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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

#71

Post by jacques_chester »

ACow_Adonis wrote: post #37
bitL wrote: post #14

Earlier quoted context omitted.

I worked for the companies considered "the best" in our industry with Glassdoor rating >4.5 at various stages of their lifecycle. This was happening everywhere, with singular pockets of progressive parts of company that were immune to that. At worse companies you can directly observe sexual or financial relations between managers and subordinates and resulting quick path to success as well, demoralizing the rest. Tec…

Glassdoor is fascinating for all the wrong reasons. I've now worked in charity/community, private sector, and government, for big, small and medium. During my last switch (from private back to government), i noticed what I'll call the "reverse glass door" effect while browsing their profiles. It was weak but it was there. That is to say, if i had to take all the employers, consultancies and corporations I've had to d…

I think it'd be an example of Campbell's Law (or the closely related Goodhart's Law).

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

#72

Post by WalterBright »

throwawayjava wrote: post #49
WalterBright wrote: post #48

Earlier quoted context omitted.

> Other fields use the words profit, not just accountants. Sure, but we're talking about accounting here when discussing business profits. People are free to make up their own definitions of things, but that makes sensible discussion impossible.

It really doesn't. The majority of commenters here understood my original meaning, and this entire thread about the definition of profit isn't even relevant to the point I was actually making. Being so fickle about definitions that you miss the broader message, however, does make sensible discussion impossible.

Let me try another way. P = profits, R = revenue, S = salary, E = expenses:

    P = R - S - E
Every dollar you get in salary is a 1:1 drop in profits. Any bonus B you get,

    P = R - (S + B) - E
is the same. You might expect from this, then, that if you're offered a S+B package, the S would be lower than what you'd get with a pure S offer, by the expected amount of B. And you'd be right. I've been on both sides of the negotiating table, and this is how it works.

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

#73

Post by jacques_chester »

WalterBright wrote: post #38
throwawayjava wrote: post #26

Earlier quoted context omitted.

Sorry, but I think that this view is both obviously wrong and actively harmful. It's an example of where going with textbook definitions actually obfuscates reality. Highly compensated managers are taking a share of profit, often quite literally (look at how VP and above positions are compensated). But always indirectly -- you can't tell me a 7-8 figure salary "isn't a share of profit". That's obvious BS. And if my o…

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…

There are multiple steps in the determination of profit ("earnings"), which I think is the cause of the confusion.

Folk tend to fixate on gross profit, because that's the pointy end of their direct market relationships. I buy a banana and it has an x% markup over the price paid to the distributor. That percentage may be quite high and if I'm aware of it I may think someone is taking the piss.

But of course gross profit is just the beginning: you need to deduct SG&A (which is where the senior managers live), R&D (the engineers) and other bits and bobs before arriving at EBIT.

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

#74

Post by lifeisstillgood »

This smells like a straw man argument. Most of us don't have pie in the sky ideals about perfect codebases. we have practical, hard won expectations of a work-person like codebase and we want to build to that standard - not some higher perfection ideal. And being prevented from having good engineering by "get it out the door no matter what" is frustrating because 99.9% of the time that leads to crap service, overruns, and more crap work on top.

the exceptions like say "move fast and break things" are ... exceptions not the rule. your company is not a facebook like special snowflake and using the snowflake argument to drive poor engineering decisions just makes you look silly.

one essay i remember from ages back on Joel On Software was him describing working at a Jewish / Israeli bakery. the bread oven was rusty and broken on the outside and looked like crap. but inside it was spotless stainless steel, because the bakers knew that the inside was what counted, and any money spent polishing up the outside of the oven was just waste.

that is an exeellent way to see the software / value argument - you have to know where the value comes from, and make that part fucking perfect. the rest can just be hung together with string.

Any disagreements on which part needs to be perfect is really a misalignment if understanding the business

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

#75

Post by zzzcpan »

nostrademons wrote: post #65
zzzcpan wrote: post #59

Earlier quoted context omitted.

> 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.

If they can't afford to pay your market value, you should leave and go work for a company that can. That's how you set your "market value" - go out on the market and see what price you get. If you can't get a higher offer, than your current salary is your market value. How much value the engineer brings in (to a given employer) is basically the ceiling on bids that employer will make. It's completely economically rat…

I would add that job market is only a market when employers are bidding on candidates and people are looking for jobs. The rest of the time it is not a market anymore, as bids are not open and not visible to anyone. So during this time employees slowly undervalue themselves by not participating in a market and employers benefit by not paying the market value and trying to keep employees as long as possible in this situation, essentially always underpaying even that.

EDIT: This was all about short term and mid term behavior. I would like to mention that long term employers and investors can influence job market and increase competition among workers, pushing wages even further down.

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

#76

Post by [deleted] »

dboreham wrote: post #45
zzzcpan wrote: post #16

This is really dishonest and disrespectful to people. Most companies are dictatorships, where all of the profits that come from maximizing value to customers do not go to employees. Employees have absolutely no say in it whatsoever and in fact are paid for their time for the sole purpose of not sharing profits with them.

True but they also get to not share in any losses.

[deleted]

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

#77

Post by [deleted] »

angersock wrote: post #40

"We get our money from customers" doesn't actually cover many other very real use cases. Let's try: - We get our money from bosses who want higher headcounts to justify their position. - We get our money from competitive poaching, so that if GOOG/MSFT/FB has us the other firms don't. - We get our money from salespeople tricking customers into buying our products. This deception is easier if the products actually meet…

[deleted]

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

#78

Post by andyidsinga »

corollary to some of the points made in the post:

- to understand one's value in $ terms, it needs to be measurable in some way.

Some possible ways to measure:

- for a product already being sold to customers, my features are helping retain customers (bug fixes, performance improvements etc) as measure by A/B testing or sales guys saying "that fix landed the sale".

- for a product not yet being sold, my performance in building the product is helping time to market as measured by improvement in sales and marketing results : "we landed a field trial today with the features I helped implement" or "those demo videos have improved response to our marketing campaign"

- for work in a large company, my performance helps my organization achieve some stated goal by its general manager. As measure by : "we got that thing done the GM laid our last quarter, his meetings with upper management were very positive and landed additional funding to the project"

Interestingly, for each of these, value in terms of $ gets more and more difficult to measure.

in my experience, working in smaller companies, value is much easier to understand, but the work tends to be "everyone sweeps the floor". In larger companies the work tends to be more specialized - and potentially more "cool" but driven by harder to pin down dynamics of the larger corporation organism. It also tends to be more "maddening" as the organization flip-flops around trying while seeking extremely difficult to attain growth.

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

#79

Post by late2part »

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…

This is all explained here: https://www.amazon.com/Capital-Critique-Political-Economy-Vo...

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

#80

Post by danieltillett »

WalterBright wrote: post #8

> If you want to increase your compensation over time, continue to put yourself in a position where you can deliver the most value. Implied in the article but not stated: it's not about how hard you work. Working hard has nothing to do with it. Nobody cares how hard you work. It's about what value you provide to the company. Work smart, work effectively, not hard.

I wish that was true, but in some organisations working hard (or at least appearing to work hard) seems to be all that matters.

The further you are from the owner of the business the more likely you are to be rewarded for non-productive proxies.

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