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> Everybody in a business is creating the wealth of the business That's clearly not true. It's just ussually very hard to quantify how much wealth every indivi
by qwytw 4y ago
> Everybody in a business is creating the wealth of the business
That's clearly not true. It's just ussually very hard to quantify how much wealth every individual is creating and it becomes even harder as you go up the chain of hierarchy.
> Unsurprisingly, their compensation is in proportion to the value they add
Well... that's a strong statement and generally incorrect, at best their compensation if bounded by the value they add (not that it's easy to measure in most roles). Supply+demand (as you said) is what determines compensation in 95%+ of all cases.
- WalterBright 4y agoThe job of a cost accountant is to quantify these things. If the business gets it wrong, then the business does poorly or even goes out of business. Supply+Demand certainly does determine employee compensation. But consider that there is no demand for workers who would cost more than the value they add. If the worker was producing far more value than he was paid, then the worker will be enticed away by some other business offering him more money. So, you can see how S+D nudges employee compensation towards being paid according to what value they produce.
- qwytw 4y ago> But consider that there is no demand for workers who would cost more than the value they add In general yes. But as as some of the venture capital funded growth companies have shown us in recent years these values can stay detached for quite a while. But yeah over longterm I'd you to be mostly right.