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A huge problem with this industry is the inflexibility to pay current engineers LARGELY increasing comp each year. The thought is that there is a market rate fo

A huge problem with this industry is the inflexibility to pay current engineers LARGELY increasing comp each year. The thought is that there is a market rate for an engineer and that pay can increase with the market rate, but this is a fallacy. An engineer that has been at a largish company for 1 year is worth 20-30% more than the year they were hired because they have specific knowledge of the tech stack. Yet that engineer will likely be offered a 3-5% raise. An engineer with 3+ years might be worth 50%+ because they have developed the specific skills relevant to the job AND know the idiosyncacies about org politics and the nitty gritty parts of the codebase. Yet they will still only get a 10-15% raise. So that engineer moves on and accepts a 40% raise elsewhere. And thus we see the constant churn of highly talented engineers which is a huge drain on productivity for all involved.

tharne 5y ago
> So that engineer moves on and accepts a 40% raise elsewhere. The other thing you see is talented engineers moving into management even we they don't really want to, so that they can get paid what they're worth. In some cases this is even worse than then the engineer leaving the company because, in addition to losing a good engineer, you often also gain a lousy manager.
magicroot75 5y ago
The whole crux of this article is that compensation is incorrectly assumed to be the main driver of turnover.
greatpostman 5y ago
I think the theory is that in aggregate they save money since most people are too lazy to jump
echelon 5y ago
Speaking as the Devil's advocate, organizations want headcount to be fungible. If hiring and churn were huge issues for most companies, they would actively combat it. Instead, they've all mostly settled into the practice you see. Engineers typically do a 1-2 year tour of duty, vest, then bounce onto greener pastures. Steady state flux. In some senses, new talent also bring in new ideas and combat skeptical dispositions and organizational ossification. Engineering salaries are without a doubt one of the biggest expenses for organizations to deal with. Companies love that they can now hire remotely and pay adjusted cost of living. They'll hire as many workers in middle America as they can, and once enough of the workforce is concentrated outside of expensive cities, you'll see them stop hiring in SF and NY entirely. But it won't stop there. Startup capital is already beginning to shift to new opportunities in burgeoning emerging markets. Employment will eventually head there too, whether it's chasing after the new capital or simply finding more talent at better market prices. Covid and WFH opened up a world of possibility for talent sourcing and cost reduction. America doesn't have a monopoly on good engineers, just the expensive ones. I wouldn't be surprised that if in ten years, our salaries begin to dip below six figures. Inflation adjustments notwithstanding. Make your money now while the iron is still hot.
- FpUser 5y ago
  >"Covid and WFH opened up a world of possibility for talent sourcing and cost reduction" I was doing remote work and hiring remote subcontractors for 20 years already. No need for COVID ;)
  - quickthrower2 5y ago
    You are ahead of the general “herd” then. Which for 20 years had been either “in the office no remote” or “what if we outsource it all to India that will cut those annoying costs”
- ENGNR 5y ago
  The counterpoint is - it’s very easy to waste a lot of money building very subtly the wrong thing! In theory it shouldn’t matter, if your processes and specifications are perfect. But in practice the closer your engineers deeply understand the problem space of your customers the better
- thematrixturtle 5y ago
  Speaking as someone hiring engineers in APAC, it's extremely difficult to find developers who are competent, experienced and have sufficient command of English to operate in an English-speaking team. The few that tick all three boxes and have in-demand tech skills (ML, k8s, AWS etc) can command Silicon Valley level salaries even in their home countries. Of course the pool will expand over time and the situation will look different in 10 years, bit nevertheless the English requirement will remain a blocker for many, many engineers who could otherwise code circles around a random mid-level American programmer.
  - oblio 5y ago
    Word gets out, though. Once people figure out that lack of language skills is the blocker, well, we already know that they're reasonably smart people, they'll learn English.
  - wyclif 5y ago
    Talk to me! I'm not that experienced, but I'm trying to get into the Junior DevOps space and get some good work experience under my belt while living in an APAC time zone, but the difference with me is that I'm a native English speaker from the Acela corridor in the US with the highest caliber of written and spoken English fluency. If that sounds like something you can accept (i.e., hungry junior guy who is eager to learn and accept training, certification, et.al), my email is in my profile.
mbit8 5y ago
Not to mention that many companies don't even offer raises, at least nothing of much worth.
- PicassoCTs 5y ago
  6 years, got a raise once, when almost whole crew quit..
  - mcv 5y ago
    I think I got a raise two or three times in 20 years. Most real raises were new jobs.
unklefolk 5y ago
This is probably true for many other industries. Organisation experience / knowledge is very important in being effective in a role. When looking at productivity, organisations tend to overpay new starters (a new starter is often a net loss, particular in a skill based role) and underpay those who've been with the organisation for several years. Of course, people have to live, so you can't pay a new starter next to nothing with the promise of huge increases after 6 months.
YetAnotherNick 5y ago
I think the real issue is that changing the companies always gave bigger raise in pay than staying in the company for most of the folks. Most were not changing jobs due to multiple factors like relations, not having to change house, comfort, good office, free food etc. Now this all factors have reduced a lot that staying in current company is looking even worse option. So till employers are able to retain using other means like interesting work or that employers are able to give 20-30% raise each year(which is pretty hard) the time people stay in the same company will low.
- 2muchcoffeeman 5y ago
  >* employers are able to give 20-30% raise each year(which is pretty hard)* Can’t be that hard if an engineer can just walk out and get that. What do you think the replacement will cost? And with none of the knowledge.
  - YetAnotherNick 5y ago
    25% raise over 20 years means 86 times increase in salary over a fresher. And no company could pay 5 million dollar or so for an average 20 years of experience. The entire industry hinges on the fact that a person would only change job 5-6 times in 20 years.
    - toyg 5y ago
      > no company could pay 5 million dollar or so for an average 20 years of experience. Uh, they seem to find that money just fine for execs, who are not even the ones keeping servers up, so to speak...
      - yunohn 5y ago
        This is a really important point that is always missing in these threads - execs at most companies (even at FAANG, but esp outside) make massive multiples of their average engineer.
quietbritishjim 5y ago
> An engineer that has been at a largish company for 1 year is worth 20-30% more than the year they were hired because they have specific knowledge of the tech stack. Yet that engineer will likely be offered a 3-5% raise. Although I agree with your overall point, I disagree with this line of reasoning. I think the pay offered to an engineer already takes into account that they will understand the tech stack after six months to a year. The situation is essentially the reverse of what you said: they're being overpaid initially compared to their productivity (but, quite rightly, that's the company's problem). Then their productivity catches up with their salary. But I agree with your point in the years after that.
- koonsolo 5y ago
  I agree with the both of you, so here is my simple version: Companies rely on the fact that you stay a couple of years at least. So if you want to make good deal, you need to switch jobs more often.
  - tclancy 5y ago
    A year to learn, a year to earn, a year to yearn.
    - vwcx 5y ago
      *A year to learn, a yearn to earn, next year churn.
      - koonsolo 5y ago
        I remember reading somewhere (but I can't remember where): "My job is not my job, my job is to find a better job"
        webmaven 5y ago
        I've come across "My job is to eliminate my job."
trinovantes 5y ago
Aren't large portions of stock compensation at most large companies paid out in years 3 and 4? Assuming you survive past the 2 year mark, you may as well stay for another two years
- lmz 5y ago
  I thought that was Amazon specific?
  - dasil003 5y ago
    Yes, but 4 years vest is standard, and new hire grants are significantly larger than refresher grants, so with stock appreciation the way it's been over the last decade years 3 and 4 have tended to be very lucrative for RSU-holding tech employees.
2-718-281-828 5y ago
so, my pay should increase within 10 years of being employed more than six-fold (1.2^10). makes sense!
- ui4jd73bdj 5y ago
  Seems reasonable enough for a fresh grad. For example 50k->300k. I doubt every engineer could prove to be so valuable in the end spectrum but might work for some companies. Of course if the company fired people the model would lose it's appeal, since you are leaving money on the table on the early spectrum but have no security to reach the end. Would you leave a company where you got a guaranteed 30% raise every year no questions asked(assuming work was interesting and you were happy with current comp)?
  - kamaal 5y ago
    Getting a 30% raise yoy, is something even the most optimistic entrepreneur starting up out there would salivate at. Even going from 50 -> 300k, is no easy joke. Its not even worth starting a company if you can make these kind of 6x increase in fortunes in years. Imagine going to the stock market and claiming to have 30% return yoy. I'd like to believe even at FAANGs these mad salaries aren't common. And I would be very wary of hiring anyone with a yearly jump trail on a resume, with a high salary. That resume is basically signalling the candidate does no work apart from hopping jobs. Hiring a non performer one has to replace in 10 months is a non starter.
    - jrockway 5y ago
      It does happen to people. In 2004, I worked at the University of Chicago making web apps for internal users, and got paid $45,000 a year. In 2017, I was a senior software engineer at Google making around $300,000 a year (that's salary + bonus + stock). This is probably an anomaly because I was massively underpaid at my first job, but you've got to start somewhere. (The first three years of my career was basically job hopping. I started at UofC, went to a part of Doubleclick in Chicago, then went to a bank. UofC -> Performics doubled my salary. Bank -> Google doubled my salary.) As for job hopping, you can have whatever weird criteria you want, but the average engineering tenure these days is about a year, so if you want someone who has 20 years of experience you probably shouldn't be surprised by 20 jobs. If you don't want people to leave to get more money, give them a raise. Why should people take less than market compensation because of your odd idea that they should be "loyal"? People stopped being loyal to companies in approximately 1950. The market for software engineers is ridiculously competitive on the buy side. That's just the reality.
deleted 5y ago
[deleted]
shrimpx 5y ago
Is the problem that people are hopping jobs (this was always the case), or that they're exiting the industry? I thought we're talking about the latter. I see a lot of software people quitting to take sabbaticals, to work on a project that might turn into a company, or going small and retiring. To my eye, you can't pay those people a 40% raise to retain them.
- wonderwonder 5y ago
  I think the people that can afford a sabbatical are a limited set. I think the difference lately is that so much of the economy is software focused so there is a need for developers that has not existed before.
notyourday 5y ago
> A huge problem with this industry is the inflexibility to pay current engineers LARGELY increasing comp each year This is not an inflexibility. This is the "leadership" deciding that it is not worth it.
- yakshaving_jgt 5y ago
  As it turns out, companies aren't all malevolent, omnipotent entities with infinite resources who withhold rewards from employees purely for schadenfreude.
  - tellmemore9 5y ago
zackify 5y ago
I was able to negotiate a 45k pay raise at my current company. After clearly proving my value for about 2 years. I made it obvious that I would accept a role at my friends company if they couldn’t come up. I explained to them nicely that I would rather stay, but I can’t without a large raise. It can be done, but it would have never happened without me pushing them. No company is going to willingly throw out raises this large to people without reason. I agree with your point fully, it’s just unfortunate it doesn’t happen.
- sbarre 5y ago
  In effect, you threatened them into giving you a raise. And I'll say congrats on getting it, but are you at all concerned about your ongoing relationship with management? Do they think "he's good for a few years at least now" in terms of comp adjustment, and/or do you expect a raise again next year? At my company, I understand (but have not seen first hand) that anyone who tries this (either comes to the table with a competing job offer in hand or threatens to leave in specific terms) is told "we thank you for your time here, best of luck"... Because it is assumed they are not dedicated to the company and so investing further in them is not wise. This is old-school thinking in my opinion, but it's probably still how a lot of places think. Unless you are _critical_ to a project or team, it's a risky play. Generally speaking it's a dilemma for sure, and I'm not picking a side here, but I have to imagine there is a lot of tension these days in companies due to these kinds of pressures. Again, good for you for negotiating a better comp for yourself though!
  - massysett 5y ago
    This is not at all a risky play, because GP was willing to walk. It’s a true negotiation only if you’re willing to walk out. So to negotiate, realistically assess the availability of other options, and whether you’d accept them. If you’re not willing to walk, it’s just a game of chicken. That can indeed be risky, as then you might lose what you have with no fallback and no alternative.
    - Nemi 5y ago
      I do agree that it is negotiation, but it IS a risky play. While you are negotiating, you have leverage. But it is time dependent leverage. If you stay, you lose, not all, but a large part of that leverage. If you do stay AND they decide that you are a risk for THEM, they may make moves to make them less dependent on you and at some point may RIF you or move you out in some other way and at that point you may not have a fallback option. While it is true that you are a great employee and someone will scoop you up eventually, when you are looking for a job and are currently not working, you LOSE leverage with your new potential employer. It is human psychology that you appear more attractive to an employer when you currently have a job than if you don’t. This puts you at a disadvantage going forward. I am not saying don’t negotiate with your current employer for a pay raise, but leveraging another job offer does come with some risks you should be aware of. Some employers can see it as “burning a bridge” (I don’t agree with them, but it happens). Personally what I do is try to negotiate without a job offer in hand (never threaten to quit) and if they don’t give you a good-faith pay raise then start looking for a new job then. It can take a year or more to find a good job you want. Then quit. They have already shown you that they don’t value you enough to pay you more. Paying you more under duress often does not end well.
Redoubts 5y ago
The problem is that, yeah companies are reluctant to give more than a 10% raise because that’s considered a “good” raise. To do better, you now need to convince both your management chain and HR. To do the latter, you need objective & independent proof of value, like an outside offer.
jtsiskin 5y ago
https://www.levels.fyi/charts.html https://www.levels.fyi/charts.html
hogrider 5y ago
To me this is clearly worker exploitation and I wish everyone realized that.
toss1 5y ago
It is a problem, but not the problem described in the article, and not the leading problem. From the article: >> "This result is consistent with a large body of evidence that pay has only a moderate impact on employee turnover. ... In general, corporate culture is a much more reliable predictor of industry-adjusted attrition than how employees assess their compensation." In short, as with many other stories, what most commonly leads people to quit is bad management, and often specific bad managers. Obviously when pay is tool low and uncompetitive, that'll also create problems. That's also why the major law firms have associate pay in lockstep with big growth that more than doubles their pay in 5-7 years, by which time they're either on Partner track or out. So, yes it would be smart for firms needing engineers to follow suit.
didnksfn 5y ago
"Largely" does not mean what you seem to think it means.
SergeAx 5y ago
Not to disagree with your take, but where this "40% raise elsewhere" comes from? Are the other company pays new engineer in advance for all those specific knowledge and skills they will learn in a next three years?
faangiq 5y ago
>Grind those code monkeys into dust. t. Every CEO ever.
vcool07 5y ago
The reasoning provided by someone to me was that at a org level, it's more cost effective for the org to replace those 1-2 departures with the market rate salary, than raise the salary of the whole team to the market rate. Many people stay back in a company even knowing they could probably get more if they try else where (ex: work like balance, friends, job security in the long term, exciting work etc). When a org has sufficient no of such ppl, it doesn't matter to them when they lose some 1-2 start performers. Also, there's no guarantee those star performers would stay back even if they are paid higher salaries !!
prepend 5y ago
Pay isn’t about “worth” or “value,” it’s about the labor market. Very few of us are paid based on a value calculation. We’re pod based on what the market values our labor and then we either fit or don’t fit into a business model that has some value. So you’re right, but the reason we don’t get 40% raises after a year is because we can’t quit and get a 40% raise to go elsewhere. We know this and our employers know this. Now if the market for programmers were 40% higher then we would just get that to start. Basically employers are overpaying us that first year while we learn stuff because we come up to speed after a while and then finally “earn” our salary.

tharne 5y ago

> So that engineer moves on and accepts a 40% raise elsewhere. The other thing you see is talented engineers moving into management even we they don't really want to, so that they can get paid what they're worth. In some cases this is even worse than then the engineer leaving the company because, in addition to losing a good engineer, you often also gain a lousy manager.

magicroot75 5y ago

The whole crux of this article is that compensation is incorrectly assumed to be the main driver of turnover.

greatpostman 5y ago

I think the theory is that in aggregate they save money since most people are too lazy to jump

echelon 5y ago

Speaking as the Devil's advocate, organizations want headcount to be fungible. If hiring and churn were huge issues for most companies, they would actively combat it. Instead, they've all mostly settled into the practice you see. Engineers typically do a 1-2 year tour of duty, vest, then bounce onto greener pastures. Steady state flux. In some senses, new talent also bring in new ideas and combat skeptical dispositions and organizational ossification. Engineering salaries are without a doubt one of the biggest expenses for organizations to deal with. Companies love that they can now hire remotely and pay adjusted cost of living. They'll hire as many workers in middle America as they can, and once enough of the workforce is concentrated outside of expensive cities, you'll see them stop hiring in SF and NY entirely. But it won't stop there. Startup capital is already beginning to shift to new opportunities in burgeoning emerging markets. Employment will eventually head there too, whether it's chasing after the new capital or simply finding more talent at better market prices. Covid and WFH opened up a world of possibility for talent sourcing and cost reduction. America doesn't have a monopoly on good engineers, just the expensive ones. I wouldn't be surprised that if in ten years, our salaries begin to dip below six figures. Inflation adjustments notwithstanding. Make your money now while the iron is still hot.

FpUser 5y ago
>"Covid and WFH opened up a world of possibility for talent sourcing and cost reduction" I was doing remote work and hiring remote subcontractors for 20 years already. No need for COVID ;)
- quickthrower2 5y ago
  You are ahead of the general “herd” then. Which for 20 years had been either “in the office no remote” or “what if we outsource it all to India that will cut those annoying costs”
ENGNR 5y ago
The counterpoint is - it’s very easy to waste a lot of money building very subtly the wrong thing! In theory it shouldn’t matter, if your processes and specifications are perfect. But in practice the closer your engineers deeply understand the problem space of your customers the better
thematrixturtle 5y ago
Speaking as someone hiring engineers in APAC, it's extremely difficult to find developers who are competent, experienced and have sufficient command of English to operate in an English-speaking team. The few that tick all three boxes and have in-demand tech skills (ML, k8s, AWS etc) can command Silicon Valley level salaries even in their home countries. Of course the pool will expand over time and the situation will look different in 10 years, bit nevertheless the English requirement will remain a blocker for many, many engineers who could otherwise code circles around a random mid-level American programmer.
- oblio 5y ago
  Word gets out, though. Once people figure out that lack of language skills is the blocker, well, we already know that they're reasonably smart people, they'll learn English.
- wyclif 5y ago
  Talk to me! I'm not that experienced, but I'm trying to get into the Junior DevOps space and get some good work experience under my belt while living in an APAC time zone, but the difference with me is that I'm a native English speaker from the Acela corridor in the US with the highest caliber of written and spoken English fluency. If that sounds like something you can accept (i.e., hungry junior guy who is eager to learn and accept training, certification, et.al), my email is in my profile.

mbit8 5y ago

Not to mention that many companies don't even offer raises, at least nothing of much worth.

PicassoCTs 5y ago
6 years, got a raise once, when almost whole crew quit..
- mcv 5y ago
  I think I got a raise two or three times in 20 years. Most real raises were new jobs.

unklefolk 5y ago

This is probably true for many other industries. Organisation experience / knowledge is very important in being effective in a role. When looking at productivity, organisations tend to overpay new starters (a new starter is often a net loss, particular in a skill based role) and underpay those who've been with the organisation for several years. Of course, people have to live, so you can't pay a new starter next to nothing with the promise of huge increases after 6 months.

YetAnotherNick 5y ago

I think the real issue is that changing the companies always gave bigger raise in pay than staying in the company for most of the folks. Most were not changing jobs due to multiple factors like relations, not having to change house, comfort, good office, free food etc. Now this all factors have reduced a lot that staying in current company is looking even worse option. So till employers are able to retain using other means like interesting work or that employers are able to give 20-30% raise each year(which is pretty hard) the time people stay in the same company will low.

2muchcoffeeman 5y ago
>* employers are able to give 20-30% raise each year(which is pretty hard)* Can’t be that hard if an engineer can just walk out and get that. What do you think the replacement will cost? And with none of the knowledge.
- YetAnotherNick 5y ago
  25% raise over 20 years means 86 times increase in salary over a fresher. And no company could pay 5 million dollar or so for an average 20 years of experience. The entire industry hinges on the fact that a person would only change job 5-6 times in 20 years.
  - toyg 5y ago
    > no company could pay 5 million dollar or so for an average 20 years of experience. Uh, they seem to find that money just fine for execs, who are not even the ones keeping servers up, so to speak...
    - yunohn 5y ago
      This is a really important point that is always missing in these threads - execs at most companies (even at FAANG, but esp outside) make massive multiples of their average engineer.

quietbritishjim 5y ago

> An engineer that has been at a largish company for 1 year is worth 20-30% more than the year they were hired because they have specific knowledge of the tech stack. Yet that engineer will likely be offered a 3-5% raise. Although I agree with your overall point, I disagree with this line of reasoning. I think the pay offered to an engineer already takes into account that they will understand the tech stack after six months to a year. The situation is essentially the reverse of what you said: they're being overpaid initially compared to their productivity (but, quite rightly, that's the company's problem). Then their productivity catches up with their salary. But I agree with your point in the years after that.

koonsolo 5y ago
I agree with the both of you, so here is my simple version: Companies rely on the fact that you stay a couple of years at least. So if you want to make good deal, you need to switch jobs more often.
- tclancy 5y ago
  A year to learn, a year to earn, a year to yearn.
  - vwcx 5y ago
    *A year to learn, a yearn to earn, next year churn.
    - koonsolo 5y ago
      I remember reading somewhere (but I can't remember where): "My job is not my job, my job is to find a better job"
      - webmaven 5y ago
        I've come across "My job is to eliminate my job."

trinovantes 5y ago

Aren't large portions of stock compensation at most large companies paid out in years 3 and 4? Assuming you survive past the 2 year mark, you may as well stay for another two years

lmz 5y ago
I thought that was Amazon specific?
- dasil003 5y ago
  Yes, but 4 years vest is standard, and new hire grants are significantly larger than refresher grants, so with stock appreciation the way it's been over the last decade years 3 and 4 have tended to be very lucrative for RSU-holding tech employees.

2-718-281-828 5y ago

so, my pay should increase within 10 years of being employed more than six-fold (1.2^10). makes sense!

ui4jd73bdj 5y ago
Seems reasonable enough for a fresh grad. For example 50k->300k. I doubt every engineer could prove to be so valuable in the end spectrum but might work for some companies. Of course if the company fired people the model would lose it's appeal, since you are leaving money on the table on the early spectrum but have no security to reach the end. Would you leave a company where you got a guaranteed 30% raise every year no questions asked(assuming work was interesting and you were happy with current comp)?
- kamaal 5y ago
  Getting a 30% raise yoy, is something even the most optimistic entrepreneur starting up out there would salivate at. Even going from 50 -> 300k, is no easy joke. Its not even worth starting a company if you can make these kind of 6x increase in fortunes in years. Imagine going to the stock market and claiming to have 30% return yoy. I'd like to believe even at FAANGs these mad salaries aren't common. And I would be very wary of hiring anyone with a yearly jump trail on a resume, with a high salary. That resume is basically signalling the candidate does no work apart from hopping jobs. Hiring a non performer one has to replace in 10 months is a non starter.
  - jrockway 5y ago
    It does happen to people. In 2004, I worked at the University of Chicago making web apps for internal users, and got paid $45,000 a year. In 2017, I was a senior software engineer at Google making around $300,000 a year (that's salary + bonus + stock). This is probably an anomaly because I was massively underpaid at my first job, but you've got to start somewhere. (The first three years of my career was basically job hopping. I started at UofC, went to a part of Doubleclick in Chicago, then went to a bank. UofC -> Performics doubled my salary. Bank -> Google doubled my salary.) As for job hopping, you can have whatever weird criteria you want, but the average engineering tenure these days is about a year, so if you want someone who has 20 years of experience you probably shouldn't be surprised by 20 jobs. If you don't want people to leave to get more money, give them a raise. Why should people take less than market compensation because of your odd idea that they should be "loyal"? People stopped being loyal to companies in approximately 1950. The market for software engineers is ridiculously competitive on the buy side. That's just the reality.

deleted 5y ago

[deleted]

shrimpx 5y ago

Is the problem that people are hopping jobs (this was always the case), or that they're exiting the industry? I thought we're talking about the latter. I see a lot of software people quitting to take sabbaticals, to work on a project that might turn into a company, or going small and retiring. To my eye, you can't pay those people a 40% raise to retain them.

wonderwonder 5y ago
I think the people that can afford a sabbatical are a limited set. I think the difference lately is that so much of the economy is software focused so there is a need for developers that has not existed before.

notyourday 5y ago

> A huge problem with this industry is the inflexibility to pay current engineers LARGELY increasing comp each year This is not an inflexibility. This is the "leadership" deciding that it is not worth it.

yakshaving_jgt 5y ago
As it turns out, companies aren't all malevolent, omnipotent entities with infinite resources who withhold rewards from employees purely for schadenfreude.
- tellmemore9 5y ago

zackify 5y ago

I was able to negotiate a 45k pay raise at my current company. After clearly proving my value for about 2 years. I made it obvious that I would accept a role at my friends company if they couldn’t come up. I explained to them nicely that I would rather stay, but I can’t without a large raise. It can be done, but it would have never happened without me pushing them. No company is going to willingly throw out raises this large to people without reason. I agree with your point fully, it’s just unfortunate it doesn’t happen.

sbarre 5y ago
In effect, you threatened them into giving you a raise. And I'll say congrats on getting it, but are you at all concerned about your ongoing relationship with management? Do they think "he's good for a few years at least now" in terms of comp adjustment, and/or do you expect a raise again next year? At my company, I understand (but have not seen first hand) that anyone who tries this (either comes to the table with a competing job offer in hand or threatens to leave in specific terms) is told "we thank you for your time here, best of luck"... Because it is assumed they are not dedicated to the company and so investing further in them is not wise. This is old-school thinking in my opinion, but it's probably still how a lot of places think. Unless you are _critical_ to a project or team, it's a risky play. Generally speaking it's a dilemma for sure, and I'm not picking a side here, but I have to imagine there is a lot of tension these days in companies due to these kinds of pressures. Again, good for you for negotiating a better comp for yourself though!
- massysett 5y ago
  This is not at all a risky play, because GP was willing to walk. It’s a true negotiation only if you’re willing to walk out. So to negotiate, realistically assess the availability of other options, and whether you’d accept them. If you’re not willing to walk, it’s just a game of chicken. That can indeed be risky, as then you might lose what you have with no fallback and no alternative.
  - Nemi 5y ago
    I do agree that it is negotiation, but it IS a risky play. While you are negotiating, you have leverage. But it is time dependent leverage. If you stay, you lose, not all, but a large part of that leverage. If you do stay AND they decide that you are a risk for THEM, they may make moves to make them less dependent on you and at some point may RIF you or move you out in some other way and at that point you may not have a fallback option. While it is true that you are a great employee and someone will scoop you up eventually, when you are looking for a job and are currently not working, you LOSE leverage with your new potential employer. It is human psychology that you appear more attractive to an employer when you currently have a job than if you don’t. This puts you at a disadvantage going forward. I am not saying don’t negotiate with your current employer for a pay raise, but leveraging another job offer does come with some risks you should be aware of. Some employers can see it as “burning a bridge” (I don’t agree with them, but it happens). Personally what I do is try to negotiate without a job offer in hand (never threaten to quit) and if they don’t give you a good-faith pay raise then start looking for a new job then. It can take a year or more to find a good job you want. Then quit. They have already shown you that they don’t value you enough to pay you more. Paying you more under duress often does not end well.

Redoubts 5y ago

The problem is that, yeah companies are reluctant to give more than a 10% raise because that’s considered a “good” raise. To do better, you now need to convince both your management chain and HR. To do the latter, you need objective & independent proof of value, like an outside offer.

jtsiskin 5y ago

https://www.levels.fyi/charts.html https://www.levels.fyi/charts.html

hogrider 5y ago

To me this is clearly worker exploitation and I wish everyone realized that.

toss1 5y ago

It is a problem, but not the problem described in the article, and not the leading problem. From the article: >> "This result is consistent with a large body of evidence that pay has only a moderate impact on employee turnover. ... In general, corporate culture is a much more reliable predictor of industry-adjusted attrition than how employees assess their compensation." In short, as with many other stories, what most commonly leads people to quit is bad management, and often specific bad managers. Obviously when pay is tool low and uncompetitive, that'll also create problems. That's also why the major law firms have associate pay in lockstep with big growth that more than doubles their pay in 5-7 years, by which time they're either on Partner track or out. So, yes it would be smart for firms needing engineers to follow suit.

didnksfn 5y ago

"Largely" does not mean what you seem to think it means.

SergeAx 5y ago

Not to disagree with your take, but where this "40% raise elsewhere" comes from? Are the other company pays new engineer in advance for all those specific knowledge and skills they will learn in a next three years?

faangiq 5y ago

>Grind those code monkeys into dust. t. Every CEO ever.

vcool07 5y ago

The reasoning provided by someone to me was that at a org level, it's more cost effective for the org to replace those 1-2 departures with the market rate salary, than raise the salary of the whole team to the market rate. Many people stay back in a company even knowing they could probably get more if they try else where (ex: work like balance, friends, job security in the long term, exciting work etc). When a org has sufficient no of such ppl, it doesn't matter to them when they lose some 1-2 start performers. Also, there's no guarantee those star performers would stay back even if they are paid higher salaries !!

prepend 5y ago

Pay isn’t about “worth” or “value,” it’s about the labor market. Very few of us are paid based on a value calculation. We’re pod based on what the market values our labor and then we either fit or don’t fit into a business model that has some value. So you’re right, but the reason we don’t get 40% raises after a year is because we can’t quit and get a 40% raise to go elsewhere. We know this and our employers know this. Now if the market for programmers were 40% higher then we would just get that to start. Basically employers are overpaying us that first year while we learn stuff because we come up to speed after a while and then finally “earn” our salary.