them pursuing any training they wanted; whether or not it directly applied to their work with my team. I had to deal with each person as an individual. I had to understand their drives, and work with them. I treated them all with the utmost respect. They worked very hard. They stepped up to the plate, when it was crucial, and I let them have slack, when the dust settled. It seemed to work for me. YMMV.
  • phist_mcgee 5y ago
    That's great to hear that you provided an awesome space for your team. I think we won't see this kind of loyalty much going forward though, the opportunity cost now of not changing jobs for more $ has a greater downside now that 20 years ago. House prices are beyond ridiculous, lockdowns create confusion about the next 12-24 months, the economy is in a terrible state, but somehow the stock market marches forward. The way I see it, engineers need to make their money now or risk being left out in the cold for when many assets move out of reach from the middle class. I don't want a yacht, I just want to own a home with no debt. Apparently that is not an easy thing for many people to do anymore.
    • ChrisMarshallNY 5y ago
      Unfortunately, I have to agree. My father never made more than $40,000 USD per year, but owned a house in a nice area, and two cars.
• urthor 5y ago
  Because they don't want to inflate their salary bill across hundreds of thousands of people. You can't just give one guy a raise. Especially in this age of Level.fyi, salary transparency works both ways. Basically they are cycling through every other strategy other than an across the board pay band raise.
• urthor 5y ago
  Also, just because the job market is hot doesn't mean there aren't TONS of chumps. The number of people out there who are happy being underpaid because of inertia far, far exceeds the number of people who will actively leave a job for another to get a bigger pay day. Companies are caught because if they give the subset who are actively dissatisfied a raise, they are giving the "inert employees" a raise as well. Hence they have a huge disincentive to give anyone a raise.
• arielweisberg 5y ago
  Being paid to stay can be its own special hell.
• cyanydeez 5y ago
  to keep their costs down via direcr (eg, low salarary) and indirect (eg, chilling effects, market manipulation, etc)
• systematical 5y ago
  This is something I assume we've all noticed. I just switched companies a couple of months ago and that's the first time the company I was leaving threw the brief case full of money at me. Interesting that 6 months ago I was only worth a 2.3% raise, but suddenly I was now worth a 25% raise. Didn't matter, I believe workers should make unlimited PTO a demand and I let them know that was another reason I was leaving... death to limited time off, long live unlimited. Back to the point. I imagine somewhere in the next few years I will get another offer at 25% bump after a few years of small 2.5% bumps. Just the way it works. I chuckle, but then I think there must be something I don't know.
• mathattack 5y ago
  I like the approach. It seems to assume that impact is easy to measure though. It’s actually very hard to measure problem avoidance versus problem solving.
• rajacombinator 5y ago
  Engineers are socially inept and oppressed. Until that changes, they will continue to be exploited.
• JayStavis 5y ago
  I wonder if there's some tacit understanding between HR/recruiting/biz at tech companies that paying for retention will lead to engineering comp running wild across the board and make all of these businesses more expensive to run. Feel free to teach me a lesson, but I feel this could be possible because: - If people were paid to stay, then the supply of engineers in recruiting pipelines would decrease. - If top performers were paid to stay, then the mere existence of a "counter-offer" mechanism would open up the door for bidding wars, where each bid is actually positive indicator for the quality of the talent. Today bidding wars largely only exist for somebody with multiple new offers, where neither company actually has a great measure of the talent. - Retention pay is likely a compounding expense for the employer. Finance departments hates compounding liabilities. Altogether would it make the labor market more efficient? Probably. Would it make businesses less profitable? Probably.
• softwaredoug 5y ago
  There’s a paradox here. I notice developers who switch jobs a lot claim to do so to “grow”. But they might not really stay anywhere long enough to get good mentorship and feedback. Growth takes tough feedback that we often don’t want to hear. There’s almost no market incentive to “grow”, and much more incentive to job hop, never leaving a honeymoon phase with an employer. Why would you grow as a developer? It’s much easier to switch jobs for a pay raise. The market is hot for developers, that there’s very market pressure to grow, TBH. (That is if your priority is purely financial, which often is not the full picture)
• collaborative 5y ago
  I dunno, I tried causing a positive impact, but management is deaf. That $5M new software we don't need? Don't bother explaining. You will be ignored. They will spend a fortune on it, fire/recruit, and realise it wasn't needed 2 years down the line when the execs have been made famous for being early adopters of the technology. They probably got to speak at some conference or were made an ad about how great they are Best to keep my head down, don't want to push elbows with this lot
• cable2600 5y ago
  Simple, you work 5+ years at a company you earn a pension, extra days off, and a larger salary. Even McDonalds and fast food joints do it. They have benefits that cost a lot if the employee continues to work there. Always finding new employees via citizens or H1B Visa workers.
• aristofun 5y ago
  In most companies a good engineer overgrows his position after few years. There’s no economical value of holding him back. It’s cheaper to hire a replacement within planned budget. Another point — in well organized business any engineer in any position is a replaceable unit. Otherwise business is not scalable. So companies do the right thing. The right question is — why many engineers are staying for so long, even though its not profitable for them after some time/experience?
• plankers 5y ago
  >At Ethena, our track record of transparency, open feedback channels and an experienced management team put us in a position to make these types of bold policies that other companies may struggle to operationalize. Never fails to make me smile watching capitalists advocate for planned economies :)
• ChrisMarshallNY 5y ago
  Here’s a relevant MonkeyUser comic (I had shared this in a previous post): https://www.monkeyuser.com/2020/new-hire/ https://www.monkeyuser.com/2020/new-hire/