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Comment by milang | Hacker News Reader

"There is a growing body of research that shows that companies that limit their high-low wage ratios and distribute generous option plans consistently outperform more traditional, inegalitarian firms."

I'd love to know more about this growing body of research.

A basic Google search yields the ten most profitable firms: Gazprom, Exxon Mobil, Industrial & Commercial Bank of China, Royal Dutch Shell, Chevron, China Construction Bank, Apple, BP, BHP Billiton and Microsoft[1].

I don't get the sense that oil companies and big banks are egalitarian in their approach to employee equity. What am I missing?

[1] http://money.cnn.com/magazines/fortune/global500/2012/perfor...

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Both oil companies and big banks compensate their skilled employees very well. It's not hard to make six-figures straight out of an MS as a petroleum engineer or geologist; you can do $200K/year with 5-10 years experience. And banks, of course, are legendary for their comp structures: you could be doing $80K salary + $160K bonus straight out of college and making half a mil or more 5-10 years out.

It's the roughnecks, construction crews, and bank tellers that don't make big money. Of course, those tend to be the numerical majority of employees because they're relatively cheap.

It's the same thing at Google - engineers can get paid $250K/year, but book scanners get paid $10/hour.

Even roughnecks make a fair amount of money in the oil industry. In canada a skilled tradesperson, like a ticketed welder, can easily clear 250k a year. The hours are long, and the work is hard, but it tends to be peicemeal in basis, so you arnt stuck doing it all year long. Also adding to this, as their work is typically all over the map, both living and traveling expenses are typically covered via something like a $100 a day living stipend.

Those are profits in absolute terms. I suspect the author is arguing that relative to the size of the company, wage ratios are important. I would argue he is mistaking consequence for cause. Companies with egalitarian wage ratios can afford (read 'need') equitable wage ratios precisely because of the nature of their business (think software firms with barriers to entry, high margins that are dense with human capital vs a company) vs (a chemicals company, that produces a fungible good and can only compete on price - business is characterized by low margins and a greater proportion of unskilled labor - ie more wage equality would put you out of business)

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