Why Don't Tech Companies Pay Their Engineers to Stay?
goethena.com
goethena.com
and here I am thinking this was a meme by HR
myself and all my competition leave jobs due to - and for - money. if you're sticking around to stay in graces of your comfortable management you are contributing to the wage gap for your respective gender in the wrong direction.
I have no idea why I should care about this.
I’m a person with tech skills in academia… myself and most of my coworkers and colleagues could make at least 2x in industry yet we’re still here because we like the job better. I have however lost a lot of colleagues.
- first meeting with direct manager: I was offered a very meager immediate increase and offered a "personal improvement plan" for proper raise end of the year (I declined - I hate this nonsense and I know I'm already a senior, no need to work towards "senior").
- then 2 times a meeting was planned with the CEO, but CEO wouldn't show up. He stated both times something came up, apparently more important.
When I announced my decision to leave, at that point suddenly more was possible. I could get the raise I wanted, CEO excused himself for his behavior, etc... But at that point, too much harm was done, from my point of view.
I would have stayed easily 1 or 2 more years if the pay was decent and I didn't have to deal with the nonsense for salary negotiations.
For many people working in the tech industry for the past ~15 years, they could easily find a new job with comparable or better pay. That’s no longer a guarantee for most people.
Which I presume this is another way to say “your direct boss”.
Because 99% of an employees view of a company, and opinions about their employer, is actually just a reflection of their like/dislike of their direct boss.
The modern management model has been to reduce the power of the front line manager to the point he can only maybe hire and fire, but then he is the one to give the employee bad news.
The boss/employee relationship depends equally on both people. If you always "have a terrible boss" that really means your relationship with your boss is bad, which depends on both people.
You were warned. The Red Pill is near:
To spell it out: If you consistently have a terrible relationship with your boss, with several bosses... I'm sorry, but the common factor is you. You're probably a shitty employee.
Plus, your unrelated response comes off as arrogant and judgemental.
Anecdotally, at my current company nearly everyone I know who left did so within a few months of hitting the 4-year cliff on their signing equity. I've left 3 companies in my career primarily because the next company doubled my comp. I've only left 1 company for reasons other than pay.
There's a lot of companies in high cost of living areas that may be willing to split the difference in salary.
https://www.mrmoneymustache.com/2012/01/13/the-shockingly-si...
"Too much money" is a solved problem
"This is stupid, but I'm going to keep my mouth shut because I like to eat and live indoors." vs "This is stupid and I'm going to tell the CEO that and suggest a better alternative."
Quality of life now is more important to me.
Taking a vacation (any vacation) in the US is a frivolity, even if you live in the US. If you could theoretically rent out your home in the US while you're gone (for the same cost as your current rent+utilities, so no net profit), you'd probably end up saving money by spending a 2+ week vacation in Europe instead of just spending that time at home and going out to restaurants in your own town.
Thanks to this industry, I got there at 42.
I’m sure as shit not going back to the treadmill, for what?
So I am taking my young family on trips and experiences I never had growing up (visiting other countries, camping, hiking, etc.), and working on the health I neglected in my 30s.
Also being more assertive at work and not sacrificing like I used to.
Because of this, I’m probably not going to have a wealthy retirement, but I have a lot of peace of mind knowing we could keep the family afloat working minimum wage jobs, with the house paid off and no debts.
https://www.ssa.gov/oact/STATS/table4c6.html
It also depends a lot on what your current age is. If you're 60 or older it's 80 or more. If you're younger than that and male it's under 80, going down the younger you are. Covid and other things reduced life expectancy in the US. This is the 2021 table, the most recent, life expectancy may go down further as new tables are published. However the graphs here tell a different story:
https://www.ssa.gov/oact/STATS/table4c6.html
Part of these graphs are future projections, so it's difficult to tell what to believe. I believe (correct me if I'm wrong) that the first table is what the insurance industry and Social Security uses.
but obesity -- which correlates with income level and area code -- is what's killing people early. if you're fat as hell at 19 you're probably going to be even fatter at 60, and heart disease or cancer is going to kill you.
It reduced life expectancy for people who were alive in 2019. Those statistics say nothing about the life expectancy of people who are currently alive.
I'm not sure what the secret is but I'm fairly sure just moving here added an extra 10 years to my life expectancy.
My grandfather was still skiing while being 80.
An injury that prevents you from working, or something like cancer in the family, could be a whole lot easier to deal with if you have a sizable nest egg.
On an unrelated note, big fan of your work :)
Pretty sure that would change your life!
Maybe you have kids and you want to be able to pay for their education, or buy them a place to live... Maybe you're helping your family.
Personally I could have "retired" a long while back if I wanted to have a lower standard of living and also take some risk. But I don't hate my work, I do things out of work as well, I prefer a nicer house and a nicer car, I'd probably be bored if I didn't work.
A more solid factor is that companies don't want to hire part-time developers, because coordination overhead means twice the number of developers each working half as many hours are far less effective.
The other way to work 50% is to take a few months or years break between jobs.
I've enjoyed doing that. It's certainly not for everyone.
> So 50% more salary might only end up being 20% more in your hand.
Poor people still, comparatively, spend more of their income to taxes. That's because poor people have to spend more of their income on direct consumption, i.e. not investment.
If I'm poor I'm easily spending 90% of all my money on stuff for me, right now. If I'm rich that drops to 10%, and the rest goes towards stuff that isn't taxed.
So, while income tax may favor the poor, sales tax very obviously favors the rich. The only reason a progressive tax exists is because rich people are so powerfully favored in modern tax systems, we need to try to bring them back in line to the burden poorer people face. Even still, poor people face more burden.
The economy and society isn't structured like this. I'd happily take half the pay I have now for half the time. But the only way to get that time is to make 10 dollars an hour flipping burgers.
This.
All companies want you to be loyal to them and them only. But they won't reciprocate it. Only the C-suite is deserving of hefty pay bumps.
Many people say the economy is bad, whatever the measurable macro-economical state of the economy is.
But if you realize the problem is not "the economy" (which you can't possibly affect), but something about you (which is the though you can affect the most), you have a chance to find a better path for yourself.
The economy has almost nothing to do with the average person's quality of life. We've completely lost the plot. That's why a country like the US can have such an insane GDP and GDP per capita and have comparatively much lower quality of life than countries with worse economies.
When people say the economy is bad, they mean the things that actually matter. When economists say the economy is good, they're speaking of some theoretical economy nobody can see. They're speaking of numbers on a screen, that don't go into your pocket. That's where the discrepancy comes from.
I've even been in an extreme situation in crypto sector where I was putting pressure on the company founder for a salary increase. I was earning like USD $100K per year comp total. They had over $100 million of assets. The founder, a multi-millionaire who had more money than he knew what to do with said that the pressure I was putting was like "Holding a knife to the company's throat." Guess how much of a raise he offered? 2%! I quit. Within 1 month after I quit, they fired half of the company. Coincidence? They didn't even need to do layoffs, they still had over $100 million in liquid assets/runway. They were spending at a rate of like $1 million per month. WTF!
Out of the 10+ tech startups and corporations I worked for over the past 20 years, that was the closest I ever came to receiving a raise and still didn't get it.
The whole market feels fake. Like a kind of weird social engineering PsyOp.
Pay has motivated me to look for other jobs, but only after I was already worn out and frustrated with my current job. Switching jobs isn't like getting a new car or moving to a new apartment. It's traumatic, kind of like going through a break-up. You work with the same people for years and then suddenly you will never see them again. That isn't pleasant.
If the pay is bad enough, I like to think I would leave anyways. But I think most people are given better reasons to leave their jobs and onto greener pastures.
I wonder if LLMs would do a better job as managers, if they can make up for cognitive biases in humans. Managers treat new employees with lesser experience, with higher regard and respect than existing employees with longer experience that remained at that company for a long time. Switching jobs is also the best way to get a raise, due to managers being heavily biased towards obtaining new hires. On one hand, they're supposed to keep good performers, but on the other hand they're supposed to keep talent flowing in. Employees should then also try to keep their jobs best they can, while also searching for better jobs and not getting more attached to their employer than their employer is to them?
Humans in general are too biased and faulty in their thinking. Sure, LLMs hallucinate and propagate existing bias in society, but at least they can maybe (in the future) evaluate employees and form more objective opinions towards existing staff and new hires? sounds better than humans winging it based on "vibes"?
I'd say they leave people. The people aren't necessarily managers.
From the CEO down to line managers, management is responsible for setting the tone and culture. Jeff Bezos and Tim Cook alike are responsible for how horrible and toxic of a work environment exists at amazon and apple. If the company is great, employees can usually switch teams when they don't like a manager.
That depends on your co-workers. It may be more like getting a divorce from an abusive spouse.
Same goes for getting out of a shitty job with bad coworkers or a bad boss.
We train on (admittedly flawed) context and offer decisions. Much closer to an executive advice bot.
If given two checkpoints: your competitions manager bot, or your competitions executive advice bot, the latter is much more valuable.
Sometimes you have to ask: how, exactly, is the extra money I might earn here going to buy enough extra happiness to make up for the crap I'd have to put up with in the process of earning it? And sometimes there is no good answer.
Leaving because of money isn't the same thing as leaving because they didn't pay you enough to stay. For most frustrations people encounter at work (or elsewhere for that matter) that causes them to want to leave, there is a price at which they would put up with it and stay. The price is often much higher than management would consider paying, and higher than the income they'd have at their new job, but it does exist. So the question of why don't they pay you enough to stay isn't really based on the assumption that you were going to leave because of money.
Followed by the company spending huge amounts of cash on acquisitions in the same year…
Too many companies are eager to invest in everything except their own employees.
To give you an idea, it would've been like living in Denver, Colorado on a $35,000 USD salary in 2020-ish or so.
Not every engineer is going to be making six figures. You just don't see those folks talking about it too much.
Highest offer I've heard specifically for a mid level SDET position was $72,000 for 4 to 5 YOE but it was with a big company out of Vancouver. AFAIK they had no problem filling that opening within a few weeks.
A classic story here is the "Sodas are no longer free" one: https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
The total cost of free sodas for engineers is probably small compared to their salaries, and for the individual engineer, the new $0.50 per soda cost is probably negligible compared to their salary. But moving from free (as in free soda) to non-free signals a culture change, and so the best engineers started updating their CVs.
In every company I have been at that was going south, the first things to go after a hiring freeze were snacks and lunch.
When companies walk back any benefits of the job that cause you to pay for things out of pocket, you just got a pay cut, and should GTFO.
When the company is large, removing a building’s $750/year snack budget is a trial balloon for identifying who will tolerate the much deeper cuts.
Now there were probably several reasons why the merger wasn't a success and why basically everybody from that company left as soon as they could, but the one thing every one of them would bring up when you talked to them was "we were promised that we would get to keep our snacks and they lied to us".
It pisses people off when you mess with their food, don't invite them for it, etc. Way way way more than what is proportional to the costs.
Like, 'pizza for all but the contractor' kind of social transgressions.
I know they mean well with their lunch offer, but I'm barely socialized. I don't want to develop that skill, it's not personal. I'm just firmly independent
You have no idea and are speaking entirely out of turn. I don't need judgement from anyone but them. I'll bite anyway.
We don't all seek the same 'rewards'. My career is great, well known and trusted by many. I'm paid very well. I have a healthy network despite my refusal to aimlessly stuff my face hole. The interviews for my last two offers were technicalities.
The point I'm getting at is, I can be sociable when it matters. This and most things don't. There's benefit to be had. I saved a lot of time, arguably years of learning, by skipping religiously posturing around meals.
Still, thanks for your input, I guess. I hope we're all better served for having endured it. You can keep going on about my life if you'd like, but I'd prefer if you fuck off with your contrived perception.
Limitation of others is the point. Selection. I'm a product of the environment, choosing less.
As far as you know this pulled me from the gutter. Again, fuck off. Don't tell me limiting. You don't know anything about me or the path I had to take.
Your post is basically: "mental health problems, yikes". Let's really talk about limiting. Go be an NPC somewhere else.
Try to be someone damaged people like me would actually want to engage with. It's healthier for everyone.
Or keep trolling. You do you, boo. That's how the phrase generally goes. I can tell you that because people born in my original social class created it, visitor.
I went from one department where the boss penny pinched all the lunches/leaving dinners/birthday budget... To a department where the boss works hard to keep a fund that allows us to go to nice restaurants, buy catered food for major meetings, and have a budget for birthday cakes.
I will tell you one thing, I definitely overlook the shortcomings of the new boss and try to compensate for them without much complaint. The first boss? I did just enough ass covering to get solidly good reviews.
I was always happier floating between 2 different firms, as you literally don't have to engage with peoples games. You can call the bluff every time, and simply drop your hours if people get irrational.
Tip: When one sees a place with perpetual Ads for fresh desperate grads, than you know it is likely a digital Gulag operating on tax subsidies. lol =3
I'm not joking when I say that free soda was a huge selling point to new recruits in the IT department. We even used it as a "smoke" break for those of us who didn't smoke. Feeling that after lunch malaise? Walk down 5 flights of stairs to get a small Pepsi. Need to talk out some tech problem with a co-worker? Grab a soda together and take a walk. It was great.
When they announced they were removing the soda machines one of the KFC VPs even offered to pay for the supplies out of their own budget. Rumor has it that the total cost was in the neighborhood of $30k / year, which was nothing in the grand scheme of things. But the higher ups said no and the machines were removed. That's when I (and others) started to update our resumes.
I do comfort drinking way too much.
Within a week I was answering due diligence type questions from “consultant” who turned out to be the CTO of the company that acquired us, and became my boss a few months later.
That was 20 years ago. Ever since through the 4 companies I have been through in that time frame, I have always used the break room as the barometer for corporate change.
It sounds like hell. How do you not get fat doing this?
By way of contrast, an engineering firm I am familiar with had an employee who had been there six years, and knew the company's very complex product inside and out, every nook and cranny. He was one of the only people who had such deep understanding of the system that he could fix any issues that might come up, hardware, firmware, software, everything. He gave his two weeks' notice, and then went to a different job. He's a very talented guy, who would command a very attractive offer, but his talent to the current company is vastly greater than his generic value on the market, because of his detailed knowledge of the product. Although he diligently documented his knowledge, the company was still left in a jam after his departure. It would have been great if the company had fought for him the way the law firm fought for the other individual described above.
But, from the company perspective, your value is based on the 'market rate' for your generically defined skills and experience.
do you have patent quotas at your position? if not they are counting the days to replace you with a machine, someone overseas, a script, AI. depending on the decade.
Not trying to be spiteful or angry, just geniunely curious about the business logic and psychology behind that kind of decision making. Isn't every job replaceable?
1) Power/Politics - This is basically Human Nature at work and institutionalized as Management/Leadership/etc to put themselves at the top. A lot of it is BS (see the books by https://jeffreypfeffer.com/) but unfortunately only the enlightened in the industry have woken up to this. It is also the case that in these domains many of the objectives are intangible/subjective and difficult to measure thus allowing the actors to create an illusion of "Importance".
2) Nature of Engineering - The output of any Engineering activity has a well-defined boundary. This makes it more tangible/manageable/measurable and reason about. All the main costs are paid upfront and once gizmo-x/software-y is done the recurring costs are generally pretty low. This gives the illusion that the Engineer is now not worth his pay compared to his current output and hence replaceable/dispensable based on bean counter calculations. It also doesn't help that Engineers do a pretty good job so that a product/software once released and accepted in the market is generally very stable and not in much need of rework. This is the reason "Planned Obsolescence", "Subscription Model" etc. were invented by the Industry.
Because the Industry thinks that Management/Marketing/Sales are the important "leaders" and Engineering is just mere "foot soldiers" and hence replaceable/dispensable as needed. The above is justified as "Business needs", "Investor returns", "Profit next quarter" etc.
We need to change the above status-quo.
However; the important point we need to be aware of is that in the current Economic/Financial System many events and their payoffs are no longer linear and that is what companies are trying to optimize for. The best explanation of this is Nassim Taleb's Mediocristan (non-scalable) vs Extremistan (scalable) dichotomy. This video Pareto, Power Laws, and Fat Tails—what they don’t teach you in STAT 101 is a very nice overview of the essential points : https://www.youtube.com/watch?v=Wcqt49dXtm8
I wonder if it's harder to associate an employee's skill level with company profit.
If most lawyer companies have established hourly billing rates for each employee, then the owners can more clearly see an employee's true value to the company?
I think it's true that Engineering is just mere "foot soldiers" and hence replaceable/dispensable as needed (as mentioned in another sibling comment here).
Send out offer letters to companies most indispensable people, just to jack up your competitors labor costs. Arms race. Eventual mutually assured destruction.
Moneyball as in an optimization technique when roles are static. Obviously this is generic because static data of any value inevitably ends up in a spreadsheet. Otherwise, I’m not sure game theory holds together here.
i.e they're not cogs in a wheel that can be replaced by 'management'.
in as much engineers here, would like to believe otherwise -- most engineers at most firms are treated as replaceable / disposable resources.
It’s easier to say “we will lose $X if this person leaves” or “$Y will be at risk if they leave due to personal relationships” than it is to quantify an engineer’s revenue impact to the company.
Hence the common cost center assumption.
Managers at engineering firms too often think that the money comes from the wisdom of the managers and the hustle of the marketers, not from the work of the engineers.
This may be because partners at law firms are lawyers, but upper managers at engineering firms often are not engineers.
Lawyers typically specialize and they work off the same body of work everywhere (the same set of laws). Having worked for 10 law firms doesn’t mean that they know something current employees don’t.
Tech isn’t like that. Everywhere is different, many of us touch multiple specializations, the body of knowledge we need is always shifting. An engineer that has worked 10 places very likely does know things your current employees don’t, like different tools.
Losing an engineer is bad for the individual business, but engineers moving around is good for businesses in general.
Anecdotally, I have been recently approached by someone who was very eager for me to consult them on the product they were going to build. After a few hours of talking I quickly realized that they don't really need to build anything complex. In fact, my advise was to only focus on the core functions which are very simple and leave the majority of actual work to be done manually by a much cheaper secretary-type role until the product got enough traction to actually benefit from automation.
I had and accepted counter-offer myself and know quite a few people who were in such position.
This has always been one of my fears. I would not want to become indispensable for a no name company while paying the price of being average to the market.
Note: No L7 or above shared, or so as I knew. That said, like any large company, resources tend to concentrate to the top. L8 and plus were still compensated really well, but L7 were so so because L8 became the new L7 after waves of rapid promotions inside Amazon.
To rub salt into the wound, I had to have “consistent” L5 level output (translates to about a year) before I could even apply for promotion and compensation only kicked in at the next review cycle. The ~13% salary bump was retroactively granted but RSUs were not, which was upsetting.
Why try to get promoted?
Now about the monetary side: the purpose of getting promoted is to get to a high enough level. Say L7 in Amazon. Since resources disproportionally concentrate to the top, L7+ got handsomely paid, especially when you are a top performer in that band.
In my role I didn’t have the freedom and the opportunity because we were a small team as part of a sub-org - not much scope for multi-team impact. I have influenced some product roadmaps but for minor changes.
Should I be hunting for chances that have more meat and convince others to see things my way?
I am making more this year than managers one level higher than me because of stock increases, and the way my stock vests.
Like “how do my skills compare to a Google L7?”
Mostly the level determines scope:
L3 can work on a feature or part of a feature. L4 can own a large feature. L5 owns a project. L6 owns a large project or something that affects multiple projects. L7 is working across multiple teams to improve many teams projects.
However, a project at rando big company might be very different than a project at a FAANG, so even these terms are incredibly nebulous.
Generally, most FAANGs are very snobby in that even if you pass the interviews, if you don't come from another FAANG type company you get down leveled. I know multiple people this happened to( Interviewed for L7 EM, offer L6 EM. Interviewed for L6 SWE, offer at L5 SWE).
Age and experience matter less though. I know L5s who are 29, and L5s who are in their late 50s.
So if you interview for L6, unless you nail every part of every interview, expect L5. Same with L7, L4, etc.
https://www.goethena.com/post/a-public-and-transparent-formu...
I really liked it. They rarely had the problem where people felt they were under-compensated for doing the same job - a problem that I have since learnt is prevalent in other companies.
"Ethena provides generous equity in addition to cash compensation, but the details of equity are a bit trickier to make public."
Publishing a formula for half your comp isn't useful.
I have even seen management who don't even bat an eye or goes extra mile to hire some 5-10x more expensive(even compared to market value) limited time contractor but zero interest or energy in putting up a fight to give a fair pay bump to one or more severely underpaid employee(s).
The tainting is a mind game: an employee suddenly hears from their friend or random recruiter about some lucrative offer(usually at least 25-100% raise in pay), tries out their luck and lands an offer, but now manager(assuming a sensible person) needs to put a fight[1] with upper management to bring that same bump(or comparable).
However, the relation is now tainted: employee now feels that injustice had been done and there is no guarantee that in future further raises/promotions will not come easy[2] and the manager might be looking into replacing them soon. The manager is now also sad that, they got under pressure by a leveraged employee+upper management will push to de-leverage such assets(yes a term managers use), and seek to replace such expensive assets soon. Now, both sides are running on bad trust and it gets immensely uncomfortable, hence the employee leaves anyways or get replaced by some shiny new hire who will command more than the original employee being replaced attained at their level.
[1] This is often difficult, unless your manager is politically influential, because once you have neglected an employee too long, adjustment can be bit high, it is now difficult to justify, how suddenly a particular employee became so much valuable out of the blue. Human mind is wired in such a way that, slowly ascending a hill feels less tiring compared to ascending steep jumps, as the latter takes more energy(or in case of employee big pay bump).
[2] Even though the adjustment being a correct valuation, any raise/bump of significance also brings expectations of more responsibilities and higher performance which is the same ol' undervaluing again in action.
For a start: everyone resigns because of multiple factors, and money is of course one of them - but when handing in their resignation, in order to leave on a positive note they'll focus on factors outside of anyone's control. Usually people tell me they're leaving because of something like because they want to explore new challenges, or that they just feel that it's time for a change, or because a shorter commute will give them more time with their kids.
Such reasons do not invite a counter-offer. You want to spend more time with your kids? Good for you! I won't try to argue you out of it.
For another thing, when someone offers their resignation you only have a few hours to pull together a counter-offer - so on the occasions when I was able to make counter-offers, they were pretty meagre. I always get my team as close to the top of the salary range for their role as I can, so there's no headroom for anything big without getting a bunch approvals for a special exception.
And finally, a lot of people who leave get offers that are kinda good, or at least good for their situation. If a kid's leaving my employer, who most people haven't heard of, for somewhere like OpenAI? That recognisable brand might well be great for their career. Leaving to get a PhD? Great, so long as they know what it really involves.
And if I wouldn't council them to stay, I'm not going to be able to sell a counter-offer persuasively.
First, you should be giving people pretty good compensation packages. If you're underpaying massively in the first place, then you're going to consistently lose your best employees.
Second, you should recognize who the best employees are, promote them, and pay them more.
Third, you should be giving people at the same level very similar compensation packages. It will get a little bit off but you want to try to keep things fair.
Given these rules, counteroffers lead to trouble. If you have ten equal engineers and one of them is overpaid 1.5x, do you just keep them overpaid by 1.5x the rest of their career as you promote them? Do you keep it a secret from the other ones? Etc etc.
Usually when a counteroffer seems like it makes sense you are screwing up one of these principles of a well-run company. Maybe you're underpaying people but also not getting what you're paying for. You're paying 40th percentile pay and getting a 20th percentile team. You give every engineer an equal salary. Then your star engineer gets an offer from Google that doubles his pay.
Yeah, then it makes sense to counteroffer. But it would be better to not be in this situation.
Switching jobs, with new physical locations, new informal structures, new colleagues imposes a change cost on the software engineer too. That's why a lot of people stay. Additionally, paying every engineer the market rate wastes money on those that would have stayed anyway.
As a similar problem, countries that pay for babies find that 98% of their money is wasted on couples that have babies anyway. The Economist says: "schemes in Poland and France cost $1m-2m per extra birth" https://www.economist.com/leaders/2024/05/23/why-paying-wome...
Now that's a scale problem. Is one engineer staying really worth $10m? $1m? You'll pay way more than you think.
So let’s take a four-person company: marketing, HR, CEO, and engineer. Marketing, HR, and CEO share two beliefs: (1) if the engineer goes, the product will change. (2) no company has ever existed without marketing, HR and CEO. So, it’s not like they need a program parallel to these more-babies program; they just need to feel they could adapt to selling any variation of their product.
Engineering has a different belief: imagine what we could do if we had another engineer slot in to tackle this backlog. That does look a little more like the more-babies program.
PS> Article is https://archive.ph/nY2b1
Because they have no money.
For startups, they want engineers to take a pay cut to work 996-like hours.
Especially in the UK, where there is a running joke where companies complain about a “skills shortage” when in reality companies cannot find engineers at top universities that want to take a pay cut and work for less pay.
I could say there should be more VC funding in the UK for startups but I don't think this would help either due to the above issues especially pay, as I don't see this at all.
So there is nothing the UK can do to make the situation better other than talented engineers should either go into finance / hedge funds, leetcode hard and compete for FAANG jobs only or move to the US and don't look back.
In monetary terms this is not true. A good software engineer can make 150-200K in the UK without going into finance or FAANG.
In real terms you are better off making 50-80K in Germany, Spain, France, Poland, Italy, etc…, especially if you have children and don’t own property.
I know many consultants that make 150K+ (which is 600£ per day)
Take Samsara, on average basis an entry level engineer in the US pays higher than a semi-senior SWE (SWE II) in the UK, taking into account the base as well for a senior also looks dismal for UK engineers.
Even when these companies are public, UK salaries just don't seem to be competitive or appealing and this all just proves my point. Just go to the US, FAANG, finance or just be a consultant.
Here’s one that advertised on this site: https://www.ycombinator.com/companies/meticulous/jobs/AkHpFa...
Up to 160K plus 1% of equity.
It's not a real figure.
Deliveroo L6 is 135k average, but I think it is more realistic to look at L5, which is just around 105k.
Also, 600 a day as a contractor is nowhere near 150K+, it is 132K paid to your company's account (assuming 220 working days a year - but that's not a salary!), or you go via an umbrella and then it is even less. A 600 daily rate is pretty average in London, but only if you work for a bank - which classifies as "finance", I guess... But then you are not an employee, you are a contractor, which is very different.
On L60-L50, I’m not saying that everybody makes 150K+; I’m saying that it’s not impossible for a good senior engineer (or staff or principal, as we call them nowadays) to make more than 150K at a non-FAANG company.
Maybe I got my maths wrong with contractors. I never did it myself, but I know they do crazy things with taxes (eg hiring their wife, son, dog and plants, to reduce the tax bill) and that they don’t take holidays. So I multiplied 600 by 5 and then by 50, got 150K and I assumed they’d make more than an employee earning the same.
And it used to be that you could do some tricks to lower your taxes, but there is a limit, and after the IR35 reforms many firms decided they don't want contractors, or they are pushing you inside IR35, which means PAYE taxes, and worse (because you still have to do the accounting for your company, pay corporation tax etc). So contractors are earning LESS than an employee with an equivalent salary, plus there are some extra burdens. It used to be that a regular engineer (without any management responsibilities) could achieve higher income in the short term being a contractor, but I'm not sure that is the case anymore.
Outside London, if you can find a place willing to take you on as a contractor it may still be worth it, because your daily rate will be less, meaning you may not reach higher tax brackets, and compared to almost everyone else around you you would still be king.
A very common scenario is that some person leaves, and is replaced by a new person who ends up getting paid more for doing the same role. The old person was on an old outdated rate and the new person is on a new corrected salary (that usually is higher)
I suspect it's inertia. Companies don't make the effort to update old rates to match new market rates, because that requires active effort on part of the company.
I'll work hard for less money if it feels like we're in it together and the potential compensation is fairly distributed.
But if someone pays me less just because they think they can get away with it, I'm out.
For the former, think of companies like Boeing, nVidia or the Windows/Office divisions at Microsoft. Here, the product of technology is what brings in the money. For the latter, think of almost any "IT company" in the world which pieces solutions for clients in various businesses by leveraging existing technology/tooling and applying some amount of customisation.
The former tend to value engineers more (exceptions are always there) as there are usually less number of competitors, but the risk of the employee switching and enriching the competitor's knowledge (and hence, business) is significant. The latter tend to look at engineers as replaceable (with little to medium effort) resources, and value their payroll expenses more than retaining top talent.
An analogy is, let's say you get a treasure box that can be opened for 100 dollars and may contain 1000 dollars. You open it and find 150 dollars. There is a smaller box inside which you can open for another 50 dollars which could contain at most 75 dollars but will most likely only contain 50 dollars. Do you spend those 50 dollars on opening the smaller box, or do you use the money to buy another larger chest that could contain 1000 dollars?
Churn is a risk in that sense.
Known average programmers have the quality of not punching you in the face.
To get that number, you have to take into consideration terrible devs who are negative multipliers.
I.e. the scale is not 1x - 10x. It's more like -10x - 10x.
I've personally experienced development projects where there was easily a -5x - 5x difference between the least and most productive. I've seen productivity improve when devs have been removed from a project.
IIRC it was also "within a given team" or some sort of similar scope, not over all developers, which would explain why they didn't see that 28x.
How would you rate someone like John Carmack?
They'd have to pay more than the difference, so they don't. And they'd have to be able to predict which engineers are about to leave (and churn models are terrible.)
Those that are hired to be permanently based in the UK have an RSU-based system.
Those that are hired with the intention of relocating to the US instead get a smaller lump-sum signing bonus, a small lump-sum annual bonus while in the UK and the RSU incentives only start after moving to the US, and starting a fresh employment contract.
In theory, employees should only be in the UK for just over a year maximum, since if the H-1B visa petition isn't successful, you can apply for an L-1 visa instead after 12 months of employment. In my case, moving to the US got indefinitely postponed due to COVID, so I stayed in the UK for 23 months before I quit.
Obviously, beyond 2 years is moot as I'd already quit, but if I'd worked another month and had RSUs from the start, I would have been about $100k better off after those first 2 years. The next 4 years would have been worse off too, as the RSU allocation for the starting bonus would have been for significantly fewer shares due to the rise in share price over those first 2 years but the dollar value of the bonus would have stayed the same.
Or maybe somebody leaving and having to be replaced by a new hire kind of rolls the dice on headcount, which low and mid-level managers might find interesting.
The answer I like the most is that, as the article says, when you hire a new person you have to pay, on average, market rate. When you're evaluating whether to change the pay of Joe Lifer, you sometimes have to pay market rate but often you don't have to. Maybe you'd save money by giving raises to Joe Lifer, but who knows? You're hiring people anyway, so if Joe Lifer wants to leave, that's a shame, pay the new guy instead of him.
That can be with a lack of promotion; or career paths that are being blocked because the company looks outside the own organization for filling roles without even thinking to promote people.
Weak leadership/management can be very damaging. The whole Peter principle is a thing. If you get stuck below some incompetent burned out leadership, the best move is to just move sideways.
Companies are bad at fixing themselves. The symptom is usually high staff turnover. Throwing more money at the problem doesn't necessarily fix anything if the problem is deeply entrenched management layers protecting themselves with that money instead of using it to replace themselves with better people.
I used to have a great manager. We jokingly called him the cleaner because his career path was literally being parachuted into teams to fix them. All he did was listen to his team when he came in and then not shying away from doing surgical fixes. Including removing people or moving them sideways, promoting people, and just not being shy towards management about what needed fixing and why. He was a busy man. Lots of dysfunctional teams in that company and senior management had figured out he was good at this stuff. So he'd swoop in with the backing of management and then straighten things out and bruising some egos in the process.
And of course the reality is that we are in a job market with record high employment. Job security has relatively low value and is mostly an illusion. Especially if you are good at what you do. People that are insecure put up with a lot of crap. But a lot of jobs in tech are the opposite. This manager ultimately moved sideways as well. Because he couldn't fix the mess above him.
In the UK, having a family often results in one partner quiting work because they earn less after tax than the cost of daycare.
Likewise interest rates on mortgages (which aren't fixed long term in the UK, unlike the US) have tripled and inflation has risen 20-25% over the last 3 years
Adopting this policy of "fire em if they ask for more" is so evil.
I feel like this argument might be used by managers or HR in companies who know that their company isn't the greatest work environment.
Although it was only 3 years ago, from a macroeconomic standpoint, this feels like centuries ago. Since then, the tech industry has weathered several erosion events (SVB implosion, interest rate hikes) and it seems that aside from generative AI (which with the recent NVIDIA drop, may be showing first signs of slowdown), at least the VC funded startup space is at a local minimum in terms of market heat. Anecdotally, I've seen a lot of colleagues I've worked with at previous colleagues in hotter markets struggle with finding their next role for much longer periods of time with much more frustrating processes. The market for candidates seems tougher today than it's been in over a decade; in fact, I'm not sure what the last time was that it was this rough -- perhaps right after the 08 crash?
Think of a new company the customers will "love". Start the company and, being a good engineer, be the CTO and CEO. "Impact"? The value of the new company. Pay? They OWN the new company.
Maybe the title should get a [2021] because it sounds like the market has cooled substantially in the last year or so.
The article doesn't seem to take into consideration market cycles, assuming market rate always goes up at a rate that outpaces cost-of-living comp adjustments. While this may be the case more often than not, how are companies supposed to absorb market downturns? A salary reduction, if legal (?), seems almost as bad as redundancy except you risk being saddled with disgruntled workers who might decide to jump ship at the next moment that is convenient for them.
I never had any expectation of loyalty from the company and it didn't from me either, otherwise the stock grants would be unnecessary. I had some loyalty to my manager and had promised him to give a heads up before leaving the company. He knew I would retire once I hit my target.
If you pay people more because they've been at your company longer (the way the follow-up post by Ethena describes[0]), you're explicitly choosing to pay them more than they can get elsewhere. You don't want to pay more than you have to for talent, so this is a hard sell to whomever manages the budget.
On the flip side, if you're attempting to pay people in proportion to their worth to you as a company, you're going to be paying less than the competition, because the competition front-loads this money. A new engineer takes a few months or more to ramp up, so if you're making an attempt to pay engineers based on their impact, you will be outcompeted by companies willing to give sign-on bonuses and extra comp to convince people to switch. That's built into the plan of the four-year cliff - you pay them a lot to start with and hope you get the savings on the other side when they don't spend the effort to switch jobs later.
Lastly, turnover isn't as much of a negative for the company as everyone seems to ascribe. Being forced to keep up with industry best practices and technologies to be able to recruit talent, to onboard new devs when someone leaves, and to retire unmaintainable legacy cruft when the creator leaves are not strictly negatives - they are risk reduction. That's not mentioning the benefit of fresh eyes and fresh ideas.
(Honestly, I think all of this discussion on both sides ascribes too much rational decision-making to what is essentially cargo-culted hiring processes. The biggest companies copy decisions from each other to the point that it's literally collusion[1], and everyone else follows suit because they are smaller and don't have the economies of scale to make researching alternatives positive expected value. People at the top setting policies don't have lines of communication to front-line managers to be able to determine whether their particular company needs extra focus on retaining developers for business continuity reasons, so to the extent that it's a conscious decision at all, it's based on industry-wide studies or company-wide turnover statistics.)
[0]: https://www.goethena.com/post/a-public-and-transparent-formu... [1]: https://www.theguardian.com/technology/2014/apr/24/apple-goo...
TBH suspect I was being seriously underpaid.
2. Raises done arbitrarily to match market rates snowball across the organization. One 20% raise is going to turn into 2, or 3. See #1.
3. "Losing time" because of a junior hire is, oddly, less of a disruption than issue 2 becoming issue 1.
the reality is that we get comp way wrong... and its related to hiring, and its related to Venture Capital and related to a million other things
My boss loves me, swears I'm so full fo awesome knowledge & smarts. But every review, there's some VP pissed off I asked a question about why we were switching to OKRs or how to was going to work or how it would help or some security team pissed off because I have complained about NetSkope or their shitty undocumented USB drive blocking policies. There's always some fuck doing a shitty job offended that some engineer dare speak up, and my boss is telling me again and again it's costing me many dozens of $k in raises.
It's so so so sad. Even if there aren't the dogshit losers, there's still so little discernment & taste. And there's so many people who can look busy and suck up, but actual deep knowledge is so so rarely respected. There's so many orgs that straight up deserve to fail, based on how bad they are at supporting their truest asset, their human resources.
It should be up to organizarions to discern & navigate what their people say, to find good options collectively, collaboratively, & not based on crude lowest levels of popularity/acceptance. There's a tyrant of structureless that most companies blindly wander into, that lets things settle as they may, without trying at all to suss out what maybe perhaps possibly could be right. It's ought not be up to every practitioner to advocate for & battle alone, battle politically for right; orgs ought build in mechanisms of support. Failing that I think they deserve to die.
This is why projects tend to be put on maintenance mode or rewritten (piecemeal or from scratch) once their original owners are gone. This can be, but isn't always, expensive for the business' owners.
/s
Over a period of 6 years, until they reach 30% of the knowledge/velocity of the people who wrote the original thing. /s
Basically the company:
- hires a new engineer on the new market rate so they get up spending extra money
- spends extra time and resources to onboard the new engineer to a fraction of the productivity of the engineer that's had tenure
Over the years, I used to think that companies are taking the hit on money and productivity in order to not have "irreplaceable" engineers. Better have replaceable cogs in the machine rather than important pillars of your company, right? Workers need to know their place, even if it costs you money and productivity.
Nowadays, I just think it's the sheer incompetence and the stubborn insistence of managers in thinking that giving a new engineer the same title as the title of one of your tenured engineers will somehow magically mean they both can do the same things, at the same pace.
I used to think that kind of company behavior was calculated malice, now I believe it's simply brutal stupidity.
The worst case is mass layoffs instead of natural gradual replacement, since entire teams leave with no time to document their area (and little motivation to do so)