- 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 your code in your issue tracker
- you work for minimal salary and generous equity; when push comes to shovel, CEO will kick you out of the company due to "company problems" and claim your equity; bonus to the threat to your existence will be burnout from overworking and lack of credit
- your company creates a new opening for a lead position in your team for which you are the primary candidate; managers of other teams privately ask you if their friend can be pushed to your manager as the "one"
Can’t agree more. OP argument only holds if “value” is an absolute and objective concept and if everyone in the company is measured by it.
It just does not work like that. It’s a simple maximization problem. If your ideal is science and engineering and good code then your value will only be recognized by people who share the same ideal and these people are usually not the one distributing money.
If your ideal is making money then you will do everything in the book to make sure that the ones that distribute it mostly distribute it to you. That means taking credit, over promising, transferring blame, sabotaging careers, networking, shmoozing, etc...
Sounds familiar? That’s the ABC of the corporate world. That’s why most large companies end up being steered by incompetent people (Peters principle, IOW the last level you can reach before your incompetence really shows and shmoozing is not enough anymore).
If money is what you are after, either stay in a big Corp and forget about technical excellence or start your business and pray. Or, realize that there can be other form of rewards than money for your excellence.
> Can’t agree more. OP argument only holds if “value” is an absolute and objective concept and if everyone in the company is measured by it.
OP's argument is not a "true or false" proposition. It's a model, and as such it has some degree of correspondence with reality. That correspondence may be low or it may be high.
I think it is a useful model. It has a high degree of correspondence to what I see at one of the big internet tech companies where I work. People similarly situated would be well advised to consider this model when deciding how to spend their time, at least if their goals involve getting paid more.
If this doesn't match your experience, consider that this may simply be that your firm does not work the same way as the author's. It doesn't make you or the author wrong; you're just looking at different things.
This is why I think it's crucial to find a good engineering manager. He or she takes care of the politics for you and makes sure you're properly rewarded for your work. It lets you keep your head down and focus on tech.
They're usually a main contributor and value good code as much as you. They're surrounded by a set of engineers who have worked together for 5+ years. And most of these engineers have followed the manager from one company to the next.
If a company starts treating the group unfairly, they move on to the next company as a group.
The problem with this argument, and most of the other disparaging (and borderline nihilistic) comments in this thread, is that it ignores the fact that competition is a two way street.
Delivering value to stakeholders is undoubtably an indicator for success in business. If your work environment isn't rewarding you for that in a way that satisfies you, then find one that will. If you are delivering value, then your company has to compete to keep you, just as much as you have to compete with your colleagues (and also the rest of the workforce in general) for what ever position it is that you want.
If you're not prepared to seek better opportunities, not only are you disadvantaging yourself, but by just putting up with whatever you're unhappy about, you're also disadvantaging every other person out there like you, by stifling competition, and setting the tone that you'll just put up with whatever bullshit comes down to you from management.
> you are generous and do non-AGPL based open-source ; parasites are waiting in the open
This is not you being generous or them being parasite. BSD type license is not "hint hint GPL type honor code". You need to communicate what you want from others trough the license.
If you use non-AGPL or non GPL open license that's a sign that others can exploit your work for commercial purposes without contributing back money or code.
If you use BSD type license and others exploit it like it was intended to, don't complain. If someone uses AGPL or GPL, but you need the code don't complain. Offer money or code.
Yes. Just to hammer this point home, I release most of the code I write under a BSD license in the simple hope it'll be useful to someone. I don't care if you make money from it (Cool! Tell me about it!) and for 80% of the projects I've written I don't actually want any of your patches. I'd often much rather people fork my work and maintain their own fork.
If this isn't your jam, the MIT/BSD licenses aren't for you. Go GPL or something.
Well, between and around AGPL and BSD there's a lot of configuration-space left unexplored.
How about an L-AGPL that so that the source of a component must be published without extending to the whole work?
Or maybe one that requires any changes made (patches) must be made available to the public under CC0, even if you only use it internally?
It's a pity that modified licenses are basically treated like plague spots, nobody wants to touch them. This conservationism prevents exploration of alternative development models.
> How about an L-AGPL that so that the source of a component must be published without extending to the whole work?
Middle grounds exist though. The MPL is one that I like. It requires copyleft at the file level. However AFAIK it doesn't have the A in AGPL, i.e. it's pretty much like the BSD license if the software is a server application.
It certainly would be nice to have some more options.
This type of reasoning is completely out of place in the context of a developer having full control of the license they release their own code under.
There are literally hundreds of different software licenses. You can just pick the exact one that matches your ethical world view.
There is no reason to pick one that doesn't reflect your intent, then being a passive aggressive asshole about it when others follow the license as described.
First of all, I never said anything about being a "passive aggressive asshole."
Second of all, you didn't even respond to specific point I made. You just repeated the GP's argument with extra force. You didn't even explore the notion of what happens if your ethics are different from what laws prescribe. For example, if you think that others should not plagiarize your work but simultaneously believe that monopoly copyright enforced by a third party (usually governments) should also not happen, then you're stuck. You can choose a license that permits others to plagiarize while simultaneously being ethically opposed to the act of plagiarism because you disagree with using laws to enforce your moral opposition to plagiarism.
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.
This just says you didn't figure out the system but happened to 'luck out' one time. If you learn where the value is, you will know how to get recognition for any value you add (e.g. who values it and who's attention to bring it to that you are boosting it). In the case that the company is dysfunctional and doesn't promote value creators you will also get an earlier heads-up this way.
But you need quite a bit of luck just to start gaining exposure to these kinds of opportunities. That single 'luck out' event means everything; after the first major windfall or breakthrough, your experiences are distorted and they have little practical value for the average person. The bigger the windfall/breakthrough, the more true this is.
It's pretty easy to see where the 'value' is... Being exposed to people who are willing and able to give you access to that value is what's hard. It doesn't take much intelligence to find opportunities, especially if you've had some past success; then the opportunities find you.
Truly great opportunities are those that everyone else wants to be a part of; the ones that already-successful people are queueing up for... The ones that are impossible to get.
The kinds of opportunities that come out of nowhere and disrupt everything against all odds are so rare that you're better off assuming that they don't exist.
It's very surprising how rare it is for employees to find out exactly how money flows into and through their organisation. I suspect developers are the worst here. But when you think about it, it's basic common sense to understand what pays your rent and how your relative value figures in that system. And if you think of a company as a system, an automated machine for generating revenue, it starts to become hard to resist having a good nose around the contraption with a screwdriver.
That oddball dev who started hanging out with the sales and marketing people, forwards strategy and innovation articles to management, and started churning out powerpoints is the one who knows what's up. It's not just 'playing politics', it's developing deeper and wider situational awareness of the company and the market. It's stacking the odds in your favour and it's even more effective when so few do it.
You must have worked at some really terrible companies. While I don't doubt this is the case at some places the places I've worked haven't been like this at all.
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. Tech workers are quite often blind and don't perceive it but it's like aliasing in photographs - once you see it, it cannot be unseen.
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 deal with, and rank them from places I've enjoyed myself at the most to places where I would have to genuinely ask whether there was a wage they could pay me to make me work with them again, it seemed that the workplaces I considered the worst held the highest glassdoor star ratings, and my favourites have consistently been around the middle of the pack.
As a statistician I've even considered naming and investigating this effect: explicit rating systems that end up being the inverse of what they purport to be measuring, and I've got some theories as to what could be behind it (me being abnormal, such firms having the resources/need/desire to manage their image the most, high turnover and getting new people to leave such rankings during their honeymoon period), but I've not got round to doing it with any rigor...
One of the companies my sister worked at had a full time position dedicated to countering Glassdoor reviews. For every negative review posted, this employee had to post three positive ones. Suffice it to say the company had a 4.5+ rating on Glassdoor because of this.
There could also be selection bias in who you talk to based on GlassDoor ratings: if a company has a good reputation in the industry but you just weren't feeling the connection at the interview, you might be tempted to override your feelings because "everybody else likes them, so maybe there's something wrong with me".
This is a commonly-observed effect in hiring (where oftentimes candidates who get one bad interview score or who have unconventional backgrounds do better in eventual job performance, because for them to get hired despite that obvious failing, there had to be a strong subconscious fit) and in romantic relationships (where people end up marrying people who hold commonly-desired traits - wealthy, sociable, beautiful, talented, high social status, a particular race, etc. - but then end up unfulfilled because their desire to end up with "an X partner" made them overlook people who lack that characteristic but would've been a better overall fit).
OK, ignoring signal from Glassdoor, there still might be some correlation between how well the workplace is perceived (unless is some Russian/Chinese/Indian company where everybody must love the company or else) and how much you might enjoy it. Usually bosses are the main reason people quit so there is a lot of variance between different teams.
It's completely reasonable to understand and be cautious of the these things happening, but coming to the belief that this encompasses the whole of reality is unfortunate. (maybe that's not what gp meant…)
It's important for engineers to understand that they have options. If you're being mistreated, move on — if people are claiming credit for your work* there are places that you can go where this doesn't happen. You have a skill that is in-demand and under supplied, take advantage of that fact while you can.
* This happens on a spectrum, some engineers have a skewed view about how much credit builders should receive. It takes a wide array of skills to market, build, and sell successful products. The best leaders that I've worked publicly credit "the team" for successes and themselves for failures but this can only happen when the leader in question has high trust in their board and investors.
I wanted to point out that this happens very often; Game of Thrones nor House of Cards aren't completely fiction and people change rapidly when a potential wealth gain is at stake. The dominance game is very real and people probe for your weaknesses all the time, trying to exploit them and hack you for their benefit. Cover your back at all times and never put all your eggs in one basket. Push to become independent as much as you can and your talents allow.
I believe what we've both said accurately reflects our own experiences. I'm sorry you've experienced this. I encourage all, should they ever feel this way, to seek greener pasture as my own experience leads me to believe that this can be completely avoided.
My first job was a terrible place. My second job was a boring place, my third job was a great place, then BOOM dot bomb. My forth job was a great place until we got acquired, then it turned into a terrible place. My sixth job was the same as the fifth. My 7th job is both great and terrible at the same time.
For me, small companies are great places, but once they get acquired by large companies, they turn into horrible places.
I guess for some people, they feel the opposite about small vs. large companies.
Why six and not eight? Or four? My father has been a chemical engineer for the same company from ages 22-now (59) and is an expert in his (very) niche field, does that make him unqualified to speak about the state of the chemical engineering industry?
People's experiences are worth listening to even if they've just been in the workforce for a couple years.
That's not true. It happens in all types of companies. Its just not discussed as much as it would be considered disruptive and more likely to get let go as a result.
"- you work for minimal salary and generous equity; when push comes to shovel, CEO will kick you out of the company due to "company problems" and claim your equity; bonus to the threat to your existence will be burnout from overworking and lack of credit"
I have personally seen this more than a couple of times. The worse I have seen is the CTO having worked for the company for a few years get fired and then his shares diluted away to nothing.
There is a correlation between these types of CEOs and hiring fresh grads. They are more susceptible to this type of brainwashing. Engineers with a few more years of experience having seen this are more wise.
There are many definitions of success. A self sustaining business that doesn't make massive profits or have a vice grip on a market is failure in VC's eyes but by most folks standards would be a massive success.
I think you completely missed the point of the article. The point is that the total perceived value delivered to customers is the long-term cap on your salary.
Your company can't charge more than the perceived value delivered, and they can't pay you more money than they charge the customers.
To add to your points. In my opinion, the reason people in corporate companies can behave as you describe is that once corporate companies get moving they are hard to stop. Like a ship. When the company was started it was innovative and found a product that was required by millions of people. These millions of people will continue to use product despite corporate shenanigans happening in different internal teams.
People will continue to use Google to search for pages on the Internet despite all the products Google launches and retires. Millions will send parcels using FedEx no matter what software is used to run it. All manner of corporate games can take place at FedEx i.e. use Oracle or Posgresql. Remove Java, use PHP ... it doesn't matter people will still send their parcels. I know I am over generalizing but the shenanigans make it hard to tie your contribution to revenue.
In reallity its not your problem if the company is not able to extract value from your work. Your work has a price they have to pay it weather they extract value or not. What if a terrible farmer buys a lamborghini tractor covered in gold then tells the person making it that the tractor only produced 10 dollars so he is going to pay for it 3 dollars. Some other farmer might get a lot more production from the same machine. Or what if i hire a team of nasa experts to build the most advanced and revolutionary nut cracking device then realize i just wasted a lot of money for nothing? Can i tell the experts sorry but nut cracking does not produce the value to justify the cost of the machine so you will not get paid. Its complete nonsense.
The real issue is that the converse statement is rarely true. Providing less value to your customers is a way to be paid more. Obviously as the entire thread points out, the outcomes are probabilistic in nature and certain job titles have low ceilings on wages as do certain companies.
As a barber, you can only cut one person's hair at a time. Regardless of your customer service, this will limit your impact and compensation. Own a chain of barbershop and you'll impact more people and be compensated accordingly.
This thread seems to dedicated to the annoying cap on individual contribution in a team game.
If you get recognition as the golden goose, many companies will promote rather than kill. Getting recognition is a part of figuring out where value is added .
I've experienced both - being ridiculously pushed up for no reason as well as company attempting to destroy me after I gave them world-class products that put them on the radar (in medieval sense when they crippled some masters once they built something for them so that they couldn't build something better in another place). Both companies "famous & loved" by geeks. Both situations were stupid and I escaped both of them. I guess for me being independent is more important.
>company attempting to destroy me after I gave them world-class products that put them on the radar
I saw this happen once and the developer responded by gradually and deliberately making the code base as cryptic and hard to understand as possible.
Then he quit and development on the product essentially stalled.
Some part of me thinks that maybe programmers who have been royally screwed should take this route. It would offend my sense of professional pride to deliberately create a mess, but I can see the benefits of discouraging business managers from royally screwing the programmer.
That guy created a lot of programmer jobs, too. The project could easily have been a much higher quality and developed at twice the velocity with just 2 people if done right. Instead that code base ended up feeding 12 people's families.
Creating value is fundamental to the job but no one is going to give you money whether you create value or not.
You have to both create value and proactively take the cut of the profit you deserve.
Giving away code is no big deal. Code is a rapidly depreciating asset and everything you create you will create something better tomorrow.
You give people code to demonstrate what they have the opportunity to buy if they want to make money. If they are stupid they don't pay and you find smarter people who want to make money.
IMO, that's a bit too cynical. How could a business grow if it doesn't create any values at all?
Reality is more nuanced and what can be considered 'value' are harder to tell but overall I think one should always strive for excellence in making values for the society. My experience working in different jobs (most are non IT) is that as long as you can create values, there will be a suitable place for your ability.
>How could a business grow if it doesn't create any values at all?
He wasn't saying that the business doesn't create any value. He was saying that the people who created the value were not the ones rewarded for it.
"My experience working in different jobs (most are non IT) is that as long as you can create values, there will be a suitable place for your ability."
I think it's easier to fit in if you either don't create a lot of value or you create a lot of value and expect your reward to be commensurate with somebody who who doesn't.
I think developer jobs are a bit different to most because the effects are amplified and the value is hard to recognize. It's possible for somebody who is very good to create a huge amount of value and not have it perceived and somebody who is not good at all to actively destroy value (e.g. take a good code base and turn it into a buggy technical debt ridden shitshow) and also not have it perceived. I've personally seen the latter happen and everybody just chalked up the resultant lost business to inevitable bad luck.
> 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 whole damn point of a firm.
Now, this may be reasonable advice if I want to maximize by income. But maybe my goal is to maximize income under the constraint that "my excellent engineering" is the primary consideration in my performance evaluations. And there's nothing wrong with that; people trade income for all sorts of things. Telling someone not to make that trade-off is like chiding them for buying an expensive latte or sending their kids to an expensive private school. It's not your money, so it's none of your business.
edit: And, furthermore, the success of large firms and the high compensation available at those firms suggest that the author's advice might actually be actively harmful. As an engineer, you might actually be better off ignoring engineering-value alignment because you might be better off simply executing well within a well-oiled machine.
Profits by definition are calculated after labor costs are deducted, so employees get 0% of the profits in salary.
However, take a look at your company's accounts and see how much of the gross revenue is paid out as wages and salary. It'll be a big chunk. There's your share.
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 own compensation is a share of profit in the same sense (which, a port of it literally is), then my observation that non-engineers get 99% of that share is still accurate.
Anyways, and much more importantly, this is pretty tangential to my original point. The point is that if I'm an engineer at a large firm, it is NOT my job to do the MBA thing. The entire premise of a firm is that the author of this post is wrong.
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 knowledge. You'll be able to then read a business's Income Statement and Balance Sheet, and see where the money comes from, where it goes, and where it is allocated.
> 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 useless and silly in the context of modern large firms, but that seems like a discussion for another day.
> This isn't MBA level stuff
By MBA stuff I don't mean "useless econ 101 terms". What I mean is "aligning engineering talent with value creation", which AFAIK isn't taught is basic accounting courses...?
The author of the post suggested this alignment is an engineer's job. But the whole point of a firm is that the MBAs do that and the engineers focus on building things. That's my point -- that in the context of a large firm, the author is wrong.
Of course, joining a large firm means that your own compensation is disconnected from the value the firm creates. And that can mean less share of compensation, especially when the firm is doing well. But it also means you can make a good living without becoming a Monday morning economist.
I don't really care about defining profit "correctly" according to accounting terminologists because I think a well-meaning reader can completely understand the point that I'm making in my original comment without this aside.
> 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.
> 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 rational for you to find the employer that values your work the most when you're searching for a job, because they'll be willing to pay the most.
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.
This isn't quite right. Engineers are normally more valuable the longer they've worked in a job, because codebases take longer to understand, business domains need familiarizing, etc. Engineers aren't normally a commodity; the best offer you'll get on the open market will normally underestimate your value to your current company by some distance.
Getting a competing offer is still the way to get leverage for better compensation, although the downsides of accepting a counter-offer are fairly well documented.
On the topic further up the thread about profit: engineers are paid based approximately on replacement cost, but profits are created based on market opportunity and scarcity. A company can create an offering that's hard to reproduce (a monopoly) - harder than most individual engineers' skills are to reproduce - and the excess profits are effectively windfall profits until the market corrects and competition sprouts up. Thus a company can charge closer to the value it adds to the customer, rather than closer to its cost base. Ideally an engineer would try to do the same thing: charge based on the value he or she adds, rather than how much he or she can make elsewhere.
And bringing it back around, companies can eventually get a windfall cost saving / profit from long-serving engineers. Because of accumulated knowledge, they can become such a good fit for the company that the company can pay them substantially more than the market rate, but nowhere near how much value they add, simply because they know that they're the only customer: monopsony, the inverse of the monopoly situation. To extract more value in this situation, you need to bring non-monetary aspects to the negotiating table. My preferred one is ownership: not autonomy, but actual capital interest in my output.
Really? I think the theories that I'm drawing on here -- about the role of the firm and so on -- are much more neo-classical than Marxist.
Maybe you're confused by the second paragraph of my post. That wasn't intended to be read with any sort of moral indignation or as a suggestion that engineers ought to capture more of that value. Rather, it was a sincere question and the answer was "you've traded your ability to capture that value for the ability to work in an environment where you don't have to think strategically about the business and can focus on your engineering work".
I think his point is engineers typically no longer get profit sharing bonuses while managers typically do. The author was suggesting to get paid more, find more value to create. This isn't even close to linear like it is with managers because of the lack of profit sharing to engineers.
I would argue that in most organizations, the culmination of engineering talent creates way more value than the manager, with rare exceptions. Most of the time, the manager can get wrecked by a train, and the engineers will continue to create value. If the manager built that team, he should get some credit, but most of the time, the manager is just a plugin resulting in more of a hinderance than a benefit. "Respect my authorit-a," type people.
Of course, if engineers would unionize, they'd get the profit sharing bonuses they used to get, but society? has convinced engineers that they get paid based on merit and the value they create, which they kinda do, but the ratio of compensation to value approaches nil and gets worse the more value they create.
For example, if I create $1M of value and get paid $100K in year one, then I create $3M of value in year two, do you think the company would compensate me $300K that year? Hell no they wouldn't, but the execs sure would get compensated for my value creation. Again, based on what the author is selling: if you want more compensation, create more value, well that's a load of horse shit for most engineer employees.
Some companies still consider top level engineers management level and will give them profit sharing accordingly. Small companies might give some sort of equity. I'd steer clear of companies that don't.
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.
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 a check is a check, since money is fungible.
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.
> Trying to infer an injustice by the what the check is called has no point.
Oh, I might now see why you're being so pedantic about the definition of profit.
When I asked "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?", I wasn't trying to make a moral point. It's not intended to be read with an indignant tone, but with a curious tone.
In fact, at the end of the post, I answer this question: because the engineer in a large firm has (perhaps) traded a bit of the value they create in order to be insulated from business decisions, allowing them to focus on engineering instead of on running the business.
In a services company a salesperson will generate around 10x to the bottom line compared to an equivalent level fully utilised engineer, so this is more than fair.
Many words have several definitions. Some more specific and some more general as used by the public. You are right in an accounting sense, but not in the complete definitional sense.
If he did conflate "profit" with "gross revenue", I was explaining that indeed he was getting a share of it. And frankly it is impossible to have any sensible discussion about business and be confused about what profits are - the only definition that has meaning is the accounting definition.
It's like discussing newtonian mechanics and confusing momentum with energy.
People routinely use a more loose definition of the word productively, for instance the term "profit sharing" is commonly understood.
But as you point out, unless it is through dividends from stock grants/options, whatever is shared with the employee no longer is profit.
Other fields use the words profit, not just accountants. Economists and philosophers, at the very least, have a claim to it too, and they do not in any way conflate the meaning with the accounting definition. Indeed, we would argue that the accounting definition is the one that is conflated with the thing we actually care about (which is why the phrase "paper profits" even exists).
And its also quite clear he didn't "conflate" the meaning, but used it exactly as intended.
Most people, I'm assuming, can quite clearly see that he captures the idea that surplus value/revenue, of which the resulting wages are a non-deterministic and variable part to some degree. That upper management of the firm take a percentage of this slice of the pie, whilst lower down labour also gets a slice, and that the notional "social justification" for why upper-management gets a greater slice is being white-anted away as the lower downs are supposed to take on their responsibilities without commensurate compensation.
> 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.
Please... I understand your pedantry, and I don't care. This is a silly conversation.
Do you have any thoughts about the role of engineers in a firm and how the existence of firms relates to the article's thesis? That's a much more interesting and relevant topic for discussion than the fact that words sometimes have more than one definition.
So if not, let's kill this thread. I used the word "profit" in a way different from how it's used in Accounting 101. For that I am profoundly and eternally sorry, but not sorry enough to continue an off-topic and unenlightening conversation :-)
You'll want to consider the main point of the article then ask yourself how much of revenue is paid out is agency costs. It's a big chunk in most companies.
But, to continue your analogy - if you're asking me advice on how to make ends meet, then it absolutely is my business to chide you for the expensive lattes you buy daily.
The point discussed in the article is very valid: you need to be perceived as "delivering value" - otherwise, your compensation will suffer. That's the whole reason why you earn well working in finance - not because "only the smartest make it there", but because you're very close to the money. The money a quant brings in can be connected to him with a very short line.
I encourage you to read the original question that the author of this post is ranting about, where the question asker who's being chided in this post makes literally exactly the observation you make in your second paragraph: https://www.reddit.com/r/cscareerquestions/comments/7mgp1m/h...
The author of that post does understand these trade-offs and is asking the best way to maximize wrt his constraints. So this article just misses the mark.
No, the author of that post mimics an understanding of tradeoffs (proof[1]). As such, it is perfectly reasonable to chide him/her for it. Also he/she does not make the same observation that I made, "theoretically technical excellence directly translates into profits" is not even close to what I claimed.
> As an engineer, you might actually be better off ignoring engineering-value alignment because you might be better off simply executing well within a well-oiled machine.
This is generally the approach for maximizing cash compensation, in lieu of being a highly sought after programmer by Google et al. That and jumping from jobs every 2 years for 20-40% pay increase.
By Value, I think OP is talking about value in the context of an engineers role.
For an engineering, you can create linear value with your amazing code, but as you contribute more broadly (architecture design, mentoring, code-reviews, etc), you multiply the value you provide.
> 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?
> How mant times can you get the 20-40% salary increases ? Very soon you will hit the band ceiling
It would require taking on more responsibility, and moving up in roles.
Two points of clarification:
* This is in high demand markets.
* Pay = salary and bonus.
I'm not advocating job hopping, but if you purely want to maximize your income, you'll get a bigger increase taking a promotion at a new company (where you have more leverage to negotiate) then you will at your current company.
Me personally--I live by the cheat-code from WC2 -- All that glitters is not gold.
Yes, the original statement is totally reasonable:
Ultimately, I want a profitable product to be a byproduct of my excellent engineering, not have my engineering be just a means to an end, of getting to a profitable product.
In other words, “I want to work for a company that values engineering excellence.” And the reply is something like, “you don’t understand how business works”? It’s true that an understanding of the concepts in the article will help you recognize a good business so that you don’t go to work for a company started by engineers with no understanding of business themselves, but you don’t want to work for someone that has a knee-jerk reaction to bringing up engineering quality as something important, either.
Depends on whether you want to be a fungible cog in a race to the bottom on compensation. If yes, then you should make yourself a commodity. But if you want to move up the value chain, you should find out where those links are and start climbing.
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.
I completely endorse the suggestion that engineers should learn to understand this concept. If you learn one thing in your career, it should be this. One of the differences between working at BigCorp versus working at SmallCo or VentureCo is that in the smaller companies the relationship is much easier to trace out.
Dan Warmenhoven (when he was CEO of Network Appliance) had a wonderful way to very clearly explaining this in an accessible way. From gross margin to net margin to the fraction of the margin that was allocated to engineering.
But the other concept, on-off splits, is also something which I think managers need to understand a bit too. When I was at Google their compensation system tended to unfairly bias toward people delivering features and I and others argued for recognition of people that made delivering those features possible (which finally came about in 2009). As a manager you have to recognize when someone on your team or in your organization is helping the whole team work better or get more done. Whether that is an administrative person who is keeping things in the group calendar current or a tools engineer who is keeping the build running smoothly. If you're lucky they will be sick for a week and you'll see the entire organization hiccup as it adjusts. I say lucky because that will give you visibility into their contribution you might not otherwise have until it is too late.
When I was at Google their compensation system tended to unfairly bias toward people delivering features and I and others argued for recognition of people that made delivering those features possible (which finally came about in 2009).
Interesting. I started at Google as a SWE in 2009 and I did not see any of this. I left in 2011 so I don't know how the situation is today.
However when I worked there it was obvious that when promotion cycle came everyone was first to claim they "put feature X into Y", even if they were just the ones doing the wiring, not the ones implementing the actual thing.
The situation was aggravated by the fact that promotions were (probably still are) in the hands of "promotion committees" (which most often did not have a damn clue about your product or team and who contributed what in reality) and not in the hands of your boss. As a result I saw promotions biased towards the most shameless liars and self-promoters.
I’ve had coworkers confide in me that their value isn’t being seen. Some were really good, some were constant problems to be managed. I have seen this scenario you observed, and my standing advice is take a week off.
If people are glad you came back then you are correct and you need a raise or more power or both. If they just ask you about your trip then your perception of your value is out of whack.
Certainly. But that sort aren’t the kind who intimate something like that in private. Everybody knows what they think of themselves. And in some cases they know what I think of them too.
I’ve been indispensable before. It’s a great feeling if you don’t know any better. But there are other ways to be indispensable besides holding all the important bits in your head and refusing to share it.
> In basketball, there’s a metric they started tracking in recent years called on-off splits. Simply, it’s meant to capture how much better your team is with a given player on or off the court. I love this metric because it’s an attempt to measure an individual’s impact on a team’s performance with an acknowledgement that individual statistics can’t paint the full picture.
Also found that 'on-off splits' metric so resounding.
I sometimes wonder if the vulgarity of capitalism forces us to think this way. You don't see lawyers, doctors, or capital-P engineers thinking this way. They have to think about the state of the art and practicing their craft with the utmost attention to detail. Anything less would be unprofessional.
And yet we programmers hear this story time and again: you don't matter, your craft doesn't matter: _all_ that matters is getting that money. If that's what your company values then that's what they'll make you do... and we don't have any profession to back us up when we say, "That's not good enough."
I suspect this is part of the story of how the Equifax's and the like happen: we prioritize profits over integrity and the consumer pays. If you, the professional software developer, refuse the company will simply find someone else who will. And they will probably hire them for less.
And yet if we were to raise the bar, stakeholders argue, then programmers would not be affordable: producing software would be too expensive and nobody would do it.
Programming craft does not matter because programming craft has no content. Doctors treat and fix bodily ills; their actions— the uses of their craft— are determined by the state of the patient. Similarly, lawyers' craft is determined by the content of the law. (The results can be encouraging or horrifying depending on whether the laws that apply to your time, place, and situation are just ones.) What determines the content to which a programmer's craft is applied? If it does not make money or serve the public good that your nonprofit addresses, why should your firm support it?
I say this as a programmer who likes writing beautiful code. Nevertheless, when we look around, we see no equivalent of charity hospitals for coders, where philanthropists donate wings and endow chairs to advance the state of the craft. (Not to disparage what we do have: CS Departments, GitHub, some open source foundations are awesome, but do not reflect similar public standing.) Our craft is not valued on its own terms because the broader society does not believe it is inherently beneficial to them. In a day when facebook and twitter throw our elections open to tampering, uber does... whatever uber does, and everyone's even more addicted to Netflix than they were to TV, can you blame them?
Lawyers are valued because they make society freer and fairer. Doctors enhance human dignity by caring for those made weak by sickness. Do you have an equivalently positive outcome for what our profession does when left to its own devices? If not, it's rightly difficult to appeal to the pieties of your profession with someone who does not share that profession.
This isn't meant to be a rebuke, rather, a reminder that good skills are unhelpful unless put to good use. If you don't like money as a means of keeping score on that, there's plenty of work in the public and nonprofit sectors.
"I sometimes wonder if the vulgarity of capitalism forces us to think this way. You don't see lawyers, doctors, or capital-P engineers thinking this way. They have to think about the state of the art and practicing their craft with the utmost attention to detail. Anything less would be unprofessional."
That's ridiculous. Of course they think this way. How many doctors are working in a hospital doing the latest surgical technique, versus how many have opened their own office? Do you think opening a private practice means you concentrate more on medicine vs. administration?
They do it because it pays more.
Thinking programmers are unique in having to balance their profession and business is just plain wrong. It's true that most professionals might not think about it that often, but then again, most programmers don't think this way either.
How many doctors are still practicing after one malpractice lawsuit? 2? 5?
You have to be insured to practice. There's a professional organization that licenses you to practice. These are the social structures we put in place to limit the damage done by the various forces of the world that would tempt a doctor to be anything but faithful to the practice including profit.
A hospital may ask a doctor it hired to "cut corners," but the doctor should refuse and if the hospital tries to fire them and get away with it anyway... the hospital should pay for that.
What I meant by the last line of my comment is that we have a vested interest in producing more software, not less, and I don't think cost is the problem. Although there are people with a vested interest in the status quo who would see the expense of insured, professional software engineers as being unbearable to their interests... not necessarily because such practices would harm the public good and their reliance on technology.
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)
"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 a need, but that isn't required.
- We get our money from VC firms playing pyramid games.
- We get our money from government grants that need to get spent or funding gets cut next year.
- We get our money from grants that have to be spent to show investment in "innovation" or "modernization".
- We get our money from selling out users to drive advertising clicks.
- We get our money because...BTC is stupidly volatile.
~
It's extremely naive, in the modern economy, to say "herp derp just deliver value to customers and you'll get paid what you're worth".
EDIT: Nice downvotes. Again, consider that maybe the modern economy is so twisted and weird in software dev that maaaaybe this simple Protestant work-ethic narrative doesn't actually hold water. Sorry to burst your bubble.
> We get our money from selling out users to drive advertising clicks.
Advertisers are the real customer and users the product and all that. This perverse incentive is the driver of most garbage on the web. And not only is the user sold out, they are manipulated by the advertising, the products (e.g. search results, news pages) are manipulated, and now elections are manipulated (Because Facebook et al designed to put the user first would not have spread viral bullshit).
Engineers need to put morality and social good above making more money. Greed is not the god that people should be worshiping and designing economic systems around.
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
"If you want to increase your compensation over time, continue to put yourself in a position where you can deliver the most value."
This assumes an efficient market. In the real world, however, value of a software engineer's output is really difficult to measure. Indirect value (like helping a team member) is even more difficult to measure than direct value (like implementing features or solving bugs and so on).
> value of a software engineer's output is really difficult to measure
True, but you can make it easy for your boss to conclude that you do deliver a lot of value. For example, don't assume he knows what it is you're doing, or the value of it. Show it and tell it and remind him. It's what any good salesman does, and face it, we're all salesmen one way or another.
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.
I don't think it's disrespectful, because I think this is what the OP is saying. When considering how to make money in this business, you need to look at the company you're working for. He emphasizes that if it does not provide value, you won't do well there. If it's overly greedy, the same holds.
It's worth noting how good we have it: when you examine career salaries against years of school required and unemployment/failure rates (i.e., insurance salesmen can make millions, but most don't/can't.) then software engineering is one of the highest paid professions in the US. Could this be true if a controlling majority of employers were so greedy?
Depending on the company, management and situation - you are the first to experience the loss in the form of being replaced with a younger, more naive candidate or an outsourced dev shop that can keep the product long enough for management to get another round of funding or find themselves an exit that minimizes their losses.
To not share in the losses you need to make yourself essential and irreplaceable, which is more and more difficult since a lot of the popular frameworks and cloud services that make developer/devops jobs easier also make them an easily replaceable part.
> 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.
The claim that "we get our money from our customers" is, on its face, wrong. Of course we're paid by the company, not the customer. The simple truth this article misses is that your wage is simply the price of your labor, and it is the firm that is paying it. The "value you add for customers" (however that might be measured) really doesn't come into the picture. The job market is competitive, and the amount your company pays you is primarily determined by how much they would have to pay someone else to do the same job.
> the amount your company pays you is primarily determined by how much they would have to pay someone else to do the same job.
This is true, but the thing you're missing is that there's not many folks out there that can add value for customers. That's why engineers who create value get paid so well, which is the articles point.
I've noticed that engineers that get paid the most tend to understand the technical and business trade-offs that come from decisions they make.
The customer pays the company for some perceived value. It may not even be real. But given that it is, the Engineer may contribute to the process, or the testing, or the coding. Which are useless to the customer and not even perceptible. Consider: if the same product were delivered without testing, would testing be valueless?
No, its the whole enchilada that the customer pays for. The Engineer is a part of the product but so is the guy on the loading dock, and in the mail room, and sweeping the floors.
No we have to look elsewhere for compensation justification. This religion (born out of the Agile process?) that only work contributing to customer needs has 'value' has got to go. Its false on the face of it.
Fellow engineers: your (loose) money comes from overcapitalized companies fighting for talent that can multiply their investor's bets or, at least, their investor's hopes.
I'm pretty surprised to read this. I did not observe any statistically significant correlation between "creating value" and "compensation". The examples are so overwhelming I feel it's on the OP to exemplify his rather false assertion:
- Big corps pay loads of cash to research centers that provide exactly zero value to customer.
- If you don't man up and negotiate no one will bump your compensation just because you're "creating value"
- Creation of value is so vague a term it's practically meaningless
There is no correlation between creating value and compensation, as compensation is set by a job market, where companies compete for workers with each other. It really doesn't matter how much value is created as long as the worker doesn't have a better choice.
- 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.
The value I can deliver is strictly limited by the sales department these days. In the last four years, I have increased the value proposition of the business 100x-1000x (hard to know for sure, but not less than that) with my team's contributions (team of 2), yet I have not gotten a raise. No matter what I do, if we don't sell more, the value does not increase. So why should I care about the value I'm delivering when it does not affect my pay whatsoever?
Let's face, it almost all jobs are like this. Certainly all startups that are running on others' funds. Certainly all big corps. The author here is talking about a very small percentage of companies where individual contributors can actually contribute to the value of the company and the company reciprocates in value to the employee (pay). The one company that I worked in where this was the case, gave decent single digit raises. Hardly commensurate with value, but not bad.
In other words, there's no reason to focus on value provided for an employee at most companies because such focus is either unrewarded or almost unrewarded.
Tangent: had a similarly disappointing experience with Coinbase. Not worth going into details, but I walked away feeling like the application wasn't taken as seriously as I would have expected.
> If you want to spend your life crafting beautiful code with headphones on, you can absolutely do that. You will get paid just fine for that. But if you’re not influencing others and helping the broader team execute, you’re setting a ceiling on the degree to which you can contribute to the company’s output.
How does building a stable, easy to maintain, extensible product not help the broader team execute?
"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.
> This is why engineering career ladders start to layer in responsibilities for things that a single individual can’t accomplish themselves. This doesn’t mean you need to become a manager, but it does mean you need to look beyond yourself to maximize the value you’re able to bring to the people who are ultimately paying you.
This is where I am right now. I've been a dev professionally for 2.5 years, and I'm looking ahead to what it will take to become a lead and eventually a senior engineer. I notice other senior engineers around me continuously providing value to those other than themselves: in the form of contributing more documentation, directing and organizing design meetings, and in general taking time to gather others to solve a recurring technical issue org-wide, once and for all.
- 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 your code in your issue tracker
- you work for minimal salary and generous equity; when push comes to shovel, CEO will kick you out of the company due to "company problems" and claim your equity; bonus to the threat to your existence will be burnout from overworking and lack of credit
- your company creates a new opening for a lead position in your team for which you are the primary candidate; managers of other teams privately ask you if their friend can be pushed to your manager as the "one"