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Comment by nobody3141592 | Hacker News Reader

Will keep all the useless staff

What do you do to keep the good ones that could get a job that pays $11K/year more and so in 5 years they would have $55K ?

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Sounds reasonable. But there's also people that are skilled but dislike change. They will be rewarded and will feel confirmed in their belief ("it will be rewarded to stay on board") this way.

There is something to be said about a lumpsum payment of $50k that is psychologically more attractive to people than the same about of money amortized over a period of 60 months. Extra 11k a year comes down to an extra $900 a month, which for a lot of people is not as psychologically impactful as getting a $50k payment. Smart strategy by the company.

Unfortunately, getting the $50K as a lump sum could have negative tax implications. If it pushes you into a higher tax bracket, you could end up paying more tax than if you got a little bit each year. Plus, you'll have the disappointment of seeing much less than $50K after all the taxes (income taxes, social security, etc.) are withheld.

Also, by having to wait five years for the money, you're giving up any possible investment gains and income that you could have made if you'd had the money earlier.

I'm not sure how easy this would be legally, but they might be able to set it up to drop most of the $50k into the employee's 401k.

The employer + employee contribution limits are currently $49k/year, so even if the employee is contributing their $16.5k max, you could mitigate a hell of a lot of the taxes.

I'm sure it's part of a larger strategy.

Explicitly valuing staff retention means that he probably also recognises the value of company culture, group ownership, and so on.

Useless staff can still be fired, he's not offering them lifetime employment.

And I've seen first hand the damage done by getting rid of the "mediocre" people who have been around for ages in favor of a new hotshot. Discontinuity and destruction of institutional knowledge has enormous hidden costs.

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