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If the company is large, it’s not that recognizing talent is hard, it’s rewarding talent. I’ve worked at places that lock in 3% average compensation increases

If the company is large, it’s not that recognizing talent is hard, it’s rewarding talent. I’ve worked at places that lock in 3% average compensation increases for departments. That includes promotions. So in a team of 5, if you give one person a 15% raise, everyone else gets zero. This is a ham fisted way that companies keep salaries under control. It’s not that managers don’t know who is good, it’s that they can’t do anything about it.

SenHeng 4y ago
Reminds me of the story a couple years back where Honda Japan couldn’t hire any AI engineers because their high salaries wouldn’t fit into the company’s pay grades.
- mathattack 4y ago
  This trips up large companies all the time. They can’t hire SAP or AI or cloud or whatever is hot. The good ones train their own, but even then they can’t keep them when they’re paid 40% below market for the skill. The irony is the same companies can pay 3x the comp for external consultants.
  - ratww 4y ago
    > The irony is the same companies can pay 3x the comp for external consultants. I once worked for a university during a large ERP migration. There was a mix of employees and consultants working on the migration. Everyone that the university managed to hire (at salaries WAY below-market price) was almost immediately snatched and started working as consultants themselves (in other companies, obviously). And rightly so.
  - Suchos 4y ago
    I was told it's different budget line, so nobody really cares. HR just does not like to see IT being paid 4 times as much as them.
- hibikir 4y ago
  This kind of happens in America today. I've worked for a Fortune 500 company that had a lot of trouble hiring good engineers on a full time basis, as the powers that be had decided that they shouldn't compare developer salaries to the market as large, but just their specific industry, so their idea of average market rate was off by tens of thousands of dollars. When dealing with capital projects and contractors, however, they had no problems whatsoever giving people on very long contracts hourly rates that weren't just good for their industry, but would have been good for Northern California. I worked for 3 years straight, 40 hours a week, where I was making three times the take-home pay than coworkers with the same responsibilities. And this was after accounting for all taxes, health care, and giving myself more days off than the full time workers did. Management seemed fine with that arrangement too. Said coworker's direct manager tried to talk to the CTO about the situation. The argument was that if they were happy paying people like me really well, and that they were losing their best FTEs to other companies in a regular basis, that maybe they should pay their best workers a competitive way, instead of ending up with FTEs that just were not competent enough to be hired at regular rates somewhere else. The answer was "If our best FTEs are getting poached by west coast companies, this means that we are good at training" Remember the story about how some government agencies in charge of building things are getting hollowed out, losing all expertise, leading to very slow, very expensive projects being mostly handled by consultants? It's how it works in software for a big percentage of private sector firms that were already big in the 1970s.
pcurve 4y ago
yep... robbing peter to pay paul. Until someone on your team threatens to quit, at which you're given more money all of a sudden to retain. Sadly, 90% of them just quit before there is even a chance to give mid cycle raise.
cbm-vic-20 4y ago
Can confirm. As a low-level manager at a large company, I have pretty much no control over compensation beyond ranking my directs. Someone above my manager merges the lists together and draws a line. I've had good engineers leave because of this, and I don't blame them.

SenHeng 4y ago

Reminds me of the story a couple years back where Honda Japan couldn’t hire any AI engineers because their high salaries wouldn’t fit into the company’s pay grades.

mathattack 4y ago
This trips up large companies all the time. They can’t hire SAP or AI or cloud or whatever is hot. The good ones train their own, but even then they can’t keep them when they’re paid 40% below market for the skill. The irony is the same companies can pay 3x the comp for external consultants.
- ratww 4y ago
  > The irony is the same companies can pay 3x the comp for external consultants. I once worked for a university during a large ERP migration. There was a mix of employees and consultants working on the migration. Everyone that the university managed to hire (at salaries WAY below-market price) was almost immediately snatched and started working as consultants themselves (in other companies, obviously). And rightly so.
- Suchos 4y ago
  I was told it's different budget line, so nobody really cares. HR just does not like to see IT being paid 4 times as much as them.
hibikir 4y ago
This kind of happens in America today. I've worked for a Fortune 500 company that had a lot of trouble hiring good engineers on a full time basis, as the powers that be had decided that they shouldn't compare developer salaries to the market as large, but just their specific industry, so their idea of average market rate was off by tens of thousands of dollars. When dealing with capital projects and contractors, however, they had no problems whatsoever giving people on very long contracts hourly rates that weren't just good for their industry, but would have been good for Northern California. I worked for 3 years straight, 40 hours a week, where I was making three times the take-home pay than coworkers with the same responsibilities. And this was after accounting for all taxes, health care, and giving myself more days off than the full time workers did. Management seemed fine with that arrangement too. Said coworker's direct manager tried to talk to the CTO about the situation. The argument was that if they were happy paying people like me really well, and that they were losing their best FTEs to other companies in a regular basis, that maybe they should pay their best workers a competitive way, instead of ending up with FTEs that just were not competent enough to be hired at regular rates somewhere else. The answer was "If our best FTEs are getting poached by west coast companies, this means that we are good at training" Remember the story about how some government agencies in charge of building things are getting hollowed out, losing all expertise, leading to very slow, very expensive projects being mostly handled by consultants? It's how it works in software for a big percentage of private sector firms that were already big in the 1970s.

pcurve 4y ago

yep... robbing peter to pay paul. Until someone on your team threatens to quit, at which you're given more money all of a sudden to retain. Sadly, 90% of them just quit before there is even a chance to give mid cycle raise.

cbm-vic-20 4y ago

Can confirm. As a low-level manager at a large company, I have pretty much no control over compensation beyond ranking my directs. Someone above my manager merges the lists together and draws a line. I've had good engineers leave because of this, and I don't blame them.