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Fellow Engineers: This is where your money comes from

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Re: Fellow Engineers: This is where your money comes from

#51

Post by alexandercrohde »

If you pretend simple economics is best representation of reality then this blog post is exactly on point, in a perfectly efficient market the value you earn for others is proportional to the profit you get in return and both are proportional to the good you do in the world.

Simple economics are not the best representation of reality.

For many pride in one's work can matter more than pay, the engineering profession attracts some of the most passionate do-gooders (Gates to name a famous example) who care about the world improving. They aren't usually recognized for it because they try to improve the world by fixing the systems rather than flying to a 3rd world country and building a house.

Additionally, in reality but not in simple economics, there is a huge gap in value-generated for the company and perceived-value-generated for the company. In fact, there can be situations where the two are negatively correlated and the engineer knows best.

Finally let's remember that short-term value to the company isn't the end-all-be-all. Did you know Zynga had some individual users who spent over 100 grand on virtual items? Great companies often arise by ignoring the short-term-profit and focusing on delivering a great product with a great experience, even if the market for it doesn't exist yet (i.e. what google did)

Re: Fellow Engineers: This is where your money comes from

#52

Post by gaius »

WalterBright wrote: post #44
gaius wrote: post #30

Earlier quoted context omitted.

so employees get 0% of the profits in salary. Bonuses, profit sharing and raises are all things that exist. So while technically correct, you are actually completely wrong.

All the money the company disburses, whether it be bonuses, profit sharing, or salary, all comes from the same checking account. Trying to infer an injustice by the what the check is called has no point. The purpose of accounting is to organize and understand where the money comes from and where it is going and where it is allocated, and to compute the tribute owed to the government. But a check written to someone is…

Trying to infer an injustice by the what the check is called has no point.

Sure it does. Ever seen a contract that promises a bonus of “up to” some percentage? That should be read as “no matter how well we do your upside is capped and management trouser the rest”. It's a calculated, deliberate strategy to exploit naivety.

Re: Fellow Engineers: This is where your money comes from

#53

Post by ajmurmann »

throwawayjava wrote: post #7

> This is why I struggle with scenarios where people discuss pay and work without considering value. Counter-point: firms exist. If I'm the one figuring out how to create value, why the hell are the C suite, middle managers, and investors getting 99% of the profits? So no, in the context of a large firm, it's definitely NOT an engineer's job to figure out how their skills align with market demand. And that's the whol…

Unless you want to be micromanaged you need to keep the big picture in mind and think about how your work is providing value and how you can help maximize that.

Re: Fellow Engineers: This is where your money comes from

#54

Post by WalterBright »

throwawayjava wrote: post #39
WalterBright wrote: post #38

Earlier quoted context omitted.

The money paid to employees is deducted from the profits (or more precisely, profits are what is left after expenses and labor costs are paid). So your salary is your share of the profits in any pragmatic sense. This isn't MBA level stuff, any basic accounting course will explain it. In fact, I recommend anyone who cares about this sort of thing to learn basic accounting principles - it is simple, and highly useful k…

> So your salary is your share of the profits in any pragmatic sense. Okay, so I'm getting a tiny fraction compared to everyone else. Again, this is a fairly pedantic tangent and no matter how we define these things, my observation seems to be accurate. Again, this sub-thread about the definition of profit is both tangential and unrelated to my original point. I think the standard accounting definition is pretty usel…

> that in the context of a large firm, the author is wrong.

An accountant serves two roles in a company. One is to produce a correct set of books for the investors and the tax man. The other is to determine the value to the business of things the business is spending money on.

I.e. to determine the value produced by the engineers.

They may get it wrong, as at some level it is indeterminate, but the more correct they calculate it, the more efficiently and effectively the business can allocate its resources.

This calculated value determines, for example, what they're willing to offer you in salary. If they overvalue you, you're likely to get laid off, or more likely, no raises. If they undervalue you, they're likely to give you a raise to keep you from leaving.

In my experience, individual engineers tend to have a large disconnect in their opinions on what value they deliver vs reality. If you believe your compensation is way under your opinion of your contribution, it is worth taking a good hard look at it, and deciding if you are better off getting another job.

Re: Fellow Engineers: This is where your money comes from

#55

Post by WalterBright »

WalterBright wrote: post #54
throwawayjava wrote: post #39

Earlier quoted context omitted.

> So your salary is your share of the profits in any pragmatic sense. Okay, so I'm getting a tiny fraction compared to everyone else. Again, this is a fairly pedantic tangent and no matter how we define these things, my observation seems to be accurate. Again, this sub-thread about the definition of profit is both tangential and unrelated to my original point. I think the standard accounting definition is pretty usel…

> that in the context of a large firm, the author is wrong. An accountant serves two roles in a company. One is to produce a correct set of books for the investors and the tax man. The other is to determine the value to the business of things the business is spending money on. I.e. to determine the value produced by the engineers. They may get it wrong, as at some level it is indeterminate, but the more correct they…

P.S. if it isn't obvious, companies who tend to be way off in determining the value of their engineers tend to go out of business.

Re: Fellow Engineers: This is where your money comes from

#56

Post by jondubois »

bitL wrote: post #9

Real-world: - you increase value; your bosses team up with each other and claim the credit; you might even get booed for some minor deficiencies whereas they will be boasting about their achievements - you are generous and do non-AGPL based open-source; parasites are waiting in the open, incorporate your code to their commercial offering, never paying you anything; your bonus will be rude complaints about bugs in you…

Yes, I don't like how some people try to rationalize the circus that really goes on. In reality, for most people, it's chaos, it's random and it doesn't make any sense... For a select few people everything just happens to work out; then these 'survivors' feel compelled to lecture everyone else about how everything works... In reality, these 'survivors' know nothing about how things really work because their personal experience is so far from the norm that it is not applicable to anyone else except themselves and other equally biased survivors.

Re: Fellow Engineers: This is where your money comes from

#57

Post by WalterBright »

gaius wrote: post #52
WalterBright wrote: post #44

Earlier quoted context omitted.

All the money the company disburses, whether it be bonuses, profit sharing, or salary, all comes from the same checking account. Trying to infer an injustice by the what the check is called has no point. The purpose of accounting is to organize and understand where the money comes from and where it is going and where it is allocated, and to compute the tribute owed to the government. But a check written to someone is…

Trying to infer an injustice by the what the check is called has no point. Sure it does. Ever seen a contract that promises a bonus of “up to” some percentage? That should be read as “no matter how well we do your upside is capped and management trouser the rest”. It's a calculated, deliberate strategy to exploit naivety.

Again, it's the amount on the check that matters, not what the check is called.

Seriously, if you believe you're delivering far more value than what your checks represent, it's time to have a chat with the boss and go over it. If there's still no agreement, find another job.

Re: Fellow Engineers: This is where your money comes from

#58

Post by [deleted] »

bitL wrote: post #9

Real-world: - you increase value; your bosses team up with each other and claim the credit; you might even get booed for some minor deficiencies whereas they will be boasting about their achievements - you are generous and do non-AGPL based open-source; parasites are waiting in the open, incorporate your code to their commercial offering, never paying you anything; your bonus will be rude complaints about bugs in you…

[deleted]

Re: Fellow Engineers: This is where your money comes from

#59

Post by zzzcpan »

WalterBright wrote: post #54
throwawayjava wrote: post #39

Earlier quoted context omitted.

> So your salary is your share of the profits in any pragmatic sense. Okay, so I'm getting a tiny fraction compared to everyone else. Again, this is a fairly pedantic tangent and no matter how we define these things, my observation seems to be accurate. Again, this sub-thread about the definition of profit is both tangential and unrelated to my original point. I think the standard accounting definition is pretty usel…

> that in the context of a large firm, the author is wrong. An accountant serves two roles in a company. One is to produce a correct set of books for the investors and the tax man. The other is to determine the value to the business of things the business is spending money on. I.e. to determine the value produced by the engineers. They may get it wrong, as at some level it is indeterminate, but the more correct they…

> This calculated value determines, for example, what they're willing to offer you in salary.

It doesn't. This is mostly a binary thing of whether the company can afford to pay an employee a bit above his market value or not, if we are talking about engineers of course. Such employee cannot actually get paid proportionally to the value he brings to the company.

Re: Fellow Engineers: This is where your money comes from

#60

Post by jeffdavis »

"All you can contribute is what your own two hands can code."

The value of which has no obvious bound. The failure rate of software projects is huge and each failure can easily cost millions of dollars, or much more if it amounts to a product failure or business failure.

A single engineer's technical choices can easily make or break a project. It's hard to tell later which were the crucial choices, though.

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