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Understanding Big Tech Salaries

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It's not just a vanity metric. The reason they choose to pay at a very high percentile of the market reference point is so they rarely have good candidates decline offers. Big Tech wants to be in the position where when they see a good candidate that they want, they get them, and don't need to worry about them going to a competitor. And they can usually afford to make that happen.

And knowing that puts you in an even better negotiating position. I got $150K/year extra in stock (which turned into $300K/year a year later when the stock doubled) with the 5 words "I respectfully decline your offer." If they want you enough, large pools of extra money are available to prevent you from declining or going elsewhere.

Absolutely. It's purely vanity in a way it's a power play. They can afford to negotiate, so they will.

If they don't have to negotiate, for example when the market is bad or when there are competing offers from a non-peer - they choose not to.

> Tech companies… decide which salary percentile they want to compete at. Do they want to compete at the top of the band (95 - 100 percentile) or at 75th percentile?

> … It's a vanity metric for the company. Facebook could choose Cisco as a peer and pay way less, but they don't because they can afford to.

“They can afford to” is what lets them offer high compensation relative to other companies. The “choice” they make is to fill their hiring funnel with extremely motivated candidates, and this lets them pick and choose from that labor pool.

Many companies choose to not fill their hiring funnel like this.

The reasons for wanting a large pipeline were explained well in another article, but in short: These companies are competing in a global market and need “best-of-breed” solutions.

Agreed, I definitely don't think it's simply a vanity metric. What sucks is when you're somewhere between the typical market salary and the top FAANG pay scale. It's a very long/hard road to jump up when you're a little older (49), but on the flip side, seeing a 25-40% pay drop if you need to work and need something sooner than later is also a hard position to be in.

My silicon valley based employer did same pay bands throughout the UK but people in my regional office were offered roles in lower bands for their skill set compared to London. It was more money for less responsibility compared to local companies so not a hard decision.

> The simple answer? They can afford it.

I'm honestly not trying to nitpick, but the explanation "they do X because they can X" is not a good one. Being able to do X is a prerequisite for doing X, but it is not a sufficient condition. Why do they choose to, though? Perhaps, a part of it is vanity, but

> nothing to do with your skills

is a bit much. I might assure you, a FAANG interview requires certain skills[1], and it's easy to fail or be "downleveled" to a lower salary.

[1] - not to discourage anyone from trying to, you just need to put in some time and work.

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