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Stock options is also a very American tech thing, and mainly provided by US tech companies in the EU. Peformance bonuses paid by the employer when you reach ta

Stock options is also a very American tech thing, and mainly provided by US tech companies in the EU. Peformance bonuses paid by the employer when you reach targets set by them is somewhat common and could be used in hospitality too. However, the majority of jobs do not have such performance incentives other than keeping your job if you keep up your end of the bargain, and possibly getting promoted to a higher role if you show certain skills. The hospitality sector does not have to differ.

ml_basics 2y ago
And American tech companies have been substantially more successful that European tech companies so maybe it does actually make sense to have stock options as part of compensation rather than employer bonuses?
- highwaylights 2y ago
  Sure, but where’s the problem? If those companies are succeeding because they offered those incentives then it forces others to do the same or fail.
  - trashtester 2y ago
    I'm not sure you noticed, but Europe simply doesn't have the kind of tech sector that the US and increasingly China and even India have. In fact, I'm not sure I know of a single global top 100 company (by market cap) that is a European tech company founded in the past 40 years. Compensation models is almost certainly part of the reason, in addition to taxation, regulations, culture, etc.
- arghwhat 2y ago
  That feels a lot more like correlation than causation. What you could argue is that because these companies are so successful, they can now offer disproportionately large compensation packages including stock options which draw talent from the rest of the world to keep them large. This in turn fuels the startup economy as investors dream of having a big share of the next big thing. I don't think it makes sense as a justification for why these companies grew so big and attracted so much money, causing a gap in startup environments. It would at most explain why they stay so big.
  - trashtester 2y ago
    American economic success is not due to old companies staying big. It's due to the immense rate that some startups tend to grow. From the 100 most valuable companies on Earth, there are maybe 20-30 US (rough guess) tech companies that have been started in the the past 40 years, and several of them in the past 20. And approximately 0 European ones. And while this isn't PROOF of causation, it surely increases the posterior probability of causation, regarles of what your prior was before adding this evidence.
ghaff 2y ago
I'd argue a lot of the "incentive" pay offered by US public companies is more or less expected as well.
trashtester 2y ago
I live in Europe, so I know. But the respect for such differences should go both ways. A system based on tips makes it easier to start a new place, and then find a few young people to help staff it. Like many places in the US, or in popular vacation resorts even in Europe. On the other hand, systems based on fixed salaries favors more established businesses (like McDonalds) or, at the opposite end of the spectrum, family run businesses where family member salaries are set more to minimize overall tax burden more than to compensate performance. Just like French small/-ish restaurants may be an excellent solution in the French countryside, the US model can work well in Miami or some steakhouse on Route 66.
- arghwhat 2y ago
  > A system based on tips makes it easier to start a new place, and then find a few young people to help staff it. So this is to allow new businesses to start easy by not having to pay their employees if there isn't business? Imagine if other industries picked up on that, stopped paying living wages and instead made it every employees job to attract business and satisfy customers themselves in order to be able to pay rent. Starting any business implies up front investments and a gamble on its future profitability. In any other industry, if you lacked the cash to pay salary you'd have to offer things like equity to share both risk and gain with the first few employees. Using tips mean you only share a high risk of them not being able to make a living off this new unproven business, without any benefit other than "if everything goes well and we're lucky, you'll be able to pay rent!". If we wanted performance-driven salary, then a living base wage and a pre-agreed performance bonus with no concept of tip would be more appropriate. Recently, there was a lot of focus on tips due to how Square/Cube/whatever has affected tipping, and it appears that the consensus in the US is not in favor of tipping.
  - trashtester 2y ago
    > if you lacked the cash to pay salary you'd have to offer things like equity Do you think the 18-year-old getting a job serving burgers and beers at the recently started sports bar cares about the equity? Most of them would much rather receive $200 in tips on a good night over POSSIBLY having some stake in that bar 10 years down the road. (The one exception I can see, is if the business is owned by her parents.) An equity as a model is suited to another type of demographic working in a different kind of business.

ml_basics 2y ago

And American tech companies have been substantially more successful that European tech companies so maybe it does actually make sense to have stock options as part of compensation rather than employer bonuses?

highwaylights 2y ago
Sure, but where’s the problem? If those companies are succeeding because they offered those incentives then it forces others to do the same or fail.
- trashtester 2y ago
  I'm not sure you noticed, but Europe simply doesn't have the kind of tech sector that the US and increasingly China and even India have. In fact, I'm not sure I know of a single global top 100 company (by market cap) that is a European tech company founded in the past 40 years. Compensation models is almost certainly part of the reason, in addition to taxation, regulations, culture, etc.
arghwhat 2y ago
That feels a lot more like correlation than causation. What you could argue is that because these companies are so successful, they can now offer disproportionately large compensation packages including stock options which draw talent from the rest of the world to keep them large. This in turn fuels the startup economy as investors dream of having a big share of the next big thing. I don't think it makes sense as a justification for why these companies grew so big and attracted so much money, causing a gap in startup environments. It would at most explain why they stay so big.
- trashtester 2y ago
  American economic success is not due to old companies staying big. It's due to the immense rate that some startups tend to grow. From the 100 most valuable companies on Earth, there are maybe 20-30 US (rough guess) tech companies that have been started in the the past 40 years, and several of them in the past 20. And approximately 0 European ones. And while this isn't PROOF of causation, it surely increases the posterior probability of causation, regarles of what your prior was before adding this evidence.

ghaff 2y ago

I'd argue a lot of the "incentive" pay offered by US public companies is more or less expected as well.

trashtester 2y ago

I live in Europe, so I know. But the respect for such differences should go both ways. A system based on tips makes it easier to start a new place, and then find a few young people to help staff it. Like many places in the US, or in popular vacation resorts even in Europe. On the other hand, systems based on fixed salaries favors more established businesses (like McDonalds) or, at the opposite end of the spectrum, family run businesses where family member salaries are set more to minimize overall tax burden more than to compensate performance. Just like French small/-ish restaurants may be an excellent solution in the French countryside, the US model can work well in Miami or some steakhouse on Route 66.

arghwhat 2y ago
> A system based on tips makes it easier to start a new place, and then find a few young people to help staff it. So this is to allow new businesses to start easy by not having to pay their employees if there isn't business? Imagine if other industries picked up on that, stopped paying living wages and instead made it every employees job to attract business and satisfy customers themselves in order to be able to pay rent. Starting any business implies up front investments and a gamble on its future profitability. In any other industry, if you lacked the cash to pay salary you'd have to offer things like equity to share both risk and gain with the first few employees. Using tips mean you only share a high risk of them not being able to make a living off this new unproven business, without any benefit other than "if everything goes well and we're lucky, you'll be able to pay rent!". If we wanted performance-driven salary, then a living base wage and a pre-agreed performance bonus with no concept of tip would be more appropriate. Recently, there was a lot of focus on tips due to how Square/Cube/whatever has affected tipping, and it appears that the consensus in the US is not in favor of tipping.
- trashtester 2y ago
  > if you lacked the cash to pay salary you'd have to offer things like equity Do you think the 18-year-old getting a job serving burgers and beers at the recently started sports bar cares about the equity? Most of them would much rather receive $200 in tips on a good night over POSSIBLY having some stake in that bar 10 years down the road. (The one exception I can see, is if the business is owned by her parents.) An equity as a model is suited to another type of demographic working in a different kind of business.