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Ive thought about this a bunch, and I design the comp plan for the company I am at, and I haven't seen any specific research on this but my conjecture is this:
by 0xB31B1B 2y ago
Ive thought about this a bunch, and I design the comp plan for the company I am at, and I haven't seen any specific research on this but my conjecture is this: The comp plans at places like google are designed not to stack superstars, but rather to make it so that everyone at the company is at least 1x productive and not being constantly poached. Its attractive enough that the interview pool is filled with plenty of 1x+ engineers, people who are median or above in performance. Its enough so that they're not really worried about you jumping to the next highest payer.
- snapplebobapple 2y agoIsn't it just that when borrowed cash is free the real risk to your oligopoly is startups doing something dramatically better and stealing your lunch? In that environment the strategy is not about limiting the pay rung jump among the established players, it's about keeping the people talented enough to successfully do a startup from actively looking at that much harder path because buying successful startups is way more expensive than moderately overpaying a few tens of thousands of people. In a higher interest environment the startup money dries up a lot so the risk to your oligopoly is much lower and the demand for yield on your stock increases dramatically so you worry less about a startup and more about maximizing value from your work force (which leads to lower pay on average and layoffs to rightsize), plus the cost of buying a successful startup will be lower because the discount factor from the higher interest rate caps price expansion.