Why You Make Less Money
jobtipsforgeeks.com
jobtipsforgeeks.com
I met with a local recruiter that claimed to be the best at what it did -- working with technical people -- and they couldn't parse my résumé except to say that they didn't see anything that said "senior" and therefore they couldn't help me. Given the fact that the types of jobs they were bragging about placing for was icanhascheezburger and other equally worthless entities, I'm fine with the fact that they don't get it, but experiences like that could be damaging to someone that doesn't understand their worth to begin with and would be willing to settle for less because people paid to help them don't actually understand what they can do.
After talking to a new candidate for about 20-30 minutes, if we haven't discussed compensation yet I'll usually throw a guess at them. I've been off by 50% on either side, but usually I'm within 10%. Part of that accuracy is based on my having a specific niche, to the point where I'm quite aware of which employers pay more than others in my market. I'll adjust my guess based on their employer, which is something more generalist recruiters probably couldn't do.
I myself am always back and forth on the value of recruiters in general. In the abstract, it seems like a perfectly okay idea for some circumstances. In real life, though, I've only ever talked to one recruiter (out of dozens and dozens of requests to 'connect on linkedin'), and that's because the salary they were offering was so high I figured it might be a joke.
Surprisingly, I too go back and forth on the value of most recruiters. My business model is so much different than pure contingency recruiters that it's not an apple to apples comparison. The industry is plagued by a well-earned bad reputation in some cases, but there are some that are worth the time. If you are ever interested in having a discussion with another recruiter (that probably won't have a job for you, but perhaps some insight), I'm easy to find and I'd be happy to take your call.
Maybe less subtlety in the future? For thick people like me.
My business focus is geographic at this point, so unless Steve wanted to move to where my clients are I probably wouldn't have a job for him. My mention of 'probably not have a job for you' could have been clarified as 'I'm quite confident that I won't have any relevant jobs to discuss'. But based on his mention of only having spoken to one recruiter, my offer to discuss his career with him remains open.
Why do staffing agencies take this approach? Most understand to some extent its a numbers game. If you call 100 people, 10 are interested, 5 will be qualified, 3 will be interviewed, and one hired. In many cases its cheaper to hire an army of new recruiters who work mostly on commission than it is to hire experienced recruiters who know what they are doing (and understand that they could just start their own staffing agency). This is not a defense of these practices, just an explanation.
There are however lots of great recruiters out there who do "get it" and can help you make the right career portal. Personal referrals from friends who have had good experiences are usually the best way to find those good recruiters.
I just went back to their website and it looks like they are back to working solely with creatives, so a small victory there.
The numbers game can be eliminated by engaged and retained search models, which is how I like doing most business.
You want to know the best job in the IT world?
Solution Architect
Enterprise Architect also works. Those two magical words can mean any of the following (I've seen them all):
1.) Network infrastructure design. Varies between handing over a Visio diagram to Cisco sales team vs detailed component level design .
2.) Server hardware guy who decides server/nas/vm requirements for the company. Deals with hardware vendors.
3.) Some combination of 1 and 2, but does 90% vendor management.
4.) Software engineer who does integration.
5.) Another visio guy, but this time highish level application workflow design. No programming. More like technical business analyst.
6.) Like the above, but presales focus and client facing. Gets a commision. Like this: http://bit.ly/YlsaWu
7.) Lead software engineer with 20+ years experience designing $10M+ software for use in critical real time distributed applications. Delegates coding jobs to different teams. Defines APIs. Defines design patterns. Does coding reviews. Understands entire code base. Excellent knowledge of concurrency and parallelisation design considerations.
To put it mildly, there is some ambiguity in the title. But what makes this 'solution architect' so special is recruiters consider it a very senior position that is remunerated accordingly. And here is the kicker that illustrates how poorly some recruiters understand IT roles:
Sometimes its not clear if a solution architect role is a software or hardware job. So long as you've got experience as a solution architect you'll tick the recruiters box and your resume will make the short list.
Think about that for a second. Dont believe me?
http://www.seek.com.au/Job/solution-architect-finance-perman...
So to all IT people out there, I'd suggest if you ever find your job role shifting towards work requiring Visio, try and get a title change to the coveted Solution Architect or Enterprise Architect. It shouldnt be a problem unless you have a very senior person with the same title. Dont demand a pay rise. You'll be well compensated the next time you look for a job.
- Alex, Aspiring Solution Architect
Remember businesses are about making money. The way to get paid more is to demonstrate you can make them more money.
And most companies are not worth working at. If you are in a position to negotiate in such a manner as described by the parent post, you aren't hurting for work.
Tell me how you can save/make me money, and I'll listen. Tell me that "You reduced IT spend my $5million" dollars and I won't have any reason to believe you.
Same for people who take sole personal credit for building something that obviously is the work of dozens.
If I could get a job doing X or Y, and be happy at either, but X is $20,000 more than Y, I'd love to know that so I can work on those opportunities more.
I can't help but wonder if I am sabotaging myself by spending time on ASP instead of PHP, and would love some hard numbers to help me make a more informed decision.
PHP is a great first step on the indie dev path. You'll work in smaller shops, pay can fluctuate wildly, but at least you'll be a profit center. It takes a bit more hustle to manage your career but you'll be better positioned to hang out your own shingle later if you're interested in doing so.
A few years of enterprise work can be a fine starting point for transition into more indie dev, but you'll have to be honest with yourself about the trajectory you're on from one year to the next.
Another bit of advice would be to work in a position where you have your hand in all aspects of a project. That will help you decide if you want to focus on a particular subset of application development (i.e. back-end, front-end, UX), or if you want to move forward as more of a generalist. This decision will impact your future type of employment. Concentrating on one particular aspect of development will lead you towards larger companies and/or larger development teams. Being a generalist will lead you towards smaller companies or start-ups with smaller or no teams at all, as well as possibilities outside of normal technology companies (i.e. I am interviewing with a law-firm next week that needs a senior developer to create internal tools). I'm of course speaking only from my experience and making generalizations on that basis alone.
Now that I'm graduating I received several job offers, most of them involved working with PHP again. However, I received two offers from two relatively large companies, one as an ASP.Net developer and the other as a Java EE developer. The salaries for these two jobs were quite a bit higher than the others and included great benefits too.
Again, I'm only a graduate so can't really give any solid answer as to whether you're sabotaging yourself by working with ASP.Net, though I doubt you are. Most decent employers will probably be more interested in ensuring you can program rather than focusing on what specific language you've been using recently. If they know you can program, they can probably assume you'll be able to apply that knowledge to a new language.
More narrowly focused skill-sets on the other hand will have variation...for example, developers that solely want to work on the front-end (e.g. backbone) are going to make 20K-40K+ less then their full-stack counterparts.
I had to read this sentence about 5 times before I realized that "backbone" was probably the name of a UI library.
Also, salaries for experienced F#/C# developers are somewhat higher than those of experienced C# developers. Do some research if you don't believe me.
When I've worked with recruiters I appreciated the fact that they would negotiate on my behalf. That said, don't forget that when it comes to salary, a recruiter's interest and yours are not really aligned. They don't care about how high a salary they get for you as long as they you get hired.
That discounts the value of time. If it takes, say, 40 hours of work to sell your home for $300K, and another 40 hours of negotiations to bump that to $400K, it is not in the realtor's interest to pursue the $100K - he/she can simply pursue another $300K sale in the same time.
A commission based structure tends to have weird cliffs like this subject to the details of the field.
I'm also transparent with my candidates. If they have two offers and my fees are different with the two clients, I think it's my duty to let the candidate know so they can make an informed decision if they feel I am showing any hint of bias towards one client (of course the difference in fee is usually nominal at best).
Being retained or engaged by a client, as opposed to contingency, really minimizes the incentive to encourage a bad deal for either side in the transaction. I know I'm going to get my fee eventually, so I don't need to try to talk both sides into a marriage that isn't good for either.
The real estate example is a very good analogy for most contingency recruiting models though.
These examples are specific to contingency recruiting, which is not the focus of my business (more retained/engaged search).
If a client's house sells for $310k vs $300k, that's an extra ~$10k for the client. On the other hand, spending the additional time negotiating only nets the agent $300.[1]
Typically agents will sell additional houses rather than negotiate prices on sure sales. However their behavior changes when selling their own houses.
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[0]: From Freakonomics as mentioned by vitalique and roel_v below.
[1]: Real estate agent fees are typically 6%, equally split between buyer / seller agents.
Also, "selling additional houses" isn't as easy as it sounds. There's a lot of unpaid effort involved in acquiring clients and getting to an offer, before any of the negotiation starts. Time spent negotiating and baby-sitting an existing offer at least has a high likely-hood of being paid time.
The problem with having different incentives is when one party doesn't recognize that there is a mis-alignment. If you're selling your home and you don't realize that your Realtor's time is not an endless, worthless resource at your disposal, then you may be inclined to insist on your Realtor spending endless hours of aggressive negotiation, potentially putting the offer at risk of closing at all, for an amount of additional money to you that's not really going to make much of a difference to you. (My wife's been involved in deals where one party or the other has risked a deal that's been in the works for 2-3 months over less than 0.1% of the house's value.)
Admittedly, not spending 2-3 months to work out another deal is worth quite a lot of money as well. But this behaviour doesn't seem obviously irrational.
For a half-million dollar home, which would be a relatively nice house for most of the country, you're talking about $500. For any party on that transaction (buyer, seller or their respective agents who each stand to make $15k on a normal 3% commission), that's not a lot of money and is almost certainly not worth arguing over if you're in all but the earliest stages of negotiation.
I now do very little marketing to new clients or candidates - I post some jobs on my site, but very little advertising and very few cold calls. The value of acquiring a set of very specific and useful information (market rates, info on companies, etc.) and providing that to your network when asked is rewarded down the road.
When I bought my current property the seller used a listing only service and pretty much screwed up every part of the transaction that was possible to screw up (missed deadlines, filed the wrong papers, failed to show up for closing for 3 days...) - I nearly walked away, in retrospect I should have, this is basic stuff that even a sucky realtor will get right.
"Our central finding is that, when listings are not tied to brokerage services, a seller’s use of a broker reduces the selling price of the typical home by 5.9 to 7.7 percent, which indicates that agency costs exceed the advantages of brokers’ knowledge and expertise by a wide margin."
Whoa.
Recruiting is a sales job with a commission typically tied to salary of the hire (similar to commissions for selling houses that are related to sale price) - but where it gets interesting is that the brokered item in 99% of sales situations has no say in the matter. In recruiting, the candidate is to some degree the product of the transaction, and the product can reject the sale. It's an interesting dynamic that makes recruiting unique.
This explanation is rudimentary and hopefully recruiters don't treat candidates like some common 'product' for sale, but it gives some insight into why analogies between recruiters and realtors or other sales/commission jobs are not entirely relevant.
This is long obsolete. Only a fool pays more than 4% these days.
Recruiters are good for one thing: to make introductions. Good recruiters are good for that, and deserve the SALES commission for their SALES job. Recruiters aren't your lawyer.
Get two job offers, auction yourself off. That's how you negotiate.
I'm not sure where you are located, but in the US most recruiting is done on a contingency basis, meaning a fee is paid only if a hire is made. That fee is almost always based on a percentage of the employee's starting salary (could include bonus as well). Fees have a wide range, but during my career I have seen them everywhere between 15 and 33%.
The counter argument is that contingency recruiters want to close the deal, otherwise they don't get paid at all. Is the easiest way to close a deal, and to make sure the deal stays closed (see "counteroffer"), to get the candidate his/her minimum acceptable level? No. You are doing both parties a disservice if you do that.
You are doing the candidate a disservice by only trying to achieve the minimum. You are doing the client a disservice because although they may get the hire, the deal is not as secure as it would be at a higher number (again, see counteroffer), and if your goal as a recruiter s to help clients both attract and retain (key is retain) talent, they are better off paying a bit more to make the hire happy on start and less likely to be poached by someone else.
If I know a candidate's minimum, achieved via some proxy ('Dave, I'll accept at 120 and start May 15', it is fulfilling to call that candidate and say 'Remember when you said I could accept at 120? Well I got you 128. Congrats!' Happens all the time, and feels good every time for the candidate. On the other end, I'm coaching clients about retention and not just getting someone on board.
The biggest benefit to a recruiter (or any intermediary) in negotiations is a buffer. I've seen candidates do some incredibly dumb things in negotiation, such as asking for 150% of what they really are worth and expect to get, just to 'start off negotiations' - as if this were a good tactic. What happens if the recruiter isn't there as a buffer? The candidate makes the proposal, and the company says no thanks and let's just pretend we never met.
Other side is a client will call and say 'your candidate was making 80 at the last job? I'll go as high as 90, but offer 60 just do see the reaction.' My response would be 'the reaction is going to be an annoyed candidate who now feels lots of time has been wasted. Lets not screw around, get serious about this.'
Without a buffer, neither of these deals happen, yet both parties were willing to accept the terms of he other. If you think this is rare, you haven't been involved in enough deals with enough people yet.
1. Failure to research the industry. This is the main reason people are underpaid. Sure, talking to friends is great but go broader than that. Glassdoor.com provides anonymized salary information on a per-company basis. Job sites like indeed.com contain salary ranges. LinkedIn can also be consulted. Finally, the stalwart salary.com provides a bell cure of salary for a specific title.
2. No B.A.T.N.A.[a] Best Alternative to Negotiated Agreement. Leverage. Fall back position. Multiple irons in the fire. Call it what you will. Having a good "plan B" gives you the upper hand. Even if the recruiter is negotiating for you, you need to negotiate with the recruiter.
a. http://www.pon.harvard.edu/freemium/batna-basics-boost-your-...
I never have seen BATNA before, interesting. I'd lump that in with negotiation. If you have multiple irons in the fire, that should be part of your negotiation tactic. If you know what you are worth and you have value above what you are being paid, you should make that clear and negotiate based on those facts.
A recruiter negotiating on your behalf mainly serves as a buffer - to prevent either side from souring a deal that should happen. If my client tells me they are going to offer 80K as a first pass to someone making 100K, I'll encourage them to make a better offer for fear of ruining their chances to present a higher offer later. If a candidate tells me to ask for 150K even though they will accept 100K, I'll educate the candidate that this tactic may prevent an offer from ever being made.
> So why did you say yes?
The other question, which is just as important, if not more so, is this: Why were you offered less?
That is, nobody pays you what you're worth to them. If they did, their profit from hiring you would be zero. Therefore, they pay you the least amount they can get you to accept.
That would be an answer, albeit a very vacuous one.
From a game-theoretic perspective, you want the most they are willing to pay and they want the least you are willing to accept. But those two values delineate a range, sometimes a pretty big one, and what's really interesting here is where the final number falls in that range.
In real life, the game of negotiation does not have perfect information, which means you can fool the opposing party as to what the endpoints of that range are. That's the main way of pushing the final landing point closer to where you want it.
So there's a lot more to questions like this than these vacuous answers. It's a psychological game, and if their offer was actually the minimum you were willing to accept, you have to ask what else you could have done, either now or in the past, to set yourself up in a position where you could have "tricked" them into paying more than you were willing to accept.
Yes, and that's what I meant when I originally wrote, "So why did you say yes? Pondering that question will reveal a lot about yourself and what you value, and it will also suggest what you should do if you're not happy with your current situation."
The point is that once you say yes, that's what you get. So think about why you said yes to a "low" offer. Was it because you didn't know it was a low offer? Then do some homework; get to know the market better. Was it because you did know it was a low offer but didn't know how to work up to a higher one? Then brush up on your negotiating skills or get an agent to represent you. Was it because you're not good at presenting yourself and have learned to live with lower offers? Then get some coaching or talk to a mentor.
Do you understand what I mean now? If you said yes to a "low" offer, it was only because you had reason to believe you couldn't do better. So identify that reason and do something about it.
Great recruiters are few and far between, but the best ones out there can add a huge amount of expertise and value to your job hunt.
I believe most people are reasonable. If I see that the people I work with make more or less than me, a decision was made by someone. If that decision is reasonable, the difference is reasonable. I wouldn't be upset, but I would then know what I could do to improve my value, which would make me a better employee.
On the other hand, if employees remain clueless about the compensation of others in their company, they don't know when they could be worth more, and won't be motivated to make it happen. Perhaps companies like this, but they shouldn't, because it removes a very key motivator from your employees. Saving $20k on a few employees isn't worth much if those employees could earn that $20k by providing more of what you want (especially if that nets you significantly more in business value than the difference in their salary).
This is why I don't understand keeping salaries private. Sure, some people are being severely under or over paid, and they'd have to regress closer to the norm or risk upsetting happiness levels of others, but I don't see any serious issues with this.
In my line of work, I generally am required to ask everyone what they make, and some are more hesitant to tell me than others. Some companies are much more transparent about comp than others, but as a rule individual comp is regarded as something not to be shared with others at your company. The hypothetical discussion I allude to in the article could easily be between two people who do not work together, or that used to work together, making the sharing of salary information more of a private matter instead of a company matter.
If employees had the rare ability to fairly critique their performance vs that of others, making salary transparent shouldn't be an issue. Imagine a baseball team that always paid their best player (highest average, value over replacement, some agreed upon statistic) the most money - it would be hard to argue with that. But in companies with multiple employees and no common metric for measurement, it's nearly impossible to expect Employee A to accurately assess his/her own performance related to Employees B, C, and D. Most would have a tendency to think they are a bit more qualified or a bit more productive than they are relative to their peers.
A fictional example. If you squeeze everyone into a narrow band, you'll loose your patio11 star A/B tester. and with him, millions of dollars of easy profit.
If I see he makes $250,000 and I make $150,000, and I ask "why?" and get an answer along the lines of "he provides us with x, y, and z, and those are extremely valuable to the business." Now that's fine, and I am empowered to be treated as a business partner. I can improve myself and provide something more valuable to the company to warrant better compensation with an understanding of what I can look to receive by providing more business value.
But if I have no clue, why would I want to engage with my company on that level? It doesn't even feel appropriate to make such an approach with this nonsensical taboo.
The point isn't to regress people that earn their difference in pay, the point is to regress people who don't earn their difference. An ancillary benefit is to provide everyone with a better understanding of their value and what value they provide the company, which makes it easier for people to grow professionally.
Long tenures can work both ways.
The reasons given in this article are interesting but they strike me as rather technical embellishments to the fundamental variable: the desire for money.
I make no moral judgement about that desire; I simply recognise that some people have it more than others.
If said engineer is able to compensate for that outsourcing pressure and you cannot, it is better explained by the points made in the article - negotiation savvy, domain knowledge, externalities like goodwill, etc.
:)
Concave work is that where the difference between top-notch stuff and mediocrity is small-- maybe 1.2x or 1.5x. Convex work means that excellence is so far superior over mediocrity (10x, maybe more) that mediocre work has almost no value.
What we do is convex because we automate all the concave processes. If the work can be commoditized, a good programmer will automate it away. That leaves the hard, creative stuff. So we have a convex input-output profile. That's part of the fun-- you can add 20% more value by being just a little better-- but it's also pretty terrifying to realize how close we are to a "natural" celebrity economy where a few stars are extremely well-paid and most get nothing.
We, however, have a few things that play differently. First, no one except a superior programmer (who become rare as one moves along) can evaluate us. Most CEOs are not only in the dark themselves, but unable to evaluate a CTO, who's unable to evaluate VP/Eng, who's unable to evaluate programmers. It's a classic Design Paradox. I think it's pretty random whether a non-technical CEO gets a decent CTO. Second, even we are in the dark about what makes a great programmer. Is it talent, or experience? Obviously, it's a mix of both... but the rarity of great programmers suggests that either few have the talent, or quality work experience is thin on the ground. We're unlike most people in the corporate world in that we deeply want to get better at our jobs (independent of being more rewarded) and yet the path to that is very opaque. How do you become a great programmer? Get great projects. How does one do that? It's not easy.
The complete opacity of programmer skill and development helps and hurts us. No one knows what we're worth. We don't even know.
I'm paying you what I think you're worth, and that's a stab in the dark based on what other support engineers in $locale are making, how sharp I think your skills are, and most importantly, how much potential I think you have (I expect one of my candidates to grow into my position at some point when I leave to be a CTO at my next org).
TL;DR People are the hardest part, and we're all still learning how to do it right. Interesting times such as now don't help.
>The complete opacity of programmer skill and development helps and hurts us. No one knows what we're worth. We don't even know.
Times like these create huge opportunity for those who are able to navigate through the uncertainty. It truly is an exciting time.
It is, however, possible to examine value by examining the differences in demand. If a firm compares their programming staff to a theoretical programmer, then determine what they would be willing to pay for wrt some specific added value that they would get at a particular level of execution, they can effectively price talent.
The take home point is that your first step to pricing is by way of comparing delivered value. The interesting part here is that programmers will likely discover that their skillsets are highly asymmetric wrt value delivery.
My question is how do we measure delivered value? Seems the push for quantifying contributions (https://news.ycombinator.com/item?id=5462622) might be related to the difficulty in value calculation.
I don't think the path to greatness or the concept of programmer skill are as opaque as you suggest, even for non-technical evaluators of talent, once we at least have some small set of evidence and indicators available that tend to suggest talent.
For example, if I'm approached by an engineer from a major player like Google, I immediately have at least an idea that the engineer should be better than average, simply based on the fact that this engineer has already been vetted by Google's hiring process. That in itself isn't a guarantee of talent or 'fit' (fit isn't entirely relevant to this discussion), other than the ability to pass a rigorous interview which does not make one great, but it's an indicator, and chances are that engineer will probably be given a pass on a first phone screen. Someone who has held a job for years at an esteemed tech organization (need not be globally known) probably had to do something right to keep their job. Not foolproof, but fairly reliable.
Running references is another way to get some indicators. Granted, if a candidate can't find 3 people to say nice things about them he/she should find another line of work, but when you ask references the appropriate questions you will notice patterns if the references are being honest. I always ask about 'areas for improvement' as well as strengths, and if 3 references provide consistent answers to an area for improvement, I can be sure that is a flaw that should be acknowledged or addressed before hire. If you don't get consistent answers from the first few references, ask for more. Even a candidate's ability to provide references is another indicator of skill (not to mention soft skill, another element of greatness probably). Not foolproof, but usually reliable.
If working in smaller circles, you may know people that worked with this candidate that is not on their reference list. This is potentially dangerous territory to step into but I'd imagine a CEO making a large investment of both cash and equity would want to know what some others think.
Over the past few years, the technical interests outside of employment are becoming another indicator. I've said this before (as have others), but below-average engineers don't read or write Haskell code on weekends. This doesn't mean that all great engineers write Haskell on weekends, but that would certainly be an indicator of technical ability, and that indicator should have very few false positives.
The choices an engineer makes are also an indicator - not a guarantee, but certainly a signal. One might question the skills of someone who leaves a job doing very interesting and complex work for something much more junior or less challenging technically. These decisions start to create a narrative that at least suggest some skill level.
Of course, if we have the benefit of seeing someone's portfolio that is another indicator. It's difficult to judge an individual contribution to a group effort, but taking that type of evidence combined with any solo effort, interview performance, and perhaps a pairing exercise with your company's 'most talented' two developers, shoof provide some body of evidence for a decent talent evaluation.
A non-technical CEO could use similar tactics (not identical) to learn about a CTO, rather than relying on luck or other methods.
What makes anyone great and who decides who is great is tricky business, but it's mostly tricky when we have no prior info to use in the evaluation. The path is perhaps a bit more opaque, but I don't think most programmers really believe they are in the dark (and unable to evaluate talent accurately) as you suggest.
My article wasn't obviously as much about greatness as perceived value and salary disparity. None of the engineers in my article need to be great, or even good, for the disparity to exist. Your points, as always, are well made.
Most dev jobs don't inherently scale difficulty up to match your constant skill growth. "Good" work (at least the metered, someone-else-is-paying-for-it kind) is subject to a lot of competition.
It's hard to get to (or even near) the 2.0 level without continually getting high quality work. That kind of work is rare in the corporate world and most people never get it.
It's also hard to push yourself to a 2.0 level if you can't work on it full time.
Now, a neat thing about side projects is that they don't have to be 2.0+ to be useful and successful. There are other things that matter just as much. That said, if your goal is to become a 2.0+ programmer, you'll pretty much need access to a quality of work that most developers never get to do at their paid jobs.