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> You aren't being paid based on what your labor is earning your company. I've managed P&L at multiple companies. Salaries are inevitably influenced by cash fl

> You aren't being paid based on what your labor is earning your company. I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. > cost of living shouldn't matter and maybe pay everyone $110k No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Why is it only capitalism when the company is greedy?

slg 4y ago
>I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. How mature were those companies? Did they have investors willing to accept extended periods of time without profit like many VC and Wall Street investors have come to accept from many tech companies? Did increases in cash flow or revenue lead to across the board raises? Or did cash flow and revenue exist purely as a cap on salaries? >No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Yes, Google can support those margins, but why would they? Why would Google pay a developer a dollar more than they need to? If they can get the same work out of employees in low cost of living areas, they will expect to pay all employees low cost of living salaries. >Why is it only capitalism when the company is greedy? I'm not sure what you mean by this. There was no positive value judgement on my use of the word "capitalism". I was not praising companies for this behavior. I was making a value neutral observation on their behavior. Don't take my observation of behavior as and endorsement of that behavior.
- tomnipotent 4y ago
  > How mature were those companies? Early stage to public, all VC-backed. > Did increases in cash flow or revenue lead to across the board raises? That doesn't happen anywhere, unless a board member recommends it or you have a very generous CEO (like Gravity Payments). Either an employee asks for a raise, or a manager fights for one using new hires/open req salaries as negotiating leverage. Turnover is part of life, and if no one is fighting for you then you're expected to fight for yourself. > Or did cash flow and revenue exist purely as a cap on salaries? G&A is a huge chunk of expenses for most companies, and after a few years of operating you'll have reasonable historical data combined with future financial projections to figure out where you want that G&A % to hover around. This is what determines salary caps, as your leadership team juggles figuring out whom they need to hire to hit those projections and how much they can pay in the given market to find the talent they need/want. For an e-comm business that might be 30-35% of total expenses. For SaaS, could be as high as 70%. So your leadership agrees on some growth plan, and the CEO hits the button on hiring X new heads with a combined Z salary cap. What ends up happening is that you max out Z by X-N new hires, and the CEO has to decide to spend more to reach X hires or tell teams to make due with the headcount they have while reminding them to "hire faster next time". Over a long enough period of time, the executive and finance teams will implicitly agree on some tolerance that G&A needs to stay within, and the company will be managed and decisions will be made to make sure those commitments are made. We've probably all seen this as sudden hiring freezes or lay-offs, when either current results or projections show that some target isn't going to be met but that tweaking these other numbers (headcount, payroll) the company can keep the first number (costs as % of revenues) consistent. Over an even longer period of times, those salary bands will ossify into comp levels like "SDE 5" or some-such and this becomes the aggregate in which salary is managed. So for a company like Google that has its finances literally down to a science, which is already operating multi-year roadmaps with high salaries baked into every assumption and model and even the stock price, would not want to rock the boat of missing those targets by tweaking something that could cause more harm than good. It's not worth it to them. Keep in mind that Google's margin are still healthy even after salaries have skyrocketed since they were discovered colluding with other companies to artificially keep salaries low.
  - slg 4y ago
    You are basing your logic on conflicting assumptions. First you say that you need "a very generous CEO" to raise salaries as revenues increase, but that isn't just a requirement to get a raise. That is also a requirement to get hired at a higher than market rate. Why would Google hire a developer in the Bay Area when they can have 3 in Akron or a whole team in India? Why are you assuming that just because Google has "high salaries baked into every assumption and model" that they won't go "tweaking these other numbers" as soon as "projections show that some target isn't going to be met"? Paying everyone the same regardless of their location means that people in the highest cost areas need to compete on salary with people in the lowest cost areas. People in the low cost locations outnumber people in the high cost areas so it will be a race to the bottom. Google isn't going to pay everyone Bay Area salaries. They will pay everyone as little as possible to still reach their target headcount/production.
nsonha 4y ago
You get paid a fixed salary, that fact alone means it has nothing to do with the income you bring into the company, it's perfectly fine and is the norm. It's always about what number would make you happy, not what is fair, nor that "being fair" is well defined.

slg 4y ago

>I've managed P&L at multiple companies. Salaries are inevitably influenced by cash flow projections and revenues, and are absolutely aligned in multiple dimensions to revenues. How mature were those companies? Did they have investors willing to accept extended periods of time without profit like many VC and Wall Street investors have come to accept from many tech companies? Did increases in cash flow or revenue lead to across the board raises? Or did cash flow and revenue exist purely as a cap on salaries? >No, they're going to pay whatever their margins can tolerate while competing for labor. If Google can manage the salaries they have with staff living mostly in high cost-of-living cities, so they can also support those margins with staff living anywhere else in the world. Yes, Google can support those margins, but why would they? Why would Google pay a developer a dollar more than they need to? If they can get the same work out of employees in low cost of living areas, they will expect to pay all employees low cost of living salaries. >Why is it only capitalism when the company is greedy? I'm not sure what you mean by this. There was no positive value judgement on my use of the word "capitalism". I was not praising companies for this behavior. I was making a value neutral observation on their behavior. Don't take my observation of behavior as and endorsement of that behavior.

tomnipotent 4y ago
> How mature were those companies? Early stage to public, all VC-backed. > Did increases in cash flow or revenue lead to across the board raises? That doesn't happen anywhere, unless a board member recommends it or you have a very generous CEO (like Gravity Payments). Either an employee asks for a raise, or a manager fights for one using new hires/open req salaries as negotiating leverage. Turnover is part of life, and if no one is fighting for you then you're expected to fight for yourself. > Or did cash flow and revenue exist purely as a cap on salaries? G&A is a huge chunk of expenses for most companies, and after a few years of operating you'll have reasonable historical data combined with future financial projections to figure out where you want that G&A % to hover around. This is what determines salary caps, as your leadership team juggles figuring out whom they need to hire to hit those projections and how much they can pay in the given market to find the talent they need/want. For an e-comm business that might be 30-35% of total expenses. For SaaS, could be as high as 70%. So your leadership agrees on some growth plan, and the CEO hits the button on hiring X new heads with a combined Z salary cap. What ends up happening is that you max out Z by X-N new hires, and the CEO has to decide to spend more to reach X hires or tell teams to make due with the headcount they have while reminding them to "hire faster next time". Over a long enough period of time, the executive and finance teams will implicitly agree on some tolerance that G&A needs to stay within, and the company will be managed and decisions will be made to make sure those commitments are made. We've probably all seen this as sudden hiring freezes or lay-offs, when either current results or projections show that some target isn't going to be met but that tweaking these other numbers (headcount, payroll) the company can keep the first number (costs as % of revenues) consistent. Over an even longer period of times, those salary bands will ossify into comp levels like "SDE 5" or some-such and this becomes the aggregate in which salary is managed. So for a company like Google that has its finances literally down to a science, which is already operating multi-year roadmaps with high salaries baked into every assumption and model and even the stock price, would not want to rock the boat of missing those targets by tweaking something that could cause more harm than good. It's not worth it to them. Keep in mind that Google's margin are still healthy even after salaries have skyrocketed since they were discovered colluding with other companies to artificially keep salaries low.
- slg 4y ago
  You are basing your logic on conflicting assumptions. First you say that you need "a very generous CEO" to raise salaries as revenues increase, but that isn't just a requirement to get a raise. That is also a requirement to get hired at a higher than market rate. Why would Google hire a developer in the Bay Area when they can have 3 in Akron or a whole team in India? Why are you assuming that just because Google has "high salaries baked into every assumption and model" that they won't go "tweaking these other numbers" as soon as "projections show that some target isn't going to be met"? Paying everyone the same regardless of their location means that people in the highest cost areas need to compete on salary with people in the lowest cost areas. People in the low cost locations outnumber people in the high cost areas so it will be a race to the bottom. Google isn't going to pay everyone Bay Area salaries. They will pay everyone as little as possible to still reach their target headcount/production.

nsonha 4y ago

You get paid a fixed salary, that fact alone means it has nothing to do with the income you bring into the company, it's perfectly fine and is the norm. It's always about what number would make you happy, not what is fair, nor that "being fair" is well defined.