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The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

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Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#31

Post by KON_Air »

dpandey wrote: post #15

Small perks like free lunches, gym membership or a massage every month are huge in making employees happy. We're a seed funded company and provide free lunches to our employees. We also reimburse up to 100$ a month for fitness/gym memberships. Some of my friends working in large organizations don't get these perks, and point out that they're wasteful of a company that is cash flow negative and trying to conserve capi…

It really sounds like something between modernified Fordism and in-setting cyberpunk horror story.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#33

Post by zhemao »

pascalxus wrote: post #18

What? They quit the company because they no longer got free sodas? I'd rather have an extra 300$ of salary per year, than free cans of Sugar all year. And, if the best developers have so much bargaining power as to leave, just because of sodas, why aren't they leaving toxic work places like Amazon in droves? Other places are cutting cost in far more profound ways: laptops and computer equipment, etc.

Did you read to the end of the article?

> The engineers focused on building product never noticed when the company had grown into something different than what they first joined. The sodas were just the wake-up call.

As for why engineers aren't leaving Amazon in droves, Amazon actually has pretty high turnover. The average employment term for engineers is 18 months. So engineers are leaving, but there are more engineers replacing them. Newly graduated engineers join big name tech companies like Amazon, Google, and Facebook to boost their resumes before going on to do other things.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#34

Post by kevinstubbs »

anthony-james wrote: post #19

As an accountant, I feel like employees are severely underpaid in highly-skilled markets (like tech, not accounting), and I think that companies don't actually capture the true cost of a single full time employee. Most see a salary, benefits, fringe costs (like hiring HR and finance teams), lunches, etc. Some of the better firms add in the cost of hiring employees with intangibles, like communication, poise, and prof…

I see what you're saying, but if everybody is getting paid at the breakeven, or close to breakeven point, the company is going to be starved of capital it needs to grow, take bets, weather a bad sales cycle, etc. Also, how can a company give bonuses or raises to employees when all employees are already being paid what the value they are generating for the company is? You can play with how short of the breakeven point (or marginal benefit as you call it) the company pays at, but the closer you are, the less breathing room there is for the company.

Secondly, the salary of an employee isn't the entire cost to the employer. I've seen some different ranges, but a random Boston Business Journal article [0] cited the total cost as 2.7x base salary. A CNN Money article cites 1.18x to 1.26x [1]. It's obviously really different on a case-by-case basis, but whatever that multiplier is has to be taken into account.

Lastly, for many companies, engineers are worth far more than 150% of their salary as value to the company, on average [2]. Apple makes 1.87 million per employee, Microsoft at 732k, IBM at 244k. These are obviously huge tech giants, but they are employing quite a lot of the highly skilled employees that you think are being underpaid. I'm not interpreting your comment to mean that your idea should be adopted for everybody in every situation, but certainly in a lot of (most?) places it can't work. Many tech workers are not paid what their true value to their organizations are, but I'm not sure that's a problem in of itself.

[0]: http://web.mit.edu/e-club/hadzima/how-much-does-an-employee-...

[1]: http://money.cnn.com/2013/02/28/smallbusiness/salary-benefit...

[2]: http://www.businessinsider.com/see-how-much-tech-giants-like...

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#35

Post by zhemao »

dpandey wrote: post #27
anthony-james wrote: post #19

As an accountant, I feel like employees are severely underpaid in highly-skilled markets (like tech, not accounting), and I think that companies don't actually capture the true cost of a single full time employee. Most see a salary, benefits, fringe costs (like hiring HR and finance teams), lunches, etc. Some of the better firms add in the cost of hiring employees with intangibles, like communication, poise, and prof…

I don't think it was 10K per employee (that'd be a ridiculous amount of soda). It was 10K total.

I thought it would be fun to do the math on this one. A 12-pack of coca cola cans is $5.00 USD. So 10K would buy 24K cans of coca cola. If that was their yearly soda budget, it would be 66 cans per day. So yeah, obviously an absurd amount for a single person to be consuming.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#36

Post by dragonwriter »

anthony-james wrote: post #19

As an accountant, I feel like employees are severely underpaid in highly-skilled markets (like tech, not accounting), and I think that companies don't actually capture the true cost of a single full time employee. Most see a salary, benefits, fringe costs (like hiring HR and finance teams), lunches, etc. Some of the better firms add in the cost of hiring employees with intangibles, like communication, poise, and prof…

> If you're paying an engineer $100k to add 150k worth of value to your product, the true value of their work is $300k

If you pay engineers $300K for every $150K in value they add to your product, your cost will exceed value and will accelerate as you add more engineers. It's therefore eminently clear that there is no meaningful sense in which the true value of an engineer's work adding $150K to your product value is $300K. (It's $150K less the necessary support costs that allowing them to work imposes on the company.)

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#37

Post by ChuckMcM »

dpandey wrote: post #15

Small perks like free lunches, gym membership or a massage every month are huge in making employees happy. We're a seed funded company and provide free lunches to our employees. We also reimburse up to 100$ a month for fitness/gym memberships. Some of my friends working in large organizations don't get these perks, and point out that they're wasteful of a company that is cash flow negative and trying to conserve capi…

I tend to agree with this perspective but I don't think anyone has managed to actually create an experiment to study it. (perhaps if two startups in the same space had diametrically opposed benefits you could use their market share or productivity as a comparison metric).

There is also something tribal/instinctual about sharing food. Buying lunch two or three times a week for the team will bond them better paying them cash. And a well bonded team is a higher performance team. That you can measure with your sprint planning. The downside is that it is disproportionately impactful when you take food away. When Crawford Beverage (HR VP at Sun) discontinued the company beer bash (and it was just popcorn, chips, maybe some vegetables with ranch dressing and beer, not even a lot of food) it permanently scarred morale.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#38

Post by anthony-james »

dragonwriter wrote: post #36
anthony-james wrote: post #19

As an accountant, I feel like employees are severely underpaid in highly-skilled markets (like tech, not accounting), and I think that companies don't actually capture the true cost of a single full time employee. Most see a salary, benefits, fringe costs (like hiring HR and finance teams), lunches, etc. Some of the better firms add in the cost of hiring employees with intangibles, like communication, poise, and prof…

> If you're paying an engineer $100k to add 150k worth of value to your product, the true value of their work is $300k If you pay engineers $300K for every $150K in value they add to your product, your cost will exceed value and will accelerate as you add more engineers. It's therefore eminently clear that there is no meaningful sense in which the true value of an engineer's work adding $150K to your product value is…

The true value of the employee to an organization in a non-monopoly industry is 300k, in this example, because of the opportunity cost of the employee (assuming they could provide the same value at other firms).

The true value of the employee ==/== the total compensation of the employee. As I said above, the total compensation would be as close to $150k as possible - because at $149,999.99 the firm still makes a profit (of $.01) and gets product features shipped.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#39

Post by davidw »

dpandey wrote: post #15

Small perks like free lunches, gym membership or a massage every month are huge in making employees happy. We're a seed funded company and provide free lunches to our employees. We also reimburse up to 100$ a month for fitness/gym memberships. Some of my friends working in large organizations don't get these perks, and point out that they're wasteful of a company that is cash flow negative and trying to conserve capi…

> the company genuinely cares about them

They don't though, in most cases. All that stuff is just window dressing. I haven't thought about it a lot, but genuinely caring might mean not firing someone going through a rough patch, when their productivity is pretty bad.

Re: The Elves Leave Middle Earth – Sodas Are No Longer Free (2009)

#40

Post by davidw »

kylec wrote: post #9
mcguire wrote: post #8

" It never ceases to amaze me how many startups make the mistake of killing off the free drinks. " (One of the comments on the page.) But wait a minute. Killing off the free drinks is just the signpost. The change is primarily in the size and the culture of the company itself. Charging for sodas might be the first, but it isn't the biggest change that the company is going to, and going to have to, make as it grows. D…

I would be shocked if Amazon, Facebook, and Google don't still give away free sodas.

Or perhaps in the case of Google, something a bit healthier and more expensive than sodas? Those things are pretty bad for you.
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