Ask HN: Why do managers tend to make more money than engineers?

Don't get too caught up on which job role has more risk, responsibility, or communication skills.

Salaries are apportioned based on how close a job role is to the company's revenue stream. Executives come out on top because they control the money and payscales. Sales is often second because they can very easily point to new revenues and say "I brought that in". Profit center staff (most Valley engineers) would be somewhere up there because they are at least creating the actual product that the business sells. Support staff - cleaning, office managers, accounting - bring up the rear because they have the hardest time claiming responsibility for a share of the pie.

Within each of those groups you'll see normal salary dynamics based on wider market forces and hierarchy. Engineering manager's gonna make more than most of the line engineers. Comptroller will probably make more than a line engineer too even if she's considered a cost center because she's in a position of relative authority and individual responsibility.

Study questions:

- How close are you to the money?

- How legible are your contributions to the bottom line?

- Could you get significantly more elsewhere for the same role?

- Is management incentivized to retain top-shelf people for your job role?

1 manager, 9 engineers (or more).

The ratio of investment per employee might not align up to the investment in function - the investment might be spread 20%/80% between both functions.

I've worked with (uh, "under" feels insulting) really good managers who truly earn their pay & it has given me a different perspective of what they do to make "things happen".

I've cut that down into literally four levels of management - delegation, negotiation, inspiration & vision. Those who merely delegate are hard to work with, those who negotiate for you are good, those who inspire you to pick up risks are great and those who can see ahead six months to realign/nudge a team to build new skills is just awesome.

On another note though, I'd rather have no management than bad management - there are those who do none of those things, while fulfilling Peter Principle.

Having been in the industry for 15 years, and having been both a hard developer and an engineering manager, my two cents: 1- managing a team of engineers WELL is really hard, and requires a broad range of skills. Granted, there are a lot of bad managers out there, particularly in engineering. 2- managers aren't getting paid for their productivity, or even their time. They are getting paid for judgment and accountability. They are accountable for the output of a whole team, and they can only indirectly influence productivity of each engineer. 3- I can say this because I'm an engineer- lots of engineers (in fact, many of the best ones) are immature and stubborn. That hurts teams, hurts feelings, and inhibits productivity. Don't underestimate the difficulty in keeping things running smoothly on interpersonal issues.

To the above points, I was a manager for 4 years. My team members said I did a good job. Yet, after sweating in that position for that amount of time, I gladly took a 30% pay cut to be an individual contributor again.

I'm surprised at how passive aggressive some of these answers sound. I imagine many of you have worked some poor managers who weren't very good at their job. That will make you question why they deserve to get paid so much. For the record, as a manager I've had staff members make as much as I have.

I believe a (good) manager gets paid a lot because they make their team more productive, focused, and happy. a good manager will... Increase the productivity and output from the team. She makes sure that each person has the tools and resources to do their job effectively. She ensures that roadblocks are moved out of the way and not a distraction. She mentors the team and helps identify projects that help improve their skills and peaks their interests. She sets a vision the team can rally behind and adjusts that plan and pitch as needed. Shes brings experience and prospective that no one else on the team has had. She hired an all-star team and fires the deadwood. She's the shit umbrella who protects the team from the rest of the company.

Hiring a good manager is hard work. It's even harder to promote within without the right training structure. One of the problems with management is many of us are self taught. Bad managers can often breed more bad managers. But a great manager can be worth every penny.

One hypothesis, admittedly based on a premise I don't believe.

We've been told by a lot of sources that 10x engineers don't exist, and only the team matters [1]. Suppose this is true, or at least suppose the company decision makers believe this. In that case, there is no point paying any engineer more than 2-3X what another one makes - why pay more for the same productivity?

In contrast, management matters a lot. All your engineers might be more or less interchangeable cogs, but the manager is a force multiplier. A good manager might increase the productivity of 20-40 engineers by 25% each - as such, he's as valuable as 5-10 engineers.

(Having worked with engineers both 1/10 and 10x as good as me, I personally do believe that 100x engineers exist. But assuming you don't believe such things are possible, then engineers being wildly underpaid relative to managers is simply people being paid for their marginal productivity.)

[1] e.g. http://www.hanselman.com/blog/TheMythOfTheRockstarProgrammer... https://modelviewculture.com/pieces/hacker-mythologies-and-m... http://leftoblique.net/wp/2014/12/27/on-the-myth-of-the-10x-...

In most companies, business knowledge is key. The more knowledge you have about how the business operates the stronger you are. Beautifully architectured applications are great, but you need to be able to make the right choices for the business, rather than simply complete task from start to finish.

On top of that, managers generally got into that position because they are solid communicators, work well in teams, and have organization skills.

In our company, all managers were engineers.

The answer is pretty simple and has broader implications than an immediate discussion about managers. The answer is people make more money because they have more leverage.

Managers make more because they're seen as having human leverage. Start-ups can make more because they have technology leverage (think about this has changed with the advent of cloud computing) Banks can make more because they have financial leverage. Etc.

Managers are promoted to managers because the higher ups like them, and want to include them in their circle. They have the right face, fit in, agree on similar things etc.

They earn more money for the same reason.

If your are not the sort person, who can surpress your own values to fit in with the right crowd. Its best to just regularly reneogiate your salary.

Humans are humans after all. We run on emotions/friendships/tribes and not pure rationality.(although people like to pretend they do)

Regneogating your salary, is using the market to correct these irrationalities and bad perceptions about where the value is coming from.

Business knowledge comes after being given position where its possible to learn it, not before. If someone wants you as a manager because they like you, they'll find a way to train you.

Also engineering managers are often stuck between a rock and a hard place. Given imposible tasks and deadlines from people above them who don't have a grip on reality, and engineers from below who are saying it just can't be done. Often it is just impossible situations. Its there job to neogiate the team out of these situations.

Its very nice to be a manager when everything's going well. Absolute hell when it isn't.

Possibly because many (most?, nearly all?) engineers are extremely poor at contract negotiation and believe whatever lies HR tells them about how much money is available and how valuable their contribution is.

A possible reason: management career tracks in larger companies are among other things a mechanism for retaining senior engineers; in that sense, the "management" role is overloaded (most companies also need managers intrinsically, to do the management job), and the manager-managers benefit from the premium the company pays the (for lack of better term) vanity-managers.

Granted, I haven't worked for a lot of different companies, and haven't experienced a silicon valley style labor economy. What I've seen leads me to suspect that nobody would want to be a manager, if managers weren't offered more money and social status.

Every case that I've seen where someone got bumped up to management, was right after the birth of a child. Suddenly, their CAD screen doesn't look so green any more. One engineer was lamenting to me his lack of advancement, and I told him that he should become a project manager. His response: "Why should I work that hard? I want my evenings and weekends." I made the jump when my first kid was born.

Management seems easier and more social, but I think it's because the ease and social perks (private offices) are part of the package of incentives to make people want to do it. I was a manager for a few years. It was stressful for me because it was way more political. As an engineer, I could solve problems by innovating. As a manager, I had to solve problems by moving resources from one pot to another, or watching people negotiate over endless minutiae. If a company has a budget, then management is a zero-sum game. That's why it's stressful. Everybody is your competitor.

And the boredom was crushing.

It sort of depends on what you mean by this. If you are asking why someone who manages engineers is making more money than the engineers they manage a couple of things come into play:

- Frequently engineering management plays a double role, both senior engineering roles (guidance, architecture, big design, project/product management etc) and "people" management (hiring, salary negotiations, compliance, etc). It is relatively easy to argue (though not necessarily correct) that someone with more things to be responsible for, "deserve" more compensation.

- Frequently engineering managers are elevated to that role because they either have aptitude, interest, or experience translating engineering feats into business relevance (ie revenue generation or cost reduction). It is relatively easy to argue (though not necessarily correct) that someone who captures more money for the business "deserve" more compensation.

- Compensation is also largely a market transaction. Managers tend to have more accurate information about both market rates and what the business can bear. This serves them in the form of more optimal negotiations, both in relation to the engineers that work for them and with their own compensation negotiations with other management.

The top voted answer on this old programmer's stackexhange question gives some insight:

http://programmers.stackexchange.com/questions/45776/why-do-...

Kind of like asking why those engineers still make +100x more than the workers at the factory in China that manufactures their computers and smartphones.

It's called capitalism and it thrives on inequality. Whoever can be exploited - will be.

Because when a milestone is missed or the product sucks it's the managers ass not the individual engineers.

It's all about responsibility

There are obviously different possible reasons.

One is that the marginal product of a manager might be more than that of an engineer.

Another is that the manager is better at capturing value than are engineers.

These might amount to the same thing if there is a difference between actual marginal product and what is perceived within the company.

It's about power, and money is how you keep the score.

Two scenarios:

1. People want to be managers to have more power/control/influence... Then money is needed to keep the score up

2. They happen to become manager, and in a hierarchical structure (company) power/money is how you enforce order

There's no one answer. Instead, it's a combination of factors that others have touched upon - closeness or influence relative to the decision makers, "force multiplier" effect, good old supply and demand. Instead of reiterating the point, I'm just going to get right in the face of the commenters who think it's unjust that managers tend to make more. I'm just a developer myself, I've never been a manager, but come on, let's not be total a-holes about this.

(1) It's just wrong to measure managers by the same yardstick one would use for individual contributors. Of course people who perceive themselves as the most technically proficient believe that less technically proficient managers should make less, but there's no rational business case for awarding pay on that basis. What managers do and understand might not be as technical, but that doesn't mean it's less important for the bottom line.

(2) You're probably wrong about the technical-profiency thing anyway. Sure, managers might not understand your favorite two-year-old technology as well as you do, but it's highly likely that they know some other still-relevant technologies better than you and have a better "gut feel" for technology overall.

(3) Business sense and general technical judgement are harder to hire for than narrow momentarily-relevant skills. Also, what managers do is often a lot less fun than what developers do. Who wants to spend all day every day in meetings or dealing with budget/personnel issues or balancing long-term development with the fire drill of the day? Thus, even if what managers know were less intrinsically valuable than what developers do, the demand for good managers would still drive up pay.

To flip this on its head, think for a moment about what the world would have to be like in order for managers not to make more (in general - I know there are already plentiful exceptions). Then you would have less technically able managers, making worse decisions, not resolving interpersonal issues, pushing more work onto the team or onto HR. Whee. What fun. Instead of grousing about it, accept it as the way as the world and get on with getting ahead yourself.

Not sure that engineering managers even really make that much more than engineers, at least not at medium or large tech-focused companies. Salary ranges at this level tend to have a pretty large overlap. I've been places where the engineer salary range extended past the manager range. On average, I'd guess managers maybe make 10-20% more. But that's nothing compared to the 10X-100X more that the senior execs and CxOs make. That's where you really have to ask whether it makes sense.

People skills.

A good manager is able to negotiate much more comfortably than your average engineer, and they are able to apply this to their salary negotiations as easily as they can to a feature list.

Another contributing factor is that the upper management is also well versed with people skills, and so they are more likely to get along with, and are more willing to compensate people they get along with better.

The really good ones also act as productivity multipliers for those who they manage, giving them leverage and visibility.

I've had one really fantastic engineering manager (miraculously my first solely programming role, wish I was still there), and I have yet to have another good engineering manager. The degree to which time was spent improving the product under the good manager was phenomenally higher under the good manager than the others. Granted this seems to be rare but a good tech manager can deliver crazy outsized returns on the line developers and also make their days easier.

It turns out we can get numbers for how valuable managers are, and indeed, it is more value than the lower level employees, by a factor of about 1.75. In turns out that the difference in increased productivity is roughly in line with the difference in pay.

http://faculty-gsb.stanford.edu/lazear/personal/PDFs/Bosses....

It makes sense if a manager is managing a big team of for e.g. 10 engineer and a product. But in a startup environment where there are only few engineers and mostly they are capable of self managing.

However in a startup I think there is lot more work apart from the engineering of the product but not all startups' manager makes more money than the engineer.

May be manager make more money, but the placement security preference would be more for an engineer (i guess)

In my experience in major tech companies, at the same levels of experience there is very little disparity between management and engineering salary.

This leads me to believe that this perception is the result of management being more tenured than the population of engineers. This same reason middle aged people make more than those out of school, and that the vast majority of wealth is held by seniors.

Simply because the boss of the manager trusts that one person with implementing their vision and strategy. Yes, you can have individual contributors underneath that are technically providing more value to the company, but they aren't responsible for the success of the team in the way a manager is. Frankly, that is just worth more to bosses and helps them sleep better at night.

Who is more useful, the guy who is capable of doing stuff, or the guy who is capable of talking other guys into doing stuff? Let's face it: Social engineering may not be particularly visionary and idealistic, but making other people do what you want is all you really need to get things done.

pay is aligned to hierarchy in the first approximation. people have a hard time accepting that they are overseeing someone who has a higher pay and the other way around.

At the end of the hierarchy, skill (& experience/age) counts. Engineering is one of the best paid "worker profession", i.e. you are not involved in managing the work of others.

Some jobs can be easily replaced, which usually means they are paid less.

Some jobs require trust by the employer (e.g. manager) and are better paid, because changing jobs would harm the employer.

Also some industries pay more than others, simply because their industry is more profitable than others.

Primarily because the people who decide salaries are themselves managers.

Because they have better, refined stakeholder management skills.

The simplest answer is probably that there are fewer of them and that they tend to be higher up in the org chart, so closer to the money.

Not always true. If you are a decent engineer consulting/contracting in a field like big data, data warehousing, analytics etc you will make far more than any manager short of C level.

If you are talking about normal salary jobs then it is simple. Managers take on risk and responsibilities. Engineers largely don't. If an engineer screws up the damage is largely minimal. If a manager screws up then serious money can be lost.

Everything boils down to demand and supply when talking about price:

Its difficult to find a good manager than a good engineer!

Throughout human history, in all hierarchical work structures, people higher up been remunerated better.

The main reason it is this way is that the organization grows by adding "leaf nodes" at the bottom, as cheaply as possible.

For instance, say you have a business in which you're the only employee, consisting of laying bathroom tiles. You make decent money, but you do this messy work all day long. You want to work less and make even more money. Hmm, what to do? Your options:

- Move to Beverly Hills and be a "tiler to the stars", charging more.

- Get an assistant to work faster.

Usually, the second approach is selected (with the first possibility being kept in mind for the future).

The next step is to let the assistant work independently, while you go to a different site, or work on business activities like advertizing or consulting with customers.

Then, you get multiple such assistants working on multiple sites. Of course, these workers are not nearly as well paid as you are when you do the bathroom, because some of the revenue goes to you (remember your goal: make more money).

The workers are not well paid is justified because all they do is show up to a designated site, and do the work with materials and tools supplied by the company. They accept that if they want more money, they have to become independent, which means doing things like advertizing, consulting with customers and such. Some of them don't even see themselves making such a move.

Okay, so now you have multiple installations going on in parallel and you're not laying tiles yourself so much. You go from site to site during the day, checking on these workers, and from time to time you see they are doing some things wrong and so you teach them the craft. Everyone treats you with fear and respect, and so you think, damn, I want even more money!

To make more money, you expand the organization even more: more active sites at the same time. Now the problem is that there are too many sites. Previously you could visit each site several times a day to supervise work. Then it was just once a day, and now there are too many sites; if you visited them all, then you would spend all day going from site to site.

The solution is to get some middle management: supervisors. Just like you, they are paid more than the individual installers. If they were paid less, why would they do that job, instead of just working as installers? They are experienced installers: they know the craft and can tell if something is not being done right. Yet, they don't make as much as you do, otherwise what would be the point of all this expansion?

So the pattern here is that the bottom-of-the-org-chart installers do not make any more money as the operation expands; in fact they probably make less as the organization grows bigger, though their employment is more stable. They have to work to sustain the overhead of all these additional people.

In other words, an operation expands so that there can be higher levels that make progressively more money.

If you have any salary inversion in the tree, then people will not want to be at that position in the tree. Supervising people is a headache! Why would anyone take less money to manage some people, if he or she could obtain an instant raise just by dropping down one level and joining them?