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Comment by phkahler | Hacker News Reader

Why do sales people get commissions and engineers don't? Because the sales person knows exactly how much money they bring in and can claim "if I didn't make the sale, that money would not be coming in" even though it's not always true it's a good story. An engineers actions are so far removed from revenue that they can't make a claim so directly. Also, if they did want to claim a portion of product revenue they could just as easily be fired and the revenue would still flow. Such is the delay between engineering work and revenue.

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> the sales person knows exactly how much money they bring in

I agree this is the key factor. Any job where a person can argue a clear, direct, measurable link between their work and profit is a job that can be paid based on financial results. Other jobs where you see this: financial traders, consultants with direct client contact.

To take the other extreme, look at teachers. They have the potential to generate huge value based on how effectively they develop society's human capital. Unfortunately the effects of a single teacher are so noisy and indirect that it's basically impossible to measure their performance. The lack of firm data is why the debate about teacher compensation is so fraught.

I'll just put one citation into this discussion. Raj Chetty and his collaborators produce amazing research. I attended a talk when he visited New Zealand a few years ago. In this paper he's attempting to address the dream of measuring teacher value, by measuring changes in test scores against changes in lifetime income.

Yes there are other ways of measuring teacher "value" too, but income changes are relevant to this discussion, since they tell us how much a teacher could theoretically ask for in "commission". The paper suggests that an average teacher vs a bottom 5% teacher makes a $250,000 lifetime difference in income (present value).

"The Long-Term Impacts of Teachers: Teacher Value-Added and Student Outcomes in Adulthood" http://www.nber.org/papers/w17699

Take a look. He does a neat job controlling for different factors, trying to tease causality out of correlation.

> address the dream of measuring teacher value, by measuring changes in test scores against changes in lifetime income.

Of course, combined with the premise of this article, such measurement will incentivize teachers to turn students into sales-people :)

I don't think the problem is evaluating individual teachers. If you look at average teacher compensation it isn't that much compared to the value they add. We could let the school and the union work out how to spread the pay among the teachers at a school, I think they're underpaid overall and that has nothing to do with evaluating them individually.

How much value do they add?

This is one of the biggest problems with trying to evaluate individual teacher performance (and reward / punish based on this evaluation), is that you need to watch out for incentives.

Rewarding teachers who have best highest test scores, for example, is a pretty good way of disincentivizing good teachers from helping less gifted children.

Sales people work their comp plan, especially if they're good. They tend to know what they're making and what the market pays.

They tend to leave for one of 3 reasons. 1: Product isn't competitive anymore 2: Comp plan has changed 3: Company is failing / run out of funding / has pivoted and fired their entire sales team.

Source: I recruit salespeople for a living.

> Rewarding teachers who have best highest test scores, for example, is a pretty good way of disincentivizing good teachers from helping less gifted children.

In the UK at least, they have changed the measurement to one of progress in a basket of subjects. Students are measured as they leave primary school, and the secondary school is rated on how much different their grades are to their predicted grades.

I don't know how they game that system here though, there will always be a way

I actually have a friend who taught in the UK for two years. While I'd have to ask him for the specifics, he told me there was a lot of gaming the system so people would get their bonuses.

All of it? None of it? Teachers themselves don't add value, teachers enable value addition.

I mean, obviously everyone adds value (from janitors up to doctors). And my person view is that all jobs should be compensated at the same hourly rate. But is there anything special about teachers? Like if they all quit society would go to hell, but that’s true of garbagemen and road workers too. The question is, does it matter who does the job?

Yes, it matters who does the job. Good teachers have measurably better effects on students than bad ones. Here's one essay with a lot of statistics: http://www.nytimes.com/2012/01/12/opinion/kristof-the-value-... . I also remember hearing a few years ago that a good teacher can teach about twice as much in a year as an average teacher, but I'm not sure if that's the same as the 40% number from this article or something else.

The effect is an especially big deal in math, because it is so cumulative. One of the worst things that can happen to a student is to have a bad math experience (whether it's the teacher, the other kids in the class, or whatever) one year, and then have future teachers never go back and cover the same material. That leaves students with permanent gaps in their knowledge, which hurts them later on.

>And my person view is that all jobs should be compensated at the same hourly rate.

What? Care to elaborate?

I think the economy should compensate people based on factors they have control over, not ones they don’t. Someone who was born smart shouldn’t be better off for his luck. Your can choose how much you work. Maybe you can choose to do things like get an education (but not in our system where that is gated by standardized tests).

If jobs of all levels of difficulty are to be compensated the same, what then counts as a job? Would I be able to get paid for sitting around thinking?

It also sounds like you're basically proposing we give people free money. That could be a fine thing to do, but then why not give it out explicitly, instead of holding wages fixed?

That doesn't equate to the same hourly rate though. Different jobs have different demands. In different roles I've been both lead engineer and painted fences. If the pay was the same I would probably paint fences and write code in my spare time.

Did you chose to have the aptitude to write code? Why should a person who can’t write code but can paint fences get rewarded less for giving up an hour of their limited time on earth than someone who can code?

I may not have chosen to have the aptitude to write code, but I did choose to go to college to better learn how to do it. I also chose to work very hard in my industry to advance. Had this come with zero financial rewards I probably wouldn't have done those things.

Do you actually believe this or are you just saying something striking to illustrate an underlying principle?

> Do you actually believe this or are you just saying something striking to illustrate an underlying principle?

It’s where I get if I’m thinking about moral justice instead of incentives/the economy. I’m not saying my proposal is workable. It’s just my observation that the last decade has been a tale of two cities for millenials. My friends who are “good at math” have been living in a different economy from everyone else.

I'm not saying current wages are fairly calibrated, but some work is actually more physically and/or mentally stressful per hour, and some work requires more training. Under your system, how do you prevent people from avoiding difficult work and/or work that requires extensive training? Central planning?

Off topic: are you, by chance, familiar with Participatory Economics [0]?

Like most utopian economic visions, it’s hard to get there from here, but it seems like it’s well matched to your stated labor market ideals.

[0] https://en.m.wikipedia.org/wiki/Participatory_economics

> And my person view is that all jobs should be compensated at the same hourly rate. But is there anything special about teachers?

Some nations tried that idea last century. It lead to war, famine and 100 million deaths. Aiming for utopia is a noble idea, but the results have been horrific thus far.

Oh no, I meant teachers in general, i.e. the ones who teach. I guess broadly there's direct and indirect value adders, each group needs the other.

250k lifetime? So he should get another $6k. Teachers and engineers don't work for money. And there are often bad consequences for people who "don't work for money."

I worked in sales so I could afford to be an engineer later. There were plenty of ex-teachers in sales. They did well.

>Teachers and engineers don't work for money. And there are often bad consequences for people who "don't work for money."

This is a metnarrative[0]. It is a thing that people say not because it is true but because it is useful to create a larger narrative that is perceived as useful within the social sphere. Peopl, especially engineers, are socialized to believe it and normed to say it. The result is very simply lower pay for their labor. It is a post hoc justificication.

[0] Sorry to lazy at the moment for a real cite so heres a wiki one...https://en.wikipedia.org/wiki/Metanarrative....A metanarrative (also meta-narrative and grand narrative; French: métarécit) in critical theory and particularly in postmodernism is a narrative about narratives of historical meaning, experience, or knowledge, which offers a society legitimation through the anticipated completion of a (as yet unrealized) master idea

So true! Case in point: people considered it "oniony" for a top teacher to leave the state for one that pays teachers better. The metanarrative has made it risible for high-star teachers to shop around for better salaries like star basketball players would! That's ridiculously unfair, press them into a kind of charity role.

https://www.reddit.com/r/nottheonion/comments/6ktzx1/teacher...

Dressing up a bad argument in the rhetoric of a derelict academic philosophy does not make it interesting or correct. Especially when all you are doing is describing a concept rather than telling us why it applies in this case.

Besides, if there is a fallacy in the OP's statement surely it is not the assertion that teachers don't prioritize money so much as the assertion that engineers do. At least among the software engineers I know (and I suspect the same holds for most people on HN), engineers are as multifaceted in their approach to work as anyone else. Most people would happily trade off non-trivial amounts of wealth for other social values such as work-life balance or work on projects that have personal meaning. The most unhappy workers anywhere are those who can only choose between jobs based on their salary.

>> Teachers and engineers don't work for money.

You're right. I hit the comment button and was going to say you're damn wrong - I have done a lot to increase my pay with each new job. I wouldn't be at work if not for the money. But then I realized you're right too. I don't think about money much at all when I'm a work. I do try to make a good product, and I do worry about bill of materials and production cost, but I don't focus on money coming to me because that's already been agreed upon. Is that what you meant by that statement?

An engineer doesn't want to make a bad product, but if a company has a good product they don't even need to hire a salesperson

Both Boeing and Airbus make good airplanes. Nevertheless, they hire expensive salespeople and pay them massive commissions. They don't just tell the airlines to download a pdf brochure of the planes' specifications and call them when they're ready to place an order.

People making statements such as "good products sell themselves" are probably thinking about gadgets like iPhones that don't require "greasy used car salesmen" with high-pressure tactics to close a sale. Yes, the Apple employees at stores are more like order takers than salespeople.

However, many well-engineered products absolutely require salespeople to close the deal. I was recently researching $100k CNC milling machines -- there are several brands with quality engineering and yet they all have salespeople to guide prospective customers about configurations and persuade me to buy. Trying to decide purely based on information posted at the manufacturers website and printed brochures would be unwise. Yes, the general "concept of a CNC machine" sells itself but a particular brand & particular model of CNC does not.

As an Account Manager, I research about my customer and reach out to them once I am convinced we can add value. Not just sell them stuff.

But you can't trust what the company says about its own product, so you really you're talking to someone who can negotiate a contract where you get your money back if it sucks.

If they get their money back, does the contract negotiator lose their commission again?

That's very true if you're selling something with a low value (most things consumers buy really), but you're dreaming if you think you can sell a technical product to a business for $10k + without salespeople. Enterprise sales is more like project management than what you probably think of when you hear "sales." Especially when you've got to pass through engineering, finance, procurement and legal to get a deal across the line.

That's not necessarily true. There are thousands of examples of good products that failed due to lack of marketing.

Replacing one teacher in the bottom 5% with an average one got the student $250k more over their lifetime. So the average teacher is generating around $135,000 more than the poor teacher.

And equating teachers to engineers makes no sense, I've met dozens of people in some engineering school to make money.

That seems questionable. In a lot of school systems, the best teacher may be the difference between a kid ending up in jail or not, but kids that are flirting with that line aren't going to be particularly successful on aggregate. And American society loves sending black kids to jail. So, what's the value add there?

It's so much more complex than that.

Yes, this is talking about the "average class." Individual circumstances vary in both directions, that doesn't make it questionable. Though, the difference between going to jail or not pretty quickly adds up to the 250k number.

Yes, this is way more complex than my two minute writeup of a small chunk of a 94 page paper.

> Unfortunately the effects of a single teacher are so noisy and indirect that it's basically impossible to measure their performance. The lack of firm data is why the debate about teacher compensation is so fraught.

The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail ends of the distribution.

In other words, structural factors that teachers can't directly control, like family support or district curriculum standards, have a much larger impact on student performance than teaching quality does. (Except, of course, for the exceptionally bad teachers, but that's better addressed by firing them than by adjusting the compensation strategy).

> The problem is not that it's hard to measure. The people is that teachers actually have very little ability to make a marginal impact on their students though their performance, except at the very tail ends of the distribution.

That's essentially true for most sales people and traders as well. There are VERY heavy tails -- that one guy at the car dealership who sells 3x as much as his peers, or the trader at Citadel whose trades made over $1bn in a year.

But imagine how the teaching profession would change if 1) the gains could be accurately measured and 2) we assigned payment or prestige to teachers based on (1).

Based on national test scores, what we know works in a small homogeneous country at least is professionalizing teaching - raising the standards to become a teacher. They didn't raise salaries to the same level as other professionals like lawyers and doctors, it's about the same pay as the USA, but Finland managed to go from worst to the top in Europe in one generation. https://www.theatlantic.com/national/archive/2013/01/the-cas...

It's also interesting to note that children in Finland got a shorter school day, and mostly no homework at all. The shortening of the school day was especially prominent in for the youngest children.

> That's essentially true for most sales people and traders as well.

It's definitely not true in most sales positions, particularly the ones that are highly commissions-based.

> But imagine how the teaching profession would change if 1) the gains could be accurately measured and 2) we assigned payment or prestige to teachers based on (1).

We can, and we do. The fact is: the gains just aren't that large. If you want to improve student performance, the best place to spend the money isn't by raising teacher salaries.

> We can, and we do.

Unless you can provide a link, I'm pretty sure whatever you're measuring is very different than what OP was talking about.

And stories abound of the very successful engineer, entrepreneur or scientist whose entire life was changed by one teacher.

That's right, we need more administrative staff, and laptops and iPads for all children. That should fix the problems in education.

> Public education by state rankings show that New York spent the most per pupil at $20,610. The next top five are District of Columbia ($18,485), Alaska ($18,416), New Jersey ($17,907), Connecticut ($17,745) and Vermont ($16,988).

http://education.cu-portland.edu/blog/classroom-resources/pu... https://archive.fo/DeBGH

A teacher's salary in New York isn't good enough but you can at least afford rent if you're smart. The reason why I tolerate laptop and iPad spending is because I don't know if/how we can cut costs and still get better results. Thus, when I see something that lets students learn without a one on one with a teacher, I imagine it saves money.

From the same page, we see that total expense is 617B or about (617 billion/18 trillion) three percent of GDP. I'll be honest. I have no earthly idea whether this number is too big or too small or if that's even the right question.

A documentary I watched claimed giving laptops or iPads to students is correlated with worse academic performance for those students.

Sorry, don't remember enough for a citation, but the suggested causal effect was students just spending even more time on social media, games, and web surfing instead of school work.

i'd oppose that. For one that's disingenious given the parent argument, that about scandinavian countries leading (by some measure) in school education and them using computers in class.

And on the other hand, what if the test subjects you mentioned just didn't learn to use the technology responsibly? I'd argue, teachers and professors need to be given computers, in a metaphorical sense, first.

> Thus, when I see something that lets students learn without a one on one with a teacher, I imagine it saves money.

There is growing evidence to suggest that having laptops and ipads in class decrease learning outcomes. So you could be paying more for worse results.

But as in the UK teachers would game the system eg by having "difficult" kids in this case those of only average intelligence excluded from the school to make their position in the league tables look good.

That's a myth. The real problem is that the average teacher (relative performance) is so far away from being close to maximally performant (as proved in studies which rigourously control teacher behaviour) that the impact of variation about that mean is swamped by environmental factors. People conclude that since swapping teachers doesn't make an appreciable difference, teacher performance can't make a difference. When in reality the problem is that teaching is uniformly bad (compared to maximal possible performance, which is very difficult. this is why the answer is not to look for better teachers but to look for better, uniformly implementable, curriculums)

If teaching is indeed universally bad (which I doubt but lets go with the idea as a thought experiment) - then surely the issue must lie with training/the accepted teaching methods?

It's not necessarily training and methods. Any environmental issue would create the same situation (curriculum selection, normative bias into testable results, etc), as would a self reinforcing cycle of undervaluing the professionals and competent people running away from the undervalued profession.

I disagree with the parent post and do not dismiss your suggestion, but no, that needn't be the only cause. The profession itself may be disincentivized in a number of ways against bringing in capable people.

Yes, I agree completely. Though I would emphasise that teaching universally bad only when compared to what is achieveable from tightly scripted presentations. I think the actual task of teaching flawlessly while "winging it" is extremely extremely difficult, and beyond at least 98% of the general population, even positing a good working environment.

I might become a teacher and I don't want to be a bad one. I want to be exceptionally good. Do you have any suggestions?

Pick an area with a strong union that will cover your ass when you have to use your experience, skill, and knowledge to do what has to be done when the admin bureaucrats not only don't help, but even become your chronic obstacle. Make sure you don't try to be too heroic before you get tenure, though.

Also, try to get a subbing or student teaching position that will put you with the same group of kids regularly for at least a month to be more sure you can handle the stress of the job.

I would reccommend looking into everything written by Siegfried Engelmann, particularly "Theory of Instruction". Honestly though, that might not be enough. Maybe you have the brains and drive to do it, for me the only unquestionab success has been using scripted presentations written by people who are smarter than I am.

Disagree. The tails of the distribution are where the teacher effect is probably the least, because there are significant obstacles on the low end that make focusing on learning impossible and immense innate talent at the high end where the kid would learn if you put him in a closet with the textbook and a flashlight. The real problem with teacher success metrics is that they are outcome-based. It is no more useful to measure the success of a world class surgeon by including the outcomes of people who completely ignore the post-op care directions and instructions for lifestyle changes.

Not sure where the idea comes from that teachers are poorly compensated. Relative to some other professions yes, but hardly a low Paying job. Annual teacher salary in California is $73k/year [1] divided by .75 is $97k/year with generous pension an medical benefits that probably push that number up $25k-$75k/year...

[1]http://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp

Interesting, CA ranked 41st out of all states for its school system this year.

http://www.mercurynews.com/2017/01/05/california-schools-ear...

I'm curious why you would divide by .75 there (?)

9 months a year of employment, which is a gross oversimplification of how many weeks/yr a teacher is working.

It was a proxy for the fact most teachers have summers off, so are only working 3/4ths the year...

Public sector salary pre-tax income is usually only 66-75 percent of total comp after adjusting for health insurance and pensions.

Though there are private schools that pay more; private tutors can make a lot more, esp to the super-rich.

[For a broader definition of "teacher", there's professional development seminars, and people who tour the lecture circuit. Though you're talking specifically about teaching children.]

Then, consider doctors (esp specialists and surgeons): there is an immediate, direct, measurable link to profound benefits, and though they are well paid, they aren't paid by commission... is it just because it isn't money?

Lawyers, esp barristers, are closer to the money, and do get a kind of "commission" (though some jurisdictions prohibit it).

> Any job where a person can argue a clear, direct, measurable link between their work and profit is a job that can be paid based on financial results

And anyone who can't will be, and should be, outsourced.

Know. Your. Value. To. The. Business.

I think MOOCs are the future based on my own experience. They allow the best teachers to scale their reach. Instead of aristotle giving a lecture to a room it allows an unlimited audience who can also rewind and pause if they don't understand something.

I've been able to learn machine learning and deep learning from Andrew Ng, one of the best AI researchers in the world, among other world class researchers, for free. It's incredible when you think about it, probably one of the most significant things in human history. I've been able to learn how to code by picking and choosing the best classes from MIT, Stanford, Harvard, etc without spending a penny. Why settle for mediocre teachers at state universities when these options are available?

The major thing we need to do is find some other way to grade people other than using a college degree as a benchmark.

Also personality. Good salespeople are... Good salespeople. They apply their craft when negotiating compensation. What am I going to do, make a single page app about why I should be paid more?

...actually that's not a bad idea.

At the end of the day, a salesperson not making quota is going to be fired. The best salesperson in the world could maybe buy themselves an extra year, at best. But eventually, if they're so great, where are the numbers? And their next job search isn't gonna look so great. They can't solve a problem on a whiteboard to make up for the fact that their prior business was a bad fit for the market, or whatever.

A salesperson who is making quota and running way over it into big bonuses is by definition earning their money.

Sometimes people are in the right place at the right time, of course, but in general it's hard to say a sales person is overpaid unless they're completely useless and failing to earn their base pay.

Agreed and to add: It is very much like a waitress / waiter. Lower base pay with commissions substituting for tips. The big difference is the Darwinian nature of the job. Bad food or service from the kitchen might decrease tips, but probably won’t get the waitstaff fired[1], but salespeople that don’t perform, regardless of the software or support, are going to be canned.

I don’t begrudge high salespeople commissions because that means things are pretty good, just don’t let them run the company (see Steve Jobs ‘lost’ 1995 interview with Cringly).

1) until the restaurant goes under

But a good salesperson who is making quota can also apply their craft to carving a larger piece of the pie for themselves. Just because they're doing well, it does not mean their compensation is an accurate proportion to their contribution to the whole.

But don't get me wrong, I'm not saying we should try to quantify the efficacy of SW devs more. I had a PM do that once in the form of ticket quantification as a KPI. I had to expend a lot of political capital to opt out from that nightmare.

Great point. Compensation is a vector of which job security is a component. Sales: extreme volatility, excellent pay for the survivors. Engineering: medium to high volatility, strong pay. Education: near zero volatility, low pay.

Do bad engineers not get fired?

Very rarely, in my experience. The only dev I've worked directly with that was fired over job performance was first fired when he deleted the entire contents of the corporate IMAP server for a dozen or so people without having verified the most recent backups were up to date and working. We didn't lose enough for it to cause a lasting problem, but it was what finally demonstrated to the CEO that he was careless enough for us to fire.

His code was atrocious, but we'd put up with that until the IMAP incident because getting the CEO to understand that his code was bad enough for him to actually be a net loss in performance for the team didn't work until we had to scramble to recover what we could of the corporate e-mail.

Last I saw he was a senior developer somewhere more prestigious than the position he was fired from. Maybe he's improved. Or maybe he's just managing to stay above the threshold they'd fire him for.

A lot of bad developers just learn to fly sufficiently under the radar and hunker down and accept that they probably won't get many raises until they move jobs and can point to X years of service in company Y, aided by lack of willingness at many companies to stick their neck out when it comes to giving bad references (a lot of places I've worked, HR policy has been clear that we were only allowed to confirm dates of employment).

depends. often the meritocracy of performance reviews is skewed by extroversion and pleasantness of a person toward management, which doesn't have much of a way to judge real skill unless form a technical background and actively working on the codebase.

Define bad. What metric do you use? Sales people have a single objective metric - sales.

"What metric do you use?"

The key difference between good and bad engineers is that good ones deliver the product/finishes the projects (add bonus points if on time) and bad ones don't. Quality makes much less business sense and is usually only important to the engineer himself and his peers than managers that pay his wage. That's especially true in current "move fast and break things" environment. I have seen a fair share of bad engineers (by this definition) fired, even though they had decent technical skills.

Coffee is for closers!

When I was still in the humanities (German Literature Major), my program was making a MAJOR push for all graduates of the major to be able to articulate to others and interviewers the skillset they'd gained during their time at university, and I found it quite useful and helpful, even though I can't remember too much about the specifics.

I even talked to one of my professors personally about the push, in which I mentioned how the humanities in general are not amazing at 'selling' their contribution to human progress (she enthusiastically agreed - this was a sign that some of us were 'getting it') - part of that deficiency shows is via the incredible antipathy the internet holds towards the Literature major who then becomes a starbucks barista.

I don't always love salespeople, and I often chafe at the thought of having to emphasize my own efforts in an attempt to gain leverage with those of higher status than myself (a situation known to some as 'playing politics') - yet salesmanship is literally universal to the human condition (really want yammer more and explain what I mean by that, but it is time to shutdown for the day. :) )

I think I know what you're saying all too well, if I understand correctly. In my Master's program, my advisor had to keep asking me to stop saying, "we" any time I described efforts. I didn't even notice I was doing it, but very naturally I would say, "we applied X." "We then did Y" instead of "I", being the sole researcher.

It's very hard for me to be so bold as to flatly say, "I designed and built this, and I feel responsible for why it has been such a success." The most I can get out these days is, "I am very proud to see that software still finds value among the other dev teams."

I think we are understanding each other very well! Yes, learning to "sell ourselves" and highlight our own successes well enough to influence social structures when we need to is a hard problem, we're trained quite strongly and mostly correctly that "rooting one's own horn" is quite rude, and even in cases where it isn't actually rude or is expected, we STILL have to tread lightly! (For example, resumes and interviews are functionally places where we're given ORDERS to tout our achievements- yet there's still an invisible line you can cross that'll mark you as a braggart if you go overboard!)

But on the other hand, people can only make decisions based on information that is actually available to them, and so the quiet industrious worker in he corner who rarely pipes up and silently gets the job done but does nothing to make certain his/her contribution is noticed is passed over, because the boss can't magically know that quiet worker is the excellent contributor they are without something imparting that info- good managers will try to understand who's truly contributing in ways like that but even very good managers are frequently subject to imperfect information!

Anyway, I'm glad your advisor told you that, and I'm glad you shared that with me, yours is a succinct way of describing that, I'm almost tempted not to post this reply, as I'm uncertain it adds anything more of value than an emphatic "yes I agree!"

https://en.m.wikipedia.org/wiki/F.D.C._Willard used another strategy.

Out of curiosity, what career path did you end up pursuing?

Short story: from German Literature to Neuroscience, after a family member was diagnosed with mental illness. Once In Neuroscience, almost literally no research questions I was interested in could be answered without substantial computer science expertise, started taking compsci courses and ABSOLUTELY LOVED THEM. And thus: Bioinformatics!

Well, ah, I'm paused at the moment, my wife got semi-unexpectedly pregnant after quite a number of years unsuccessfully trying to do so - she is a salesperson and makes more than me (I was an intern at a genomics startup at the time) so I am being the dad, finishing school, and working on side projects while we map out what we do next - We're planning on swapping roles as soon as I'm finished with school and it's otherwise workable. That does mean I'm focusing more on programming than the data science/bioinformatics side of things, but I'll keep my eyes open for opportunities there too, never know exactly what will happen. Also, the baby is totally amazing, and I adore being his Dad, seriously, I wish stay home dads were a much more common thing than we are, it's freaking fantastic, makes me wish things worked differently to facilitate a pair of parents staying home with anc raising a child as their primary function. :)

Well, sounds like you got things moving in pretty exciting directions. Congratulations on becoming a dad!

Depending on who you are pitching, it might turn out something like http://getcoleman.com/

Or http://noahstokes.com/

That page is glorious

That's incredible.

Most engineers would do vastly better simply by negotiating at all when receiving an offer. I hardly ever experience engineers trying to negotiate when I hire people, yet when I've taken permanent jobs myself I have always negotiated and it has always yielded a higher offer (never once have I experienced anyone pulling an offer or refusing to raise the offer; sometimes they've not raised it enough for me to take it, though).

> single page app about why I should be paid more?

Isn't that a resume?

My resume doesn't have enough frameworks.

Try writing it with jupyter.

yea share it on https://gryd.us

Ditch the frameworks and write your resume in web components instead.

I wonder if that's how Glassdoor was started.

Ehhh. Yap, in coarse we gotta db dat can handle dat shit. Look bro.. you gots an issues, we got da, uh, ting dat can service you!

Dats watt we 'ere fer.. we do what's you needs.

Now, I'm not gunna lie to ya, I love ya, why would I lie to ya... what I got 'ere fer ya t'day is da best deal yer gunna see in yer lifes!

So whadda I gotta do ta get you behind this deal ofs a lifetime fer, say, twenty cores on da best DB on da freakin planet for a fraction of what da others would even dream of?

You sign right now and I promise you I'll take dis deal all da way to the top and get the CEOs personal sign-off on dis deal so dat you get da best pricing you ever seen!!

What say you? We gots a deal? C'mon, you have to only say yes and I'll get my guys all over dis and you will look like a freakkn rock star to your boss for savin da moneys! (Plus I'll be out dere in august and I'll take yous out fer a steak dinner, c'mon that will be our celebrations!!)

/oracle

As an engineer, the way you get paid for the value you create is by starting a company. In fact, that's the way you do it in pretty much every profession.

The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.

> The only difference between the guy who owns a successful Veterinary practice and the guy working as an underpaid veterinarian is that one of them went out and leased some office space.

I understand the point you're attempting to make but the guy who owns the <type of business> has done much, much more than simply lease an office.

Many business founders put their life savings on the line. Those who don't have that luxury ramp up thousands of dollars of personal debt.

On top of that they work every waking hour. Time is a precious commodity and cannot be replaced, so risking so much of it to enjoy the slim chance of being a successful business owner is not something most people care to risk.

That's why it's so much better to be a developer than a veterinarian.

I didn't have to buy an MRI machine to start doing my thing. I just had to register a domain name and sign up for a Stripe account.

Incidentally, there's a lot of room to build a successful software business with an effort between zero and "work every waking hour"/"put [your] life savings on the line". I built the products I live off in the downtime between contract gigs, when the surf wasn't working and conditions weren't right for climbing. With two digit hosting expenses for the first several years.

Definitely don't let fears like the ones you expressed above stop you from doing it.

Too late I'm afraid, set this thing up 10 years ago and still going at it :)

https://www.atlascode.com

When you start a company, you are a business owner first and an engineer second. It is not the same job.

You may be the best engineer in the world, if you don't know how to find customers and get paid, make good investments, and do all the bookkeeping, or, alternatively, hire the right people to do it for you and manage them, then your business will fail.

However, if the only thing you know is how to do business, then all you need to do is hire a competent engineer and you will succeed.

The difference between an underpaid processor designer and Intel is a billion dollar fabrication process.

Intel only started with a few million. https://en.wikipedia.org/wiki/Intel#Origins

That didn't seem to stop Xilinx, Cirrus Logic or Broadcom?

Glad you know that most vets are underpaid. Entry costs are massive - you can't just rent some office space and you cannot really do it alone, there are some single vet practices, they don't make much.

If you think some of the equipment is 100k, x-ray 30k per plate. You also need a territory before you start. It is too easy for bigger practices to starve you out to just pile in 250k and hope for the best.

You have to join a small practice, crawl up through the ranks, getting paid next to nothing, somehow kill your colleagues before they make partner and then you might be in a position to jump ship stealing customers as you go or organize a coup take over the practice by joining with another bigger practice nearby and buying out the seniors.

If you had said lawyer now... I don't know maybe - but I got your american dream point.

For what it's worth, I picked Veterinarian because a friend of mine did in fact make the leap from underpaid vet to small business owner. All in one go, with a small business loan.

His motivation for doing so was a conversation with his previous boss that included the quote "because I went out and got a lease on a building".

A coworker once suggested to our CTO that we should get bonuses as a % of the money we save by optimising our AWS costs. I was super on board with that plan at the time since I had been thinking about an unmaintained system and had figured out we could shave off a huge chunk of storage saving us 20k/month with no impact on functionality, and I got the change deployed. Instead of a bonus I got laid off a few months afterward.

Is there a reverse incentive here?

*IF we bloat AWS costs for 1 year, then at year end find a way to cut 50k.. bam, big bonus?

Maybe if the adding to AWS cost team is a different team from the lowering cost team...

Something like this happens all the time in Corportate IT, I've been seeing it a a lot lately.

It goes like this VP agrees to do these projects in 2018 at X amount. VP gets the highest possible cost for X. VP cuts projects and/or project budgets down to bare minimum. Now he can say he saved whatever amount and is a hero for saving so much let's give him a fat bonus.

Exactly, you can always fool the metrics, but everyone who is paid by metrics is doing it.

I'm not saying this is a good metric, just relaying an anecdote :)

Sales also has a different culture than development. Sales really is brutal and soul wrenching in a completely different way than software is (yeah, I've been on both sides, less on sales part).

The measurability of money has two sides - one is that you can argue for a commission, the other is that it's very easy to point to numbers that say you didn't really sell anything this month.

In sw dev, if you're mildly competent, you can coast for many months, if not years.

So, essentially it comes down to different risk/reward profiles . Which of course selects for the right kind of people and the cycle feeds itself.

If you work as an engineer in a big company you often face decisions that will influence big time results. And you can make a big impact, by deciding which competitor for your time (manager, co-department, company's partner A or partner B) will get you to build the result they desire. I can guarantee you that even ina 600 ppl team there will only be a few engineeers who can really plan, push others, understand the technical problems, and communicate to all parties, so that a result can be achieved. These people will either work their 40 hours, tell everybody maybe, and then work on their side business the other 30 hours, or they spend 50-70 hours on your project and get the result you need to even start calling customers. It is also very accountable, because no technical results means no deals.

Thus, the same logic as with sales people also applies for engineers. It's just that they are cheaper, because fewer of them know, and fewer people actually are smart enough to make them offers accordingly.

In the end it's always how to make the biggest impact with the limited amount of money you have. And there's no natural reason that would stop engineers from being in key positions to your success.

Sales can get a percent of the value they generate because they have more leverage than engineers. Plain and simple. They have direct relationships with customers and the value they bring in is easier to show.

This line from the article was pretty gross to read, "Do your engineers like programming? Might they even do a little programming on the side sometimes for fun? Great. I guarantee your sales people never sell enterprise software for fun."

Personally, I don't do that much programming for fun and a lot of the crap I have to do for work I would never do for my own projects. It reads as though they are aware that they can get away with paying engineers less because they like to create valuable things just because. So it's easier to trick them into giving up the valuable things they create for cheaper.

Who cares why someone creates something? No businessman is entitled to someone else's creation because it was created for fun.

I mean, if all these VCs and founders are sooooo passionate about their work, they should't need equity or much of salary, right? It's the same line of thinking, but of course it doesn't apply in those situations for...reasons.

What about sales engineers though? I've never seen them get commissions even though in a vast majority of cases they are the ones doing the heavy lifting of convincing the client's tech team[s] to go with the product/solution the company is selling?

A little less obvious case, but still - what if we're talking professional services type situation and the architect/engineer assigned to the customer does such a killer job the customer decides to spend more money on their services. Sales person's job at this point is minimal but they still get the commission but the tech person doesn't.

I work for a Major ISV and I get a commission.

How it works is there are various clip rates

0-80% 80-100% 100%+

On 0-80 I get a percentage of the deal, on 80-100% I get a percentage and there is a small multiplier and above 100% I get a larger percentage and a significantly improved multiplier.

My quota is divided quarterly and yearly; the incentive is set out that if you overachieve on a couple quarters, I might exceed my "On Target Earnings" even though I didn't hit the yearly number.

You are correct that the Sales Engineer does a lot of the heavy lifting; and in most cases we are the deal -- without us selling the technical, the deal usually doesn't get done. So should we get paid the same as the Account Executive? No Freakin Way.

The purpose of the Account Exec isn't to close a deal; that's table stakes. The purpose of the Account Exec is to open doors and exceed quota, 100% quota attainment isn't a high-five moment as the expectation is 110%+. Take a good hard look at the sales people you know and look where they are and where they have been -- these people are hired for their contacts and usually once they have exhausted their contact list they are done and they move on to the next organization unless they are exceptional at developing new pipeline and new relationships.

I've seen firms go through 2x Account Execs in a year because they weren't hitting the numbers fast enough; that wont happen with a Sales Engineer we get a lot of job stability and protection but we wont get a 30% commission.

There's lots of ways to compensate a cat! Not all sales compensation plans are commission-based (a percentage of the sale). Commission-based plans are much less common for sales engineers vs. salespeople, unless they are working with only a single salesperson.

In general, sales engineer variable compensation plans are going to be based on some mix of sales numbers, with less variability and risk than the salesperson's plan. Ideally providing goal alignment with money, smoothing out the stresses, but also encouraging some level of independence for the sales engineers. A ward against salespeople who might be seduced by the Dark Side.

The less obvious case you raise, a single engineer directly responsible for causing a customer to spend more money: structurally or ad-hoc, that person should probably be getting paid. Maybe the customer-facing people aren't engaging efficiently, and it's a sign of something a bit out of alignment with customer operations.

Salespeople can provide big value in getting engineering attention to the right customers at the right time... but the best ones know it's a team sport. I know salespeople that give envelopes of cash to difference-makers, though that's exceptional.

If you haven't seen sales engineers get commissions, then you're working for the wrong companies. Very common for sales engineers to have up to a third of their comp commission based.

Getting commissions does not necessarily mean getting paid more. Often people paid on commissions have smaller base salaries.

Payments with commissions are a managerial tool to incentivize a certain behavior, the same way there are other structures to help organizations behave in a certain way.

For example, you can incentivize people based on an easily measurable metric fully under their control (e.g. $ sales, customer support tickets solved, factory throughput, etc.), or choose to align everyone's behavior (e.g. Profits of xyz division of the company - hardly under a particular person's control).

That's the same principle behind giving CEO and other senior executives incentives based on stock options: you want them to create value and get share price up, while leaving them maximum freedom on how to get there.

Each approach has its pros and cons in terms of how easy it is to explain to employees, track the metrics, create a collaborative environment (or not), incentivize intra-company communications (or not), and the impact it has on workforce productivity (also, it depends on how you measure productivity...)

In designing an incentive plan, one has to decide which one of these factors one wants to prioritize.

Because of the salesperson role, and because of the type of mindset/profile these people predominantly have, it is easy/common to have their pay structure heavily based on commissions.

Looking at things from the other side: if you ask a salesperson about compensation structures, possibly she would be wondering why engineers' or designers' pay is not linked to sales, so (instead of working on interesting and beautiful stuff) they would prioritize shipping features that help her sell... (as an example of not so beautiful designs that sell more think about the design of certain low cost airlines websites) ...Then again, possibly, the salesperson only knows what would help her sell more easily TODAY, and not what she is going to need in a year's time... you need an engineer not directly incentivized on current sales to think about that!

The difference is that often sales commissions have no (or much higher) upper limit. That is, if you are skilled enough (and lucky enough, for sure, since there are certainly many factors outside of the salespersons control), then they can potentially make a large commission. On the other hand, a salaried engineer has a hard upper limit (their salary + any bonuses that may exist) which can only be raised through a promotion or renegotiation.

A problem for me is that there's little incentive to work b tons what my contract stipulates and what my manager feels is acceptable productivity (and whatever I need to get bonuses, if I get bonuses at all), because I get the same compensation (in terms of money or time off or whatever -- I don't get to leave early if I finish my work early: I move on to the next task instead) no matter how hard I work or productive I am. So why would I wear myself down by working harder if I can be less stressed and work less hard for the exact same compensation?

At least a commission-based role puts some of this into my hands. If I feel I can make more sales by working harder/longer/faster/smarter, I can get paid more.

> "An engineers actions are so far removed from revenue that they can't make a claim so directly"

This statement is simply not true in my experience as an engineer in the tech industry for over 15 years. Sell a bad product 'once', and the sales person 'ability' to sell it again will decrease. Sales people ultimately sell a project and its features, interpreted by engineers. You must incentivise an engineer to be creative, write better features and good code or you run the risk of having something that destroys a sales person reputation along with the companies revenue!

They are also closer to management - having drinks with higher ups and important customers, going to events. They tend to be more fun to be around and in a better mood. I'm an engineer and I am really not happy about this industry habit. I think it is simply not fair.

> An engineers actions are so far removed from revenue that they can't make a claim so directly.

That's not true for everyone. I worked for an agency that did e-commerce integrations and developments and we had eyes on the client's budget and profits along with our agency's. We were not paid on commission either despite knowing the exact value of our work.

To be honest, being so close to the money was demoralizing. It skews perspectives (or should I say it enlighten you?). Hard to stay motivated working for xx.xx/h salary salary when you know very well that you create yyyyyy.yy$/day in value.

Yeah, in my last job I saw I was making the company over a million Euros a year, if you split the projects among the employees working on them. And I got an entry level salary.

It was demoralizing, I switched to a bigger company that pays well. And it's so soul sucking that I yearn for my last job. Money isn't everything. Life is still unfair.

>An engineers actions are so far removed from revenue that they can't make a claim so directly.

Really? I see it the other way around. How did the salesperson contribute to building the product? A well built technology solution can sell it self in many scenarios. If we didn't have sales people, we could still build a product and push it into the market.

Of course all of this depends on the type of product, but still...

I'm actually in favor of of commissions, and engineering bonuses for the same reasons from this article. But it cannot be said that engineers are so far removed from the revenue.

I've been working in software for a long time, and other than inexpensive / simple consumer software or inexpensive departmental IT software, I've never seen products that sell themselves. Marketing at the very least is required, and for anything remotely complex, that's what sales is for.

Sales does something nearly as important as building the software: they map a customer's opportunity or problem to a technical solution, and ensuring they're successful with it. Sales (and marketing, which is arguably the evolution of sales at scale) are the field forces in discovering and exploiting product/market fit. No feature list survives first contact with the customer. Sales creates customers, and thus create markets.

You might have a great piece of software but if no one can explain it, no one will understand it, and it won't sell. This is the difference between software that costs $1k and $100k+. The price is reflective of the value it can provide and who is buying it.

Now in very small companies, the engineers are also marketers and salespeople. But beyond (say) 50 people, the divide between engineering and customers gets wider unless you have very good communication between sales, marketing, product, and engineering. There's too much work for everyone to focus on everything.

Didn't Atlassian grow to a pretty big size before they even started hiring a sales team?

I think so, but it depends on "big". You probably can get to $20-50 million without much in the way of sales. They did have reasonable marketing.

It's when they started targeting the mass market, getting funding, removing features their early adopters loved (eg. wiki syntax in Confluence) that they needed a sales force. But that was necessary for their plan to scale. They're still not huge ($600 million is excellent but not Red Hat).

> A well built technology solution can sell it self in many scenarios. If we didn't have sales people, we could still build a product and push it into the market.

I don't how much sales experience you have, at either the management level or the hands-on sales level, but products almost never sell themselves. You're better off changing that to never sell themselves, because of how rare the examples of it are.

It's practically universally agreed that most companies love to squeeze whatever angles they can for another dollar of profit, particularly around employee costs. So why does sales persevere in such a big way across all companies? They're not doing it for fun, they're not doing it because their products sell themselves, they're not doing it to waste large amounts of money. They do it because they have to, all of them; basically every single company on earth has to sell.

I've come across a number of products that sell themselves because they've solved a problem I was having. A lot of these went on to unsell themselves with things like "contact us for pricing". A sales team might be better at maximizing sales, but that isn't necessarily a good thing.

One that's bucked this trend lately has been atlassian, they're a 5 billion dollar company without a sales team that operates in a space that typically requires sales teams. Transparent pricing is a huge part of their success.

> One that's bucked this trend lately has been atlassian, they're a 5 billion dollar company without a sales team that operates in a space that typically requires sales teams. Transparent pricing is a huge part of their success.

I heard they have a huge partner/reseller network though

They also hire for lots of sales roles which don't have sales in the title https://www.smartrecruiters.com/Atlassian/743999657351399

I think you're getting hung up on the difference between product work and product revenue. Think of this like the terms front office and back office. The back office (engineers, product managers) build the core software and the front office (traders, salespeople) use or sell that software to bring in revenue for the company.

The terminology doesn't refer to which parties did more work to release the product, it refers to which parties are closest to the revenue, and thereby have more quantifiable metrics to be judged upon.

Unsurprisingly, software engineers can make just as much or more than salespeople if they work in roles that happen to be very quantifiably attached to revenue generation, this just isn't the norm.

    > How did the salesperson contribute
    > to building the product?

I've worked at several companies where we've sold things we hadn't yet built in order to finance building them, generally with the client's knowledge.

I note as well that Uber was selling rides quite a time before they had any kind of real engineering backend.

You're not going to sell to large businesses without salespeople. A $10/month product? Sure. But when you're selling a $10,000/month product, you need salespeople.

Not always.

We sell out software to the big banks and we don't have a single salesperson in our team. Everyone call us. The reason for this is that we have been in national newspapers with awesome articles, which is great marketing.

I'm sure we could do even better on the international market with a sales team.

Out of interest, who speaks to them when they call if you don't have a sales team?

We have 3-4 people that take care of that and that works with closing. But sales is not their primary role.

What about AWS ? I often see spend 10k+ Without much of a conversation with salespeople. But this is probably the exception rather then the rule. And of course there is high touch to grow accounts after they reach certain threasholds.

A huge portion of the small to mid-sized clients I have which end up using AWS do so because they've been approached by sales people handing out free credits like candy. Often it short-circuits cost/benefit evaluations completely.

But AWS also often start as a $10/month product, and then one more, and one more. I think that's a huge portion of their success - it's easy to ramp up the cost slow enough and in small enough steps to not trigger any major approvals until it's "too late". People usually move off AWS first when if it gets to be enough of a cost pain-point to make higher ups take notice.

> People usually move off AWS first when if it gets to be enough of a cost pain-point to make higher ups take notice.

Isn't that the point of cloud computing? So you don't have to worry about datacenter capacity until it becomes a major cost center?

You don't tend to have to worry about capacity with the cheaper options either.

AWS's large clients make up the majority of the AWS business, as is typical in a business like that. AWS has a dedicated sales team that manages those customers.

Here's how that works in concept, for example:

Microsoft didn't hand-sell every individual copy of Windows 95 at every individual retail location. They did sell, big time, at the macro level however, which made the micro sales possible. That's how AWS works, Amazon captures the macro, the micro takes care of itself for the most part. If you're AWS and you capture dozens of impressive start-ups and enterprise players, the headlines and blog posts that are written as a consequence will micro sell as a consequence to countless smaller businesses for you. Not to mention, Amazon simultaneously pushes AWS at small businesses in numerous subtle ways, including on their site (which of course happens to be a giant advertising platform that reaches every business owner in the US).

I reckon it depends on the degree of customization required for the solution.

You can sign up and AWS without any customization. Even if you spend $10k/month on AWS, you don't really need to talk to AWS to create a custom deployment (from what little I know of AWS - might be wrong).

But if you're talking about a solution that requires customization, or if you want volume discounts, you will want to speak to a salesperson.

AWS has built up a very substantial enterprise sales force. Basically, there was a limit to how much and to whom they could sell based on waiting for people to click on their website.

A well built technology solution can sell it self in many scenarios.

I don't think this is actually true - and in fact I'm loathe to come up with any examples where it was the case. In some cases fewer active sales efforts are required, if the product is really perfect, but even those are exceptionally rare and generally are utilizing pre-existing networks where the high touch process is already done.

The fact that it’s easy to measure sales is part of it, but it’s really about creating the right incentives for the business to succeed. When you pay comissions the sales people will chase big sales for their own self interest — the more they sell, the more they make. Engineers are similarly incentived through stock options to design products and features that will help the company make more money.

There's often a considerable delay between sales work and revenue, too. "Sales" are generally counted on the day the client signs the contract, but the company doesn't see the revenue until actual delivery.

It's more likely to be because in sales, the individual can have a major effect on the numbers that their commission is calculated on, so (as the article describes) that attracts the strongest performers, because they know that they will be well-compensated.

In positions where your personal performance doesn't have a direct and immediate effect on the numbers, the strongest performers won't be attracted to commissions. If you were part of a software development team would you want a significant part of your compensation to be at-risk based on this quarter's sales numbers? Probably not, because you know that you could bust your ass this quarter getting an important release out but still see your paycheck dive because that big potential lead backed out of signing.

Commission isn't the only mechanism of performance based compensation: bonuses and revenue and profit sharing (which commissions might be considered a subset of, I suppose) are also things. Equity (real equity, e.g. of a public company or profitable, stable company with a clear, real value) is another form.

Besides that, it's certainly possible to measure at least in aggregate the impact on revenue non-sales team members have, e.g. by the value the products they work on create. It's obviously not as clear or direct as a sale.

Well, yes and no. I have seen "sales" types get accounts handed to them, after which they are essentially collecting rent. If their protectors are sufficiently powerful, this can continue indefinitely.

Account managers would be the ones mending the existing clients. They get less commission but they can coast a little more easily.

The money the sales person needs to live is probably the same as the engineer. Therefore, if sales people get commission, then their salary must be set lower than the engineer so that on average (that is, when the ratio between actual sales and missed sales is average), they earn the same thing as the engineer. (this in a context where the added value by the company is equally shared between the engineer and sales people)

I don't understand what you're saying here at all. Are you under the impression that money someone needs to live has something to do with compensation? Labor is a market like any other. A sales salary has nothing to do with how much a sales person needs to live but rather perceived value of a sales role.

In my personal experience, sales people tended to have higher salaries along with strong commission.

Maybe your comment is constrained by your idea that revenue is shared equally between engineers and sales people, but why would that be the case?

good questions indeed.

I was challenging the fact that, as you say : "Labor is a market like any other.". I don't think it is like that because behind each job there's a life.

Moreover, on the fact that engineers and sales persons should have the same salaries, yep that's what I think. I don't see why sales works should be more compensated. I understand that the way it is compensated (bonus for sales) is the way it works, but in the end, I don't see why it should pay more than engineering (here I consider a context where the sales person and the engineer are both employees).

The two roles are equally important to me, just different skills.

>I don't think it is like that because behind each job there's a life.

Labor is a market. It's a shockingly inefficient one, but it's definately a market.

Sales is also a rather short-term, target-oriented activity. If you would incentivise developers on those same short-term goals, this would have a negative impact on the quality and innovation of your product, since they'd also start chasing the quick wins. This is not to say that developers do not deserve a bonus when performing well, I just don't think it should be tied to Sales.

In my experience it's all about where the sales target gets set with sales people, as it can be really hard to differentiate the "seat" from the person. I.e. An all star salesman at one company, given a different product/company might not be able to make their numbers. Hence the old saw that good salesman find easy products to sell...

An engineers actions are so far removed from revenue that they can't make a claim so directly.

Not always. I've worked for two companies that customize software for customers. I knew exactly what the company was charging for every hour I worked.

A great Salesperson can sell a mediocre MVP on the promise of future enhancements.

This can help start-ups defer fund raising by bringing in operational cash. This can also bury start-ups by making promises that can't be kept.

From a company's perspective the nice thing there is that they can push some risk to the sales people. If they build a shotty product nobody wants the sales people earn less, while not being responsible ...

How exactly is that a good thing for anyone in the company?

We gave bonuses and profit sharing. The now-parent company stopped that practice, I am told. I still own shares in the parent company, I should sell them.

This is pretty much spot on, they get a commission because it is easy to work out, and has the added bonus of an easy to calculate monetary incentive.

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