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Compensation as a Reflection of Values

oxide.computer

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Re: Compensation as a Reflection of Values

#11

Post by fblp »

This company looks to be pre-revenue and raised a $20mil seed in late 2019. Although I like the ideal of everyone being valued the same - this may be easier to do when the company has plenty of VC cash and just needs to make cool stuff. Over time, people who are more committed and more experienced will emerge.

Are the founders going to get the same pay as the new admin hire in year 4 when there's only 1 year's runway left?

Who's going to leave first - your junior sales hire on 170k, or the sales hire that has been with the company 4 years, has a book of business that generates 5x more revenue (that is now helping pay for this salary policy) and has only received 5k raises each year?

Re: Compensation as a Reflection of Values

#12

Post by cestith »

darth_avocado wrote: post #3

Isn't this like, socialism? Everyone gets paid the same regardless of what they bring to the table? Like union jobs.

Socialism would be more like every employee getting the same share of ownership of the company as every other employee.

These folks are explicitly looking for mid to late career, highly skilled people. Those they don't hire they're not arguing need to be paid the same. I'm pretty sure they don't have a pool of receptionists and custodial staff making the same as the founders. Those positions, if they exist, are likely done by temps or contractors.

When they mention that the pay may not stay uniform, they might be talking about creating junior positions and operational positions like technical support at a lower rung, even if the ladder stays to very few rungs.

Re: Compensation as a Reflection of Values

#13

Post by acegopher »

vecplane wrote: post #10
smasher164 wrote: post #5

I really want to see this model scale somehow. I've spoken with friends about this model, and it's hard for them to get past the idea of compensation as a proxy for value. The discussion eventually devolves into - X type of employee is more valuable than Y type of employee, therefore they should be paid more. - There is no mechanism or incentive for growth (a.k.a the career ladder argument).

If an employee's impact is more valuable, why shouldn't that employee demand to be paid more? If a job or position is less valuable, why shouldn't that position be paid less?

How do you measure impact?

Re: Compensation as a Reflection of Values

#15

Post by smasher164 »

vecplane wrote: post #10
smasher164 wrote: post #5

I really want to see this model scale somehow. I've spoken with friends about this model, and it's hard for them to get past the idea of compensation as a proxy for value. The discussion eventually devolves into - X type of employee is more valuable than Y type of employee, therefore they should be paid more. - There is no mechanism or incentive for growth (a.k.a the career ladder argument).

If an employee's impact is more valuable, why shouldn't that employee demand to be paid more? If a job or position is less valuable, why shouldn't that position be paid less?

The question could be flipped around as "why should they be paid more/less?"

The goal is to treat the salary as a necessary (evil?) for "what you need to feed your family, buy a house, etc..." and not as the primary motive for work.

An employee who makes a valuable impact does so because they want to see the company/product succeed.

Re: Compensation as a Reflection of Values

#16

Post by steveklabnik »

fblp wrote: post #11

This company looks to be pre-revenue and raised a $20mil seed in late 2019. Although I like the ideal of everyone being valued the same - this may be easier to do when the company has plenty of VC cash and just needs to make cool stuff. Over time, people who are more committed and more experienced will emerge. Are the founders going to get the same pay as the new admin hire in year 4 when there's only 1 year's runway…

We are pre-revenue, and the sales people example you mention is explicitly in the blog post as an example of how we may end up changing things eventually as time goes on. (you can control-f for "sales")

(I wrote this comment before you edited a few times, but I think it still works even with the extra you added)

Re: Compensation as a Reflection of Values

#17

Post by _e21c »

It would be nice to have a bit more detail about the equity part of the total compensation, since it does seem like, from reading the paragraph describing how equity fits into this, that the amount of equity granted to employees is not equal.

Re: Compensation as a Reflection of Values

#19

Post by Jtsummers »

smasher164 wrote: post #15
vecplane wrote: post #10

Earlier quoted context omitted.

If an employee's impact is more valuable, why shouldn't that employee demand to be paid more? If a job or position is less valuable, why shouldn't that position be paid less?

The question could be flipped around as "why should they be paid more/less?" The goal is to treat the salary as a necessary (evil?) for "what you need to feed your family, buy a house, etc..." and not as the primary motive for work. An employee who makes a valuable impact does so because they want to see the company/product succeed.

> An employee who makes a valuable impact does so because they want to see the company/product succeed.

With most companies, this is a comical assertion only applicable to 20-somethings who haven't realized that their employer will betray their trust one day. At least in the US.

Until companies start rewarding longevity and favoring employees over executive bonuses when budget crises occur, employees will also be mercenary and seek out better compensation if they have the opportunity. US companies, by and large, will slash staffing or employee bonuses before cutting management or executive positions and/or bonuses during difficult times, even when they have the capital to avoid those cuts if the so-called leaders would be willing to make a personal sacrifice.

Now in the case of the posted article, the compensation is already good. So that changes the calculus ($180k/year may not be the best SV salary out there, but it's very good across most of the US, even for developers). And by leveling the pay at an already good salary it can further change the motivation of employees. But try fixing the salaries at, say, the median household income of central GA (depending on which county somewhere between $30k and $45k). Sure, the boss can say, "I'm suffering with you." But the employee is still going to seek out better pay.

Re: Compensation as a Reflection of Values

#20

Post by yowlingcat »

darth_avocado wrote: post #3

Isn't this like, socialism? Everyone gets paid the same regardless of what they bring to the table? Like union jobs.

Seems a bit more like collectivism to me. Remember, everyone is choosing to and agreeing to be paid the same by choosing to work at this firm. If they disagreed, they'd be voting with their feet.

Socialism is a society level compact that cannot be unwound the same way if at all.

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