Hacker News Reader

Comment by ram_rar | Hacker News Reader

The simplest way to manage pay equity is to at least match current engs salary to new hires for the same level. It baffles me that companies are ready to pay new hires market rates, but not try to retain existing talent by giving them the same $$. This gives very little incentive to stay in the company for long time. Engs are most productive when they stay 2+ yrs in a team. We should incentivize folks to stay longer than that.

View on HN

My experience at $previousjob... Another issue (and argument for job-hopping/frequent job switches unfortunately) is that it's often easier to get a promotion i.e. a higher job title by switching jobs rather than going through a long and bureaucratic promotion process at the same company. (Speaking about simple promotions and not switching to a manager track.)

Trying to put together a promotion packet with items or projects that are often orthogonal to "real daily work" feels daunting. "I need an x type of project or contribution for getting promoted" - while at the same time you might feel that if the company hired you fresh, they could hire you at the next level.

It's not just giving more money. If I stay at my current company and ask for a significant raise, that usually comes with more responsibility... Whereas if I just switch jobs, that usually means more money for doing the same.

Sure, but paying someone who's been with you for two years more for the same job still beats paying a new hire more for the same job, which is what often happens in practise.

On a case by case basis yes, but in aggregate many people end up staying because they're risk averse.

The game the company is playing is trying to walk the line where the amount they're underpaying the risk averse who don't leave more than makes up for the turnover cost.

From an engineering perspective we know this leads to worse outcomes in terms of velocity and code quality, but those things are not quantifiable in a way that satisfies the bean counters.

My guess of why companies don't pay current employees more, is that they believe, correctly or incorrectly, that good talents will naturally rise through the ranks and would be compensated reasonably, while the rest are simply replace-able cogs.

That, and the difficulty of explaining to management/shareholders that they plan on increasing payroll by N% despite not actually acquiring new talent in the process.

At my current company (and I assume in many other companies), this is the main reason for not compensating existing employees fairly.

If my manager (lead of 15 devs) went to his shareholders that we want to adjust people's salaries so that they are more likely to stay longer (let's say this cost 300k a year), they would not approve it even if it meant we could reduce the number of devs leaving from 4 to 2.

If he said we need 300k for hiring two devs, it would be approved without a question.

Back-of-the-envelope math based on European salaries.

Is the current talent worthless? that's what their actions indicate.

The flaw in this is that even if you rise through the ranks, each promotion usually only gets you a 10% raise at most, 15-20% if you’re really lucky. So your initial low comp will continue to haunt you unless you rise to a level where there’s a step change in pay, usually some sort of leadership role.

If turnover is low, leadership will often assume people must be fine with their current compensation, since their data indicates the market continues to clear.

More than once I’ve seen startups go and do a round of comp adjustments after an uptick in turnover.

Companies don't spend time thinking/rationalizing why they shouldn't raise current employees' salaries. They are simply forced to pay market rate for new hire, that's all, no one thinks about "what about our existing employees?"

Sometimes we romanticize tech company too much that we forgot that they are, at its core, just like any other company, and an engineer is just a headcount. Faang sometimes has the ability to steer away from that perception, but it remains true for almost all non-faang. Everyone below leadership is replaceable

>They are simply forced to pay market rate for new hire, that's all

That's kind of tangential to the point of this conversation though. They're forced to do so via turnover rather than proactively raising wages, which hurts them far more in the long run.

Disagree since “good talents” are dependent on the whims of those making that judgement.

I’ve seen people go from “irreplaceable” to “not a good fit” when a new CEO comes in.

I’d argue companies are aware that good talent costs money and they are happy to acquire it internally or externally when the arise needs. If no need, then business as usual.

I'm the author of the original piece. Totally agree with this -- it can be quite simple to implement. Increasing retention makes a big difference. Unfortunately, there are more incentives to hire than to retain, so many companies do a poor job of it.

I've been at three companies that have implemented pay equity (and one of those I was the one implementing it). I wrote up a guide to implementing pay equity here: https://www.rubick.com/implementing-pay-equity/ and it's basically as you describe -- have new and existing employees get paid the same rate, with no manager or recruiter discretion.

Simple is not better. It’s better to spend less money from the company’s perspective and also keep information asymmetry about relative pay levels.

Sounds like a recipe for high turnover

Which is often fine with leadership. New employees tend to be more compliant and more malleable to the current leadership’s point of view.

I think the reality is that inertia is a big factor. Changing jobs is not a smooth easy process necessarily. I think companies are fine with a certain percent loss of employees in attrition and if it gets too high they'll start trying to fix it, but not before.

Which is a part of why most software is garbage.

Why would leadership want compliance if it's coming at the expense of productivity? Who cares how obedient the employees are if profits are down?

Engineering productivity doesn't always have a 1:1 relationship with profits in the current quarter, it can take a while for the rot to start to show up in the bottom line - by which time people may have moved on and it's someone else's problem, there may have been an exit, etc.

>Engs are most productive when they stay 2+ yrs in a team. We should incentivize folks to stay longer than that.

really? I tend to get worn out and bored after 3 years actually.

Months 12-24 is commonly a sweet spot IMO. A year is often enough to understand the domain and problem space well and be empowered to enact complex changes. It might taper off then a bit for some as they get bored or burn out, but a 2+ year tender is going to cover that very productive period and hopefully more.

That usually means you don't have authority (which is also a problem) and forced to solve the same problem over and over again.

For me it usually in 3-6 months I'm able to make complex changes to the existing code. In 12-24 months I'm able to make fundamental changes and demolish some of Chesterton's fences.

As a manager, how do you determine who deserves a raise and whose hiring was a failure?

If you don't hand out raises automatically then you know that those who change jobs are the ones who would have deserved more. That's an instant loss where you gain nothing from your knowledge. However, if other managers in other companies play the same game, then you have created a tool to judge the quality of your workers.

Chances are the only good way to make your engineers stick around is to keep adjusting compensation to market rates. If an engineer can get a higher salary at pretty much any other company, there's no question if they "deserve" a raise.

I don't think compensation should be used as a reward for effort. If you do that, you'll end up creating an incentive for people to only do stuff that looks great for a promotion -- and people who maintain software and don't create flashy new features will end up being under-appreciated.

If you don't think a person "earns" a raise then they shouldn't be working in your team. In a great team, everyone "deserves" a raise because teamwork is the result of the entire team. If a person pulls that teamwork down then they shouldn't be in that team.

> As a manager, how do you determine who deserves a raise and whose hiring was a failure?

IDK, manage? I let go of anyone who is determined to have been a 'hire [that] was a failure.' I also look back and try to figure out what failed in the hiring process. Luckily I haven't had too many failures, because it sucks to let people go - even if they deserve it. Admittedly, I also have never had to hire at the scale of a FAANG.

Reply on news.ycombinator.com