Seems like "pay them more" should be at least mentioned as a possibility here.
Actually, money is a huge factor for most tech people. I don't know many developers who wouldn't move jobs for a 30-40% increase in pay.
Not to mention salary is fairly closely tied to value within a company... unless you are getting ripped off. And once somebody realises they are getting ripped off they are likely to leave.
Suppose you have a person you've brought on, and they agree to do some amount of work at a salary and tiny equity split.
After some amount of time, they realize that they've produced a good deal more value than you have compensated them for. They're going to feel jilted.
It's not enough to say, "We'll take advantage of you less in the future"...you might have to say, "Wow, okay, we screwed you, how can we make this right?"
And sadly, the optimal capitalist strategy is to just lay them off and enjoy the surplus they unwittingly made for you.
Maybe for a dumb capitalist. The optimum strategy is to pick a level of compensation that works for them and you while realizing there is a transition cost to new people and talent is worth something.
Just because parent said optimal strategy is to lay them off doesn't mean you have to act like that's _never_ going to be the case.
For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy.
I thought it went without saying that you cannot force someone into an agreement. Agreements sometimes don't happen and then you pay the additional costs out of necessity.
> For the given hypothetical, the 'ol "get them to unknowningly train their replacement by pretending like you're rewarding them with more compensation and a direct report" could be the "optimal" strategy.
That might be someone's interesting play, but I think it is a poor strategy because it shows your employees and anyone else you are going to make agreements with that you are of the duplicitous sort and cannot be trusted. This will affect your long term prospects in a negative way. Never mind its a pretty poor way to go through life.
Strategy should be thought of as long term.
But if they choose to leave, do not offer them money to stay. Any employee who stays is not being very smart, the only interest the company has in paying you more is keeping you long enough to train your replacement.
If you were not worth X the day before you quit, how are you suddenly worth X the day you decide to quit?
I've seen people accept a counter-offer from a company, and very few of those lasted more than 6 months, or the amount of time it takes the company to make them no longer indispensable.
This can easily happen when you are actually worth X, but the company thinks you are worth X-Y because they have a history of underpaying and perhaps were able to get away with it when the economy was down. If the market is willing to pay X for someone like you, you are worth X regardless of what your current employer thinks you are worth (as long as you act on it).
On the other hand, why would they have paid you X even if you were worth it, if they could get away with less?