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CEO behind Japan’s best-performing stock says his secret is raising salaries

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Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#231

Post by lotsofpulp »

ecpottinger wrote: post #219
lotsofpulp wrote: post #59

Earlier quoted context omitted.

> you could see employees that were more productive by a large factor. And you would never be able to pay enough to keep them and still sell at the low prices. They will move on to bigger and better things as soon as they can, and the proof is the astronomical turnover in almost the entire mid and low tier restaurant market. There’s a reason it has the widespread reputation of being the least desirable, dead end jobs…

Sorry, I think some of them are stupid. For example: One reason I said we could increase sales is that repeatedly we suggested putting a menu list further from the order window so people could see and decide what to order before we asked for their order. Management refused to even listen. Often someone would drive up and then spend time reading the menu before deciding what to order. Compare this to my local Dairy Qu…

There may be instances of lack of oversight at certain places, but specifically regarding the simple hypothesis of increasing pay for retail/hospitality/restaurant workers will result in more profit due to retaining better workers is shown not to work by the entire world not doing it.

The other aspects to consider are, are the customers willing to pay the extra marginal cost for the marginal increase in utility, and will objectively, will the cream of the crop stick around for these jobs?

It’s pretty well opined that customer service/retail/restaurant type jobs have the worst quality of life for those working in them. The amount of money needed to offset the quality of life issues at work is simply not possible for most restaurants.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#232

Post by ridaj »

matwood wrote: post #187
nsonha wrote: post #62

Earlier quoted context omitted.

> if engineers in America are ridiculously overpaid, or why do you only compare to Japan and EU? American engineers get paid more than anyone else (except for EU outliers). I make slightly above 100k in Australia, it's a bit tight with the housing situation and cost of living but it's liveable. Cost of living in the US is lower except for maybe healthcare but engineers get companies pay for them anyway. I don't have…

> but I think software engineers are overpaid. I'm curious why you would think this. In some ways software is a trade, but what makes it unique to nearly any other profession is its multiplicative effect. One software engineer can write a program that improves the productivity of thousands or more people. What would you pay the person who invented the lever? Now, what you would the pay the person who invents the leve…

I think the issue there, to continue your analogy, is that some carpenters are busy creating new levers, while others are busy repeating the same carpentry over and over again. Same trade, different aims.

The "multiplicative effect" is easy to translate to economic factors: it's what allows software-based companies to have very high marginal profit. The average net profit margin of a small business in the US is less than 10%, but in scaled, software-centered businesses it's not unusual to be above 30% or 50% due to the zero marginal cost of production.

But for every company like Facebook, Amazon, Oracle, Google etc which understand this and plays to it to shoot for sky-high unit margins, there are N companies like Tata Consultancy, Accenture, Capgemini (or in-house IT departments) which effectively employ software engineers to do non-reusable "glue" tasks where the margin expectation is topping out somewhere between around 10%. These folks cannot pay as much for talent, in part because their stock isn't valued nearly as much, whereas it is a relatively cheap source of compensation for tech companies.

A key to understanding the difference between US and other markets is the 1:N ratio. Software engineers in the Bay Area are gifted with very low ratios, and places where the ratio is higher in my experience have much more depressed software engineering compensation because there are not enough high margin software businesses to drive them.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#233

Post by snovv_crash »

cutemonster wrote: post #199
snovv_crash wrote: post #134

Earlier quoted context omitted.

As it rises it starts to pull in talented people from other fields who wouldn't take the job otherwise (coming from everything from finance to biology). There is a lot more supply-side variability than people realise based on salary differences, and money can paper over a lot of work satisfaction issues, at least temporarily.

Maybe also some clients will be happy to pay more, if they notice the quality is better

Short term it steals competitor's employees, which will be biased towards the higher quality individuals (as in, they should be able to pick and choose). Longer term it brings new people into the field, which might depress skill and aptitude levels, since these are people to who this was not their natural calling.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#234

Post by erosenbe0 »

jogjayr wrote: post #211
novok wrote: post #104

Earlier quoted context omitted.

In canada, most places are not 'bad' areas, but just lower income or higher income. The competitiveness to live a richer area to get better schools is not much of a thing, almost a foreign concept.

> The competitiveness to live a richer area to get better schools is not much of a thing, almost a foreign concept Are you sure about that? A lot of real-estate listings I see here boast about having good schools.

Americans really take the cake when it comes to creating exclusive "close the door behind you" communities which advantage the already relatively wealthy kids to hog the next generation of opportunity.

Just think Silicon Valley.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#235

Post by cutemonster »

p_l wrote: post #57
lupire wrote: post #37

Headline is contradictes by the article. The company replaces layers of contractors with direct employees.

Layers of middlemen The company itself is contracting, they just cut out a huge value-skimping set of middlemen, and the savings involved mean they can simultaneously undercut their competitors while pocketing more money, which is fed into employees' salaries.

Does middlemen here mean middle managers, or layers of contractor agencies?

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#236

Post by cutemonster »

snovv_crash wrote: post #233
cutemonster wrote: post #199

Earlier quoted context omitted.

Maybe also some clients will be happy to pay more, if they notice the quality is better

Short term it steals competitor's employees, which will be biased towards the higher quality individuals (as in, they should be able to pick and choose). Longer term it brings new people into the field, which might depress skill and aptitude levels, since these are people to who this was not their natural calling.

> longer term brings new people into the field

To me, that raises the question of how to find out if someone from another field, will be able to get good at software.

This CEO mentioned they have training programs -- how do they know if someone from, say, biology and with some basic programming skills, is the right person to hire and maybe join a training program

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#238

Post by s17n »

bobthepanda wrote: post #85
s17n wrote: post #76

Earlier quoted context omitted.

This is backwards, the high cost of living in the bay area is a result of the high salaries (and the barriers to expanding the housing supply).

It's not really backwards, it's a cycle that reinforces itself. House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive. This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased produ…

It is true that higher housing costs lead to labor scarcity which leads to higher salaries, and also that employers do cost of living adjustments, but these effects are small compared to the core "companies offer higher salaries to attract the best talent -> housing becomes more expensive" driver.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#239

Post by bobthepanda »

s17n wrote: post #238
bobthepanda wrote: post #85

Earlier quoted context omitted.

It's not really backwards, it's a cycle that reinforces itself. House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive. This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased produ…

It is true that higher housing costs lead to labor scarcity which leads to higher salaries, and also that employers do cost of living adjustments, but these effects are small compared to the core "companies offer higher salaries to attract the best talent -> housing becomes more expensive" driver.

And housing factors in offering the higher salaries to attract the best talent. It takes a lot of money to eventually buy property in the Bay Area and if you manage to apply to companies there unaware of that fact you probably literally live under a rock.

Re: CEO behind Japan’s best-performing stock says his secret is raising salaries

#240

Post by bobthepanda »

imtringued wrote: post #155
bobthepanda wrote: post #85

Earlier quoted context omitted.

It's not really backwards, it's a cycle that reinforces itself. House expensive -> salaries jump -> people have more money to pay for house -> house becomes more expensive. This is like arguing about the chicken or the egg. More housing supply would help to a point but it would take an order of magnitude change to make a dent in the current self-reinforcing cycle, and probably would need that level of increased produ…

You got it completely backwards. The maximum possible salary doesn't change because of more expensive housing, only your ability to negotiate for a salary rise does. Therefore expensive housing will let you get the maximum possible salary at most. There is a self reinforcing cycle but it has nothing to do with housing. You're saying that expensive housing is the only factor in salaries which is completely wrong. The…

It doesn't really matters that all salaries don't jump the same way. It matters that someone whose salary jumped can still pay more for a house.

I've never claimed that rent control works. But house prices would not keep rising if no one had the salary to afford the mortgage. People still do, they're just all concentrated in the one profession, and due to bumper results they can demand more.

You probably couldn't negotiate SV level salaries in, say, Tulsa, and pretty much every large company I have heard of expanding remote work is doing so with geographically adjusted pay downwards from SV. (I never really got the angle of people who thought they would get to have their cake and eat it too with SV-level salary and dirt-cheap COL; employers aren't blind.)

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