4 ms·

HR is of the universally mistaken belief that a 2% raise is all anyone should get regardless of market conditions. The only way for managers to retain talent i

by lumost 5y ago

HR is of the universally mistaken belief that a 2% raise is all anyone should get regardless of market conditions. The only way for managers to retain talent is then to promote people and dilute whatever title structure your org has.

analog31 5y ago
During my brief stint as a manger, I quickly learned that the money for promotions comes out of a different "pot," and that the most highly respected managers were not timid about dipping into that pot. All of the engineers at the highest level at the time, worked for one manager. That understanding changed how I thought about my own career development after I moved back to an IC role.
- nine_zeros 5y ago
  Can you summarize the various "pots" and what makes the best sense for ICs?
  - ragona 5y ago
    Usually you have a pool of money to split between your reports, playing with say a 2-6% raise for them. If you have an underpaid report you try to favor them, that kind of thing. If you get someone promoted, they get bumped into a new salary band, and thus get a larger raise — and this is outside the above pool.
  - hiptobecubic 5y ago
    Pay allocation isn't rational from the ICs point of view. For handwavy business reasons that sound stupid and no one cares about, you have things like separate budgets for "extra money spent due to promotion" vs "extra money spent due to retention raises" so if you want to retain someone and can't get sufficient money from the retention pot, you are forced to dip into the promotion pot. From an ICs perspective, I think the takeaway is that getting promoted is almost never the wrong move and should be done as soon and as aggressively as possible, otherwise you're probably leaving money on the table. Even in the rare event that you manage to get promoted beyond your level of competence and are now struggling to avoid being fired for performance, you just move to another company with your shiny new title and enjoy a higher total comp there than you would have gotten without promotion anyway. It's pretty hard to go wrong.
  - analog31 5y ago
    In a nutshell, there's one budget for annual salary increases, and another budget for pay increases that result from promotions and competitive counter-offers. These budgets may be controlled by different people. Companies that have a lot of money, tend to manage that money by dividing it up into different "pots" that are controlled by individual managers. This is just a straightforward way of managing a business, but what's not obvious at first glance is that moving money from one pot to another is hard. If a higher power has decided that the merit increase budget is 2%/y, that could be hard for an individual manager to budge. On the other hand, if you promote someone, you get the full 2% of your new budget in the next annual cycle, so your salary budget has increased by more than 2% for that year. Another thing is that if you bump a junior up to senior, and that person leaves, nobody will bat an eye at replacing them with another senior. What I did as an IC was that I articulated my interests to my boss in fairly plain terms. I asked: What's the process for moving up a level? What do I need to do? What goals can we put on my performance review? A lot of people are timid about this, especially as the answer might be No. One of my friends was told by his boss: "You are topped out at your level." Ouch. What I can't tell anybody is what risk they're taking by adopting any particular approach. I don't think I engaged in any skullduggery or politics. I am in fact enthusiastic about the business, and committed to improving my own knowledge and work. Something I've told my bosses, which is completely sincere, is that I have a lot of mental flexibility, and am happy to be guided by what they think is the best for their department and the business. It might be that my experience as a manager gave me some cred, since it was clear that I understood the process from both sides of the table.
    - khuey 5y ago
      > One of my friends was told by his boss: "You are topped out at your level." Ouch. It might be hard to hear but this is a very good answer from the boss. Your friend was told to start looking for a new job if they want to move up rather than waste their time grinding away at their current job. Much better than being sold false hope.
      - analog31 5y ago
        Indeed, my friend talked to his financial advisor, bought a sailboat, and went down to a 4 day week. Also, org charts get rearranged once in a while, so his new boss may have had a different idea.
- lumost 5y ago
  Curiously, when I look at new companies I always check for manager tenure. My experience is that new managers often don't understand these organizational quirks and have a difficult time navigating the internal politics and processes.
  - analog31 5y ago
    In my own case, I simply realized that I could be an OK manager, but was never going to be a great manager. And an interesting IC position came along within the same work site. I was actually promoted out of management.
  - no_wizard 5y ago
    It can also go the other way. I found at established companies new projects often had new managers (not sure why) and also got a lot of the positive focus in the org, and had more resources as a result, which lead to better retention and raises and more headroom if there were issues like missing deadlines. It really depends on the company though
yehNonsense0 5y ago
isbvhodnvemrwvn 5y ago
HR doesn't make that decision, the upper management does.
- lumost 5y ago
  not really, the basic mechanics for most companies are 1) The CEO was consulted on a particular comp plan for the new year with budgets for promotions/new hires/retention etc. 2) The CEO was almost certainly given a "generic" plan that the investors of the company + whatever data the HR team has indicates is warranted. 3) The CEO has to decide between going to bat for the employees with the investors (his boss), pushing back on HR with no data, or just accepting it. Unsurprisingly the CEO always takes option 3 - everyone is breathing their own exhaust on what a good raise for the year is and the investors will often present a generic comp plan. You'll usually hear things like "we pay the median" or similar to justify this, but the root cause is always the same, bad data driving bad decisions. Also note that generally these comp plans are made regardless of role. Engineering being more cyclical tends to have rapidly increasing comp on the up-cycle and struggles to match this model. On the flip side we all may be great full that HR doesn't mark comp to market.
  - nojito 5y ago
    The CEO has literally no say in creating Capital Allocations. That's what the CFO is there for.
    - lumost 5y ago
      This will vary from company to company - In some companies the CFO was selected by the board to keep finances in order as the CEO is not trusted, in others the CEO will defer this to the CFO by choice or through collaboration, and some CFO's will probably do not much more than do what the CEO tells them to.
      - nojito 5y ago
        Absolute nonsense. CEOs are facilitators. Maybe this is a case of startup culture seeping in but there is always a firewall between the CEO and the rest of the c suite.

by lumost 5y ago

analog31 5y ago

During my brief stint as a manger, I quickly learned that the money for promotions comes out of a different "pot," and that the most highly respected managers were not timid about dipping into that pot. All of the engineers at the highest level at the time, worked for one manager. That understanding changed how I thought about my own career development after I moved back to an IC role.

nine_zeros 5y ago
Can you summarize the various "pots" and what makes the best sense for ICs?
- ragona 5y ago
  Usually you have a pool of money to split between your reports, playing with say a 2-6% raise for them. If you have an underpaid report you try to favor them, that kind of thing. If you get someone promoted, they get bumped into a new salary band, and thus get a larger raise — and this is outside the above pool.
- hiptobecubic 5y ago
  Pay allocation isn't rational from the ICs point of view. For handwavy business reasons that sound stupid and no one cares about, you have things like separate budgets for "extra money spent due to promotion" vs "extra money spent due to retention raises" so if you want to retain someone and can't get sufficient money from the retention pot, you are forced to dip into the promotion pot. From an ICs perspective, I think the takeaway is that getting promoted is almost never the wrong move and should be done as soon and as aggressively as possible, otherwise you're probably leaving money on the table. Even in the rare event that you manage to get promoted beyond your level of competence and are now struggling to avoid being fired for performance, you just move to another company with your shiny new title and enjoy a higher total comp there than you would have gotten without promotion anyway. It's pretty hard to go wrong.
- analog31 5y ago
  In a nutshell, there's one budget for annual salary increases, and another budget for pay increases that result from promotions and competitive counter-offers. These budgets may be controlled by different people. Companies that have a lot of money, tend to manage that money by dividing it up into different "pots" that are controlled by individual managers. This is just a straightforward way of managing a business, but what's not obvious at first glance is that moving money from one pot to another is hard. If a higher power has decided that the merit increase budget is 2%/y, that could be hard for an individual manager to budge. On the other hand, if you promote someone, you get the full 2% of your new budget in the next annual cycle, so your salary budget has increased by more than 2% for that year. Another thing is that if you bump a junior up to senior, and that person leaves, nobody will bat an eye at replacing them with another senior. What I did as an IC was that I articulated my interests to my boss in fairly plain terms. I asked: What's the process for moving up a level? What do I need to do? What goals can we put on my performance review? A lot of people are timid about this, especially as the answer might be No. One of my friends was told by his boss: "You are topped out at your level." Ouch. What I can't tell anybody is what risk they're taking by adopting any particular approach. I don't think I engaged in any skullduggery or politics. I am in fact enthusiastic about the business, and committed to improving my own knowledge and work. Something I've told my bosses, which is completely sincere, is that I have a lot of mental flexibility, and am happy to be guided by what they think is the best for their department and the business. It might be that my experience as a manager gave me some cred, since it was clear that I understood the process from both sides of the table.
  - khuey 5y ago
    > One of my friends was told by his boss: "You are topped out at your level." Ouch. It might be hard to hear but this is a very good answer from the boss. Your friend was told to start looking for a new job if they want to move up rather than waste their time grinding away at their current job. Much better than being sold false hope.
    - analog31 5y ago
      Indeed, my friend talked to his financial advisor, bought a sailboat, and went down to a 4 day week. Also, org charts get rearranged once in a while, so his new boss may have had a different idea.
lumost 5y ago
Curiously, when I look at new companies I always check for manager tenure. My experience is that new managers often don't understand these organizational quirks and have a difficult time navigating the internal politics and processes.
- analog31 5y ago
  In my own case, I simply realized that I could be an OK manager, but was never going to be a great manager. And an interesting IC position came along within the same work site. I was actually promoted out of management.
- no_wizard 5y ago
  It can also go the other way. I found at established companies new projects often had new managers (not sure why) and also got a lot of the positive focus in the org, and had more resources as a result, which lead to better retention and raises and more headroom if there were issues like missing deadlines. It really depends on the company though

yehNonsense0 5y ago

isbvhodnvemrwvn 5y ago

HR doesn't make that decision, the upper management does.

lumost 5y ago
not really, the basic mechanics for most companies are 1) The CEO was consulted on a particular comp plan for the new year with budgets for promotions/new hires/retention etc. 2) The CEO was almost certainly given a "generic" plan that the investors of the company + whatever data the HR team has indicates is warranted. 3) The CEO has to decide between going to bat for the employees with the investors (his boss), pushing back on HR with no data, or just accepting it. Unsurprisingly the CEO always takes option 3 - everyone is breathing their own exhaust on what a good raise for the year is and the investors will often present a generic comp plan. You'll usually hear things like "we pay the median" or similar to justify this, but the root cause is always the same, bad data driving bad decisions. Also note that generally these comp plans are made regardless of role. Engineering being more cyclical tends to have rapidly increasing comp on the up-cycle and struggles to match this model. On the flip side we all may be great full that HR doesn't mark comp to market.
- nojito 5y ago
  The CEO has literally no say in creating Capital Allocations. That's what the CFO is there for.
  - lumost 5y ago
    This will vary from company to company - In some companies the CFO was selected by the board to keep finances in order as the CEO is not trusted, in others the CEO will defer this to the CFO by choice or through collaboration, and some CFO's will probably do not much more than do what the CEO tells them to.
    - nojito 5y ago
      Absolute nonsense. CEOs are facilitators. Maybe this is a case of startup culture seeping in but there is always a firewall between the CEO and the rest of the c suite.