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Rethinking Levels, Promotions and Salaries

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Re: Rethinking Levels, Promotions and Salaries

#111

Post by robertlagrant »

This is quite interesting, and I'm curious to see how it goes.

I do think the definition of "fairness" is off, though:

> Because using years of relevant experience is transparent and repeatable, both for leveling and promotions, it carries a strong measure of fairness

Or more precisely, there are lots of ways to define "fair". And in this case fair is defined as "more years in post means more money, whatever your job is".

This is not general fairness (perhaps nothing is) but it rewards loyalty. Other types of fairness (which actually their sales teams get) is "create more value, get paid more". I.e. kicking back for 10 years in a role that's fairly straightforward and hard to measure might reward someone as much as working incredibly hard and transforming the business for 10 years. That could well be considered unfair.

I think rather than "fair" it's just "easy to measure", which accounts for the lack of need for promotion recommendations. I've never known them take very long, but yes, a length of tenure calculation will always be quicker.

I would say also that I am curious as to how competitive this can possibly be for attracting talent. Desirable employees who need incentive to move to a company will generally get more money, as otherwise they won't move. Additionally retention might be an issue, as the same principles apply; market forces will mean that other companies that pay according to what an employee will agree to work for will have extra cash to wave at daily.co employees.

Finally, I suppose that in the short term, powered by VC money, this is likely to work, and it's as good a way to spend VC money as any. I don't think we should call it a revolutionary way of working, as having a pit of money to prop up an idea does not make the idea sustainable for other companies. It might remain automatically workable for years to come if the company raises more money without having to survive on its own merits.

Re: Rethinking Levels, Promotions and Salaries

#112

Post by nerdponx »

humanrebar wrote: post #74
angarg12 wrote: post #50

I worked for a very old fashioned company in Germany that used a similar system to pay employees. After about a year I became the lead of my team. But since some of my colleagues had been in the company about 10 years, they were getting paid more than me. Frustrated, I left for a better (and better paying) job. I believe these systems produce a "dead sea effect". High performer will leave, being able to get better de…

If you felt you were underpaid, leaving is fair. I don't really understand the requirement that all bosses are paid more than those they supervise, though. I mean, emotionally I can understand feeling that way. But I don't think it's a rule of nature or something. For instance, coaches often make less than their star players. Directors and producers often make less than star actors. Hospital directors seem to make le…

I think this makes a lot of sense. Management is not "better", it is simply "different".

And in terms of actual value delivered to the business, I doubt that a low/mid-level manager delivers significantly more than an experienced and productive individual contributor.

Organizations need both good managers and good individual contributors. Clearly managers of technical contributors need enough technical experience to make sound management decisions. But that doesn't seem like a good reason to constantly promote people upwards, nor does it seem like a reason to always pay managers more than ICs by default.

However I think in some cases managers end up subject to extra risk if a project goes bad, so they are probably entitled to some increased "hazard pay" for that. (The risk/responsibility structure might be inverted at some toxic dysfunctional organizations, but that's beside the point.)

Re: Rethinking Levels, Promotions and Salaries

#114

Post by loudmax »

benreesman wrote: post #42

This is sort of well-articulated and someone thought about it a lot. The salaries seem fine, as long as there’s 1MM in liquid equity to go with the L7 one like Google does. But it doesn’t seem to address the real issue (to which I also don’t have a final answer): the jock/nerd thing is still playing out. If, as I believe is mostly true, A16 is pretty on the money with the software eats the world thing: hackers “shoul…

It's not just sales, it's figuring what to sell, and when to pivot. It's all well to have a solid tech stack but the market changes and companies need to see changes coming and adapt. Having the most optimized compiler isn't going to help if you're trying to sell something nobody wants.

Even tech companies don't just depend on elite programmers plus an exceptional sales guy. You need good design, good customer service, good marketing, and so on. Yes, there's a lot of bullshit in those fields (not that programming is free of it), but there's real value there too when executed correctly.

Re: Rethinking Levels, Promotions and Salaries

#115

Post by bl4ckm0r3 »

It really feels like the objective for growth is just to wait, and not based on actual skills. Not sure if this is a good metric tbh, years of experience have a lot to do with type of challenges, and type of challenges have a lot to do with environment and architectures. you can be working 10 years on a small flower shop or building a huge distributed system that can handle crazy traffic or have really complex business logic. The worst thing to me is that it encourages engineers to focus on less risky challenges since the complexity of the work does not contribute to experience.

Re: Rethinking Levels, Promotions and Salaries

#116

Post by nerdponx »

3pt14159 wrote: post #78
humanrebar wrote: post #74

Earlier quoted context omitted.

If you felt you were underpaid, leaving is fair. I don't really understand the requirement that all bosses are paid more than those they supervise, though. I mean, emotionally I can understand feeling that way. But I don't think it's a rule of nature or something. For instance, coaches often make less than their star players. Directors and producers often make less than star actors. Hospital directors seem to make le…

My boss doesn't know how much I'm paid. I like it that way. He communicates how he feels I'm doing to the people that need to know and it's working out ok.

This sounds like an unusual arrangement. Who actually determines your pay?

Re: Rethinking Levels, Promotions and Salaries

#117

Post by robertlagrant »

deepsun wrote: post #29
parkingrift wrote: post #18

Strong disagree with basing salary on years of experience. I see almost no correlation between output, skill, and years of experience. I actually consider this an anti-pattern that actively encourages coasting.

I've yet to see anything better than years-of-experience (or years-in-company). I've worked in both FAANG and startups plenty, and personally I've seen worse outcomes from "impact-driven" OKRs, nepotism, team-surfing, than from coasting. Coasting can be fixed by firing or layoffs (which I consider a healthy lifecycle for any company). "Coasters" at least know that what they do today they might have to support for N y…

> Coasting can be fixed by firing or layoffs

Based on what? You've just invalidated all the tools one would use to evaluate performance.

Re: Rethinking Levels, Promotions and Salaries

#118

Post by vikingerik »

angarg12 wrote: post #50

I worked for a very old fashioned company in Germany that used a similar system to pay employees. After about a year I became the lead of my team. But since some of my colleagues had been in the company about 10 years, they were getting paid more than me. Frustrated, I left for a better (and better paying) job. I believe these systems produce a "dead sea effect". High performer will leave, being able to get better de…

"Evaporative cooling" is another term for the effect. Hot talent leaves, cold talent stays, diminishing your total talent-temperature.

Re: Rethinking Levels, Promotions and Salaries

#119

Post by bluGill »

tcbawo wrote: post #73
deepsun wrote: post #29

Earlier quoted context omitted.

I've yet to see anything better than years-of-experience (or years-in-company). I've worked in both FAANG and startups plenty, and personally I've seen worse outcomes from "impact-driven" OKRs, nepotism, team-surfing, than from coasting. Coasting can be fixed by firing or layoffs (which I consider a healthy lifecycle for any company). "Coasters" at least know that what they do today they might have to support for N y…

A part of me wonders whether certain organizations tolerate "coasters" as a talent reserve of sorts, expected to engage when things get busy or new/interesting challenges emerge. For whatever reason, many businesses fire underperformers, promote overachievers but treat the 80% in the middle very generically. Why work to be a top 20% performer when you are treated the same as the bottom 20% performer? Coasting seems l…

Your best employees should always be working on the least important projects. Thus they will seem like coasters.

By making the best be on unimportant projects you get the following benefits:

Nobody worries about interrupting them if they have a problem - who cares if you make the unimportant project take more time.

Your second best people get to experience leading important projects and thus you grow them into the best people (sometimes the previous best people may need to take a turn leading, other times the third best get promoted). See above about asking questions - the best people can mentor them as needed - again nobody cares if it makes their project late.

Unimportant projects sometimes turn into next years most important project - and your best people have been creating a good base to throw lots of people at.

When sales/marketing discovers an sudden opportunity that needs people now - you have experienced engineers to take it over without killing progress on what was the most important project. (be careful about this one - if they only rarely have such requests it is fine, but if such requests take up too much time you probably should either have a dedicated department of engineers for this - with a real budget and management to ensure the requests are really valuable enough to be worth the time - or you need to tell sales not to make such promises)

Re: Rethinking Levels, Promotions and Salaries

#120

Post by dkarl »

odiroot wrote: post #90
angarg12 wrote: post #50

I worked for a very old fashioned company in Germany that used a similar system to pay employees. After about a year I became the lead of my team. But since some of my colleagues had been in the company about 10 years, they were getting paid more than me. Frustrated, I left for a better (and better paying) job. I believe these systems produce a "dead sea effect". High performer will leave, being able to get better de…

Experienced a very similar situation in Berlin. I assume it may actually be a norm. Loyalty to the company > experience/skills.

That's very interesting, and a contrary norm to many big companies in the U.S. Companies here are happy to pay whatever it takes to fill an empty position, but they often have limits on pay raises that prevent loyal employees from getting fair pay as they gain skills and rise to higher levels of responsibility in the company. Many people enjoy the familiarity and relationships at their job and would rather accept being underpaid than be forced to take a new job every couple of years, so the company loses a few people but gets to keep the rest at below market rate. Loyalty is effectively punished, and job-hopping is how you keep your salary current with the market and your experience.

I know several people who have been affected by this, but the most dramatic was a software engineer at AT&T who had started in an entry-level position in network operations. He had received the maximum allowed raise every year, but he was being paid less than 70% of what other software engineers at the same level were making. The request to make a one-time adjustment to his salary had to be escalated to an executive in another office hundreds of miles away (the VPs in our office did not have enough authority) and took months to process. It was not routine at all. It involved a physical sheet of paper with the executive's signature on it.

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