When I worked at eBay, we had a bonus program based on company revenue. It was around 6% of your salary max and managers got around 25% max based on the same formula. For the first few years, you could count on getting a max bonus every quarter. To the point where most everyone who worked there had always gotten one.
And the one quarter, we didn't get the max bonus. In fact, I don't think we got it all. People screamed and yelled and were pissed. At the company all hands they spent a lot of time explaining that bonuses weren't guaranteed. Some of the lower paid folks were actually crying about not making critical payments because they counted on the bonus. Morale went way down. People left because of it.
Stories like this are one of the stated reasons Netflix doesn't do things like bonuses or any sort of variable comp. Because once you get one once, you feel entitled to it in the future, and it feels like a loss when you don't get it.
I worked at a company that instituted a very similar bonus program, it started just after the time the former COO of Ebay joined ... must have been coincidence. Anyways, we had similar formulas, pretty much the same thing. We were eligible for 6% of our salary but it would be paid out in 4 times a year in 2 different ways.
Our bonus was split in two, half would be used for quarterly bonuses, half would be used for yearly bonuses.
Each Quarter you would make personal goals and take on team goals. Each goal which would be measurable and would contribute to your bonus. They would be scored each from 60-120%. Each employee would have a mix of personal and team goals, totally 5 to 8.
Rather than have yearly goals, your average score of all quarters would be applied to the yearly half.
Finally, there was company goals, revenue and profit. If we met "guidance" we got 60% of our calculated goals above and if we hit the 'BHAG' we got 120%.
.....
So, lets say you are pushing a feature and you get it done super early. You your goal, complete on time, well you get 120%!
Of 1 of your 5 goals. It happened to be weighted at 40%, but fixing bugs on time was 30%. You did that ok, no problems, so that's 100% of a 30% goal. And your team didn't get that CFO cost cutting project at all, so that's 60% of that 20% goal. Some finally team sports participation one gave you the remaining at 100%.
Well how much did you earn from that 120% burst of hard work?
Well, its 120% of 40, so 48 points. 30 points for the team and only 12 points for the CFO one. Finally throw in that 10. So... you got 100% of your bonus.
How much was that, well, its 6% of your salary. But really only 1/8th of that 6%, so if you earned 100,000, that was $750!
Wait how did the company do? Well, Rev was lower than expected, so it was 80% of that. so $600.
Profit? No, the revenue drop ate away the profits. So is that 60% of the $600?
No, the bonus pool was funded from profits, so we get nothing. And.. we didn't made a profit in all quarters but one, one that you didn't bust your ass, so you only got $400.
So year end bonus of 6%? All you see if $400, but your math got better.
Sounds like lots of time wasted for coming up with such a complicated scheme, communicating it and everybody thinking through how to maximize their own benefit from it.
Sounds like the articles point. But on steroids.
All it does is keep people from doing actual work and be happy doing so. This is just infighting waiting to happen.
Originally it might boost peoples morale, as they think there is a bonus to be gained. But after people figure it out, there morale drop will probably be a net negative.
It definitely would be a net negative for me, as I would feel screwed.
It's fairly standard, in my experience, and makes sense if you come form the position of the company.
In the budget a certain amount of money is allocated towards the incentive scheme. If the company does not perform as well as planned this pool is reduced appropriately (you can't pay bonuses with money that doesn't exist).
If you take the original pool of money you can express it as a percentage of the entire payroll, and that percentage is what, on average, everyone's bonus will be (for example 6%). Alternatively, that percentage is used to calculate what the pool will be in the first place (before scaling for company performance).
You then have the individual perfomance scaling, which is designed to reward people excelling at their job. The individual has a starting percentage-of-salary bonus, and that percentage is moderated up or down depending on how they performed relative to their peers. Relative to their peers is super important here, because the total bonus pool was worked out based on the starting percentages (and then moderated by company performance) so the final bonuses are really just an allocation of that pool between the employees. In some companies managers will literally take their employees' performance reveiws into a big round-table meeting where they argue why specific team members should receive a 4 or 5 rating (the highest), as there are a limited number of 4s and 5s available in the incentive scheme.
The final calculation is fairly straightforward then.
From the company's perspective, an individual's bonus is = (total payroll) * (incentive scheme budget allocation percentage) * (company performance factor) * ([potentially] business unit or department performance factor) * (individual performance factor)
For the individual it's built up in reverse, and it's the accountants jobs to make sure the numbers match in the end!
bonus = (employee salary) * (base bonus percentage +- individual performance modifier) * (company performance factor) * ([potentially] business unit or department performance factor)
I think it makes sense in practice too, if you accept some incentive scheme. Perhaps no incentive is the best incentive, but I don't know the data on that.
In my experience there was never a huge disconnect between an individual's performance and their expectation of their bonus.
Your starting point was based on your position - say 5% for junior positions and 10% for senior positions.
The thing you had control over was if that starting position went up or down. There are 5 performance review levels, and each has a matching percentage associated with it. A '3' is "doing your job satisfactorily" and gives your base of say 10%. A '4' might be 15%, '5' 20%, '2' 5%, and '1' 0% (I don't remember if they actually went to 0% or not).
The last important factor is the companies overall success, but that is largely out of your hands so it 'is what it is'.
The bigggest downside with this system is that it's not capable of handling everyone getting a '5'. If you really had a team of superstars it would be a hard and long battle to get them all recognised (though I did see that happen on occasion).
a) it was overly complicated and huge individual performances were just washed out in the larger mix
b) It had the appearance of giving a great deal of control to the employees in driving their 'bonus'. However, in the end, the decisions made at the highest levels made the entire process moot. For example, A goal for YoY rev increase of 100%, was a failure when it hit 80%. The hiring and spending required to try and hit that 100% growth target, made profit a 2nd priority.
As a manager, all the personal goals were interesting behavioral levers, but all that was lost when the bonus kept not being paid. "We're tracking all of this for our Goals, which informs our bonus, but our bonus never gets paid because the ceo says its ok we shouldn't be making a profit now cuz we're growing."
I always find it fascinating when employees try to justify these schemes. Both the bonuses and the rating systems.
Yes, all of your team can be 5s. They can all exceed expectations. And that's what each individually thinks too. He's gonna be so much better than everyone's else. Most people think that.
Of course the system is rigged. It's not really about exceeding your expectations. Even when they try to make it seem like it's possible. It's about making a nice bell curve of the ratings and assigning bonuses and salary increases based on it. If you're at the wrong company they also fire the bottom 10% or something like that.
Why they do this I will never understand. It kills intrinsic motivation (even for the 'exceeding' guys as seen in previous comments). Google the Oprah experiment. It kills morale if the company doesn't make it one time. It kills morale for the guys that don't get the bonus they wanted or makes them game the system. Which kills morale for the guys that are actually good at their job but don't care about gaming the system. So much to loose.
Yeah, but your example is a little different than the OP's - I think part of this though is that the company is using the 'bonus' effectively as salary but with the idea that they don't have to guarantee its future.
The company treats it like salary, the employees treat it like salary, recruiters probably mention it as part of comp like it's salary, etc.
Then one day they decide not to do it, of course people are pissed. Netflix is right - you can't have 'bonuses' that are not tied to something real (like the article, and even then there are issues). If the formula is explicitly defined and publicly known then fine, otherwise it's a bad idea.
I've found companies that rely on this also tend to underpay on salary, but say things like "we're competitive when you factor in the bonus that basically everyone gets".
If you run a company this way and don't expect blow back when you slash everyone's comp by 6% you deserve the loss of talent.
Michael Lopp has written something similar about the "Thanks for the Bonus, I Quit" in one of his management articles somewhere. The idea being that if you have a direct report and give them a smaller raise than they're expecting when they know peers are got larger raises (in percentage) the act of giving them the raise could be the trigger that gets them to say “I quit”. It might be because they're already on the higher end of the comp range, but without knowing this they'll be frustrated. Working effectively with people and comp takes effort and understanding how people will feel/think about comp.
Exactly. At my company, salaries are capped and the higher end of your comp comes from your bonus. At the end of the year, instead of raising salaries, they give out larger bonuses. If one day they just decide not to give it to you, you will have earned anywhere from 20-70% less in total.
That's exactly what a bonus is: part of your salary that your company can at it's discretion not pay you. Marketing and HR has spun this into the sham that it's some kind of additional benefit, but it's not. It is directly at odds with the individual employee's end of the risk / reward trade off, and he should almost always reject it in lieu of some other form of comp.
> I've found companies that rely on this also tend to underpay on salary, but say things like "we're competitive when you factor in the bonus that basically everyone gets".
If I had money for every time I heard this it'd be a nice bonus unto itself!
Robert D. Austin, Measuring and Managing Performance in Organizations (1996). This book coined the term "measurement dysfunction" to describe how reward structures work against company goals.
And Alfie Kohn's 1993 article in Harvard Business Review where he summarizes decades of motivational research (also citing Herzberg), concluding that giving bonuses to staff is usually a bad idea, and it is an especially bad idea for jobs that require cognitive sophistication.
I'd also suggest the book Drive about motivation and how economic compensation can have counterproductive effects.
Edit: Oh, and dear Lord how could I forget Deming?! Most of the time we think we're measuring individual performance we're really measuring noise. And it's not individual performance but organisational performance that matters anyway.
The system determines performance. Measuring variation within statistical process control and attributing it to individual effort is a mistake that keeps being made.
Many have made the effort to translate these ideas to knowledge work, so it's not like the manufacturing context is holding this concept back from being understood.
Honest question, what's a reasonable solution for a small company (since it's easier to do thought experiments on a small company).
You're a business owner. You hire 3 people. You pay them salaries. That year the company does really well. You want to thank your employees. You're not going to just give them raises because there's no guarantee you'll do as well next year
It sounds by Netflix logic you should just keep all the money and not reward your employees. They got what they asked for.
Find a project to call the justification for a bonus - that way the project is the thing, and there won't be a repeat expectation set up.
(we paid december bonuses on exactly that basis once and then the next year wasn't as good and one of my team thought he'd fucked up to not get a bonus again, so the project oriented thing is way superior even if it's the same money being given to the same people for the same reasons overall)
For a small company like that I would implement basic profit sharing. Set aside a certain percent of company profits (10-15% is fairly common) and those profits are distributed among the employees.
The way you distribute it among employees can get tricky. If everyone is in a similar position you could split the pot evenly. Otherwise you can implement a points system. Maybe the lower level employees get 1 point each. The manager gets 2 points. At the end of the year the profit pool is distributed per share (so the manager would get twice the bonus of the lower level). This is the easiest way to manage it. You'd want to run some hypothetical numbers first and talk to an accountant, etc. But this is a good way for a small company to manage bonuses.
Don't worry about Netflix. The Netflix strategy is that they are overpaying you to begin with, so bonuses become less important. They also have programs where employees can buy discounted public shares in the company and stuff like that. So it's a whole different ballgame they are playing. Don't even try to compare yourself to them. I am currently in the interview process right now for a position at Amazon and they follow a similar strategy to Netflix. You have public share buying program that allows you to do well with a growing public stock, plus the base salary they are offering is insanely high (higher than it should be honestly). So despite not offering a bonus program, it is still a good deal because they are paying you so much that the bonus doesn't matter.
I worked at a small company of < 10 employees when I was first starting my career and they did a profit sharing program like what I listed above. A certain percent or profits were set aside and split among employees. I was a higher-level position so I got a significant portion of the profit pool. As the company did better the bonuses became VERY SUBSTANTIAL. I was getting under-paid with my salary, but after bonuses it put me in the top 5% for salary ranges for my job title. The owner was happy because he allowed me to be highly paid, without the risk of paying high salaries up front. Granted it wasn't all wonderful. I did hold a grudge that I felt like I had to wait out the bonus each year because if I didn't get the bonus than I was just getting a moderately low salary for my position.
You can decide to give a bonus because your company did well, and tell folks it is probably a one-time bonus.
It is a bit difficult to then make this apply to Netflix, though: They are Huge at this point. If I remember correctly, they profit. They can probably safely give small raises, increasing overall financial security for workers. They can, however, still give employees a one-time bonus.
Not bad, but... it would depend on how much money we are talking about, and what office amenities it would buy. For example, once I got a new $1000 office chair that felt less comfortable than the old cheap one -- I definitely would have preferred the cash. On the other hand, once I had to work with a barely functional mouse, and I would gladly spend my own $5 to buy a new one, but that would be against the company policy, so I couldn't.
In general, greater computer screens, more memory, more disk, better mouse -- good idea. (I have no idea what makes many software companies try to save money on this. It is a fraction of the developer's salary, and it can have huge impact on productivity.) Expensive chair, expensive table, art or whatever -- I would probably prefer its worth in cash, because companies typically buy stuff way more expensive than I would. Fit ball could be fun, though.
At the end of the day, the cash remains mine, especially if I invest it wisely. The office amenities that company gives, the company can take away. And I can't bring them to my next job either.
> Buying each employee an expensive present.
Just no. If it's something I want, I can buy it myself. If you buy it without asking me, there is 99% chance it has zero value for me.
> Funding a family vacation for each employee.
Again, I can do this myself, if you give me money. And I prefer to keep my family separated from my job, thank you.
> Making a sizable donation to a worthy cause (collectively or for each employee).
Another thing I can do myself, thank you. Also, high chance the "worthy cause" will be something super politically correct, and I don't want to be that bad guy who publicly opposes it.
"I can do it myself", "I don't need you" etc. - you're being slightly misanthropic here. Why are you assuming GP's employees don't want to do anything together?
Even about office amenities - you're assuming it's several units of something personal. Maybe it's setting up a recreation room, that everyone can use? Maybe people want to install a skylight for their workspace, or set up some indoor plants with water drips and stuff?
I try to keep my job separated from... well, everything else. I can be quite anthropic in my free time, with people I choose freely of economic consequences.
> Why are you assuming GP's employees don't want to do anything together?
If they do, then I have no objection. People are different, probably any choice is going to make someone unhappy.
> set up some indoor plants with water drips and stuff
(shrugs) Well, that's legitimate. In a different company it may be different. But this is not the point.
The point is that:
1. They get to to be involved in making the decision, and
2. This kind of a process will create a clear distinction, in their consciousness, between the bonus money and their salary - since the process for obtaining the bonus money is different and special.
I think by pooling and sharing a fixed amount the reward is company wide not connected to individuals. That aligns everyone to work as a team to generate enough income that you will allow you to take a dividend. I like the approach for smaller business.
I've been at places where you get bonuses and me and the wife always call it "magic money". We don't bank on it and we try to pay down debt or invest it.
We had a quarterly cash bonus program that was variable based on company performance. In the fastest-growth times, it often paid out at the cap (250%). After one such payout, my neighbor stood up and theatrically loudly exclaimed, "I have no idea how this gets determined; I've just been strongly incentivized to act randomly!"
I've had that experience too. I've gotten a big raise, a promotion, and a tiny raise all off an employee "report card" that has had the exact same letter scores each time to the point I think the majority is copy pasted.
Yeah, that is the smart way to do it, but as I learned, very few people treat it that way.
I know that sales people usually are smart enough to "live off the base, play on the commission", but that's because commissions are quite variable. When you get a fixed bonus every quarter, it starts to feel very much a forgone conclusion.
Same. My wife and I actually live within the lowest salary between the two of us so we have no stress even if one of us loses our job. We have an emergency fund and invest the hell out of the rest of the money. That means the second salary is like a year round bonus, which lets us take nice vacations, buy our kids nice stuff, buy nice cars, pay for our kid's college when that time comes, etc. Our actual bonuses go into the year round bonus fund.
In my case, the bonus is based on company revenue goals. And it's small (relative to salary). So, I ignore it. It does nothing for my motivation. As a line manager at a large company, in a non-customer facing business unit, I don't have much impact on revenue (I can't bill more hours or sell more units). My personal goals have very little impact on the bonus. If my bonus wasn't part of my stated comp plan (ie, it only paid on years where revenue was actually good), I would appreciate it more. As it is, it doesn't factor into my daily thinking at all.
Wife's bonus can be considerable. And it varies by a huge amount (low end 8% of salary, high end ~30%). It's more of a motivation for her - the high end is based on her performance, not company metrics she can't impact. Of course, if she busts her ass and doesn't get the high end, she is miserable until the next cycle. Hasn't happened yet, but two years without the high level and I bet she looks elsewhere.
We're fortunate to be able to budget and live within our means without the bonuses. At lower salary levels, in a high COL region, that might not be easy. Like you, we either use them to pay down student loans, pay off cars, or go on a more extravagant vacation than normal.
Yes. I had a high school teacher [underpaid] that gave us donuts in the morning. One day that didn't happen. Anarchy. Screaming, yelling, crying, breakfasts ruined. WHAT WILL WE EAT? This teacher was now an evil villain. The teacher learned: never give out free donuts again.
I visited China in 2000 and remember one night in Beijing I very poor sad little came up to me asking for help for food and I handed her 5 dollars. As I recall at the time the little ones always were asking for “one dollar” so i felt it very nice to give 5... after an hour or so eating in the restaurant when I came out a literal sea of children were gathered all around me begging for the same gift... I had given the little girl the only cash on me at the time so when a little boy very angry dropped the f bomb at me multiple times for not giving him the same - I stopped and asked, “do you know what you just said?”... he was thankfully much smaller then me but definitely didn’t seem to phased fortunately he gave up after a few blocks of walking... I’ll never forget this... both sad how desperate they were but also the effect of being generous... as they say you can’t win
> very poor sad little came up to me asking for help
Never give to beggars. Ever. For any reason.
If you just feel you must give, give food--something that can't be converted to cash. Nothing pisses off "beggars" faster than giving them a sandwich.
1) Most of the time it's a scam.
Often the individual isn't really that badly off or, if they're children, the money is being skimmed by adults.
2) A lot of the time it's criminal.
Many of these encounters are used to snag your attention while you become the victim of a crime.
3) You are not solving the fundamental problem but you are making the area worse for the people who have to live there and deal with the beggars on a daily basis.
I probably should have chosen my words a touch better. Beggars are certainly never in a good place in life irrespective of whether they homeless or not. I don't subscribe to the "welfare queens" rhetoric.
However, giving a small amount of money to that particular person right now does nothing to improve the situation. And, in fact, it makes the surrounding area slightly worse for the people who live there by creating an attractive nuisance.
Comforting? Not particularly. My mother had quite bad dementia. Without me around, I could have easily seen a path for her to becoming homeless. This is a huge indictment of our current government and economic system that having a mental health crisis can consign you to homelessness.
> if they're children, the money is being skimmed by adults
This one may vary by country, but I'll stick by it.
Once I saw kids begging and I wanted to give them money. But they pointed at the packed leftover food from the restaurant. Then I knew it was not a scam and it taught me about the living conditions in that place. Thank you for the chance to remember this incident.
Yeah, if someone actually asks for food, I'll probably help them out--certainly if I'm holding it in my hand. That's only happened once in all my years of walking around cities (and I generally walk a lot wherever I live--which is why I recognize all the habitual beggars).
For almost a half-dozen of my too sympathetic friends, I have introduced them to the local beggar population that they wanted to help by saying: "All right. I'll split it with you. Go there (whatever close food source), buy some form of sandwich and drink--no mayo, and come back and give it to him. He'll still be here; trust me on this."
They have quite the reaction when the cursing starts and the food gets thrown back in their face. It's been sadly invariant.
Supposing someone didn't want food, I don't see that it changes the fundamental reality that they are homeless and begging. In fact it's hard to blame them for wanting a drink in that situation.
The issue is that someone genuinely homeless will happily take the drink and sandwich and consume them later (thus the "no mayo") if they happen to not be hungry right now.
Someone who is panhandling wants money and they get very angry when you interrupt that process. At least in the US, the panhandlers tend not to be the genuinely homeless--they mostly tend to be scummy people. It's a semi-regular news occurrence for someone to follow a panhandler with a camera to find out they really aren't homeless.
It really makes the political discussion about how to help the "homeless" a lot harder because now you have to deal with "How do we make sure that we help the "homeless" instead of these scummy jerks?" And it's impossible to make the separation--the scummy jerks will always work your system better than the genuinely homeless. It's one of the reasons why I'm generally for the basic income kind of approaches--the scummy jerks can't work your system to the detriment of those who genuinely need it.
In the US at least, the "genuinely homeless" that you could actually help tend to be nearly invisible because they don't want to be seen--getting seen gets you noticed and harrassed.
> Someone who is panhandling wants money and they get very angry when you interrupt that process. At least in the US, the panhandlers tend not to be the genuinely homeless--they mostly tend to be scummy people. It's a semi-regular news occurrence for someone to follow a panhandler with a camera to find out they really aren't homeless.
My belief is that this is a very small percentage of beggars and the videos are so widely shared not because they reflect a common situation but because they make the people share them feel better about walking on by. I don’t actually think that you can determine that someone isn’t homeless just because they don’t want to accept food from you.
Maybe it's different for where you are, but I used to see several beggars park their car and unpack before lunch and repack and drive away once past dinner. One would bring a woman and 2 children to help panhandle. These aren't the exceptions--they're the norm.
Should we be helping these people? Yes.
Is panhandling money really helping these people? Not really.
Is their having a car meant to be proof they aren't homeless? And I would encounter several panhandlers just on a short walk to work in Boston; should this one anecdote from an unknown place be enough to completely change my perspective?
Isn't that a bit like evaluating the cost of coffee based on starbucks prices?
We also don't know how recent this story is. When I was a kid, in the days before gentrification and gourmet-everything, there was a doughnut shop nearby that was like $2 for a dozen. It was way cheaper than regular fast food. I remember thinking what a great discovery it was until I found I couldn't handle more than a couple of them before the sugar was too much for me.
I don’t think KK is quite as pricey as Starbucks. A Starbucks brewed coffee is about 2x the price by volume of McDs. As long as we’re talking about standard kk-sized donuts I think it would be difficult to find them for less than $6/dozen.
Are doughnuts different in America to other parts of the world? I couldn't imagine ever eating 12 Aussie-style doughnuts in 1 sitting, unless it was some sort of eating competition. It'd be like eating 3 hamburgers or 6 hot dogs.
Should've doled them out based on performance. My fourth grade teacher used to give out candy bars for good grades. King sized ones, too. No other teachers gave out much of anything except gold stars. I was an overachiever so I usually managed to get a treat.
When you make a charitable donation of cash, you get a tax deduction to undo the income tax you paid when you originally got that cash. If a company directly donates to charity, you don't pay income tax on that money in the first place, so you don't need a deduction to undo it.
The end result is the same $0 net change in your bank account balance.
Also, companies can deduct all expenses from corporate income tax. So if a company pays you money via payroll, or pays that money directly to a charity,t he company will deduct it from corporate income tax either way.
The benefit of a company making charitable donations directly is that payroll taxes are avoided (not to be confused with income taxes). Both the employee and the company benefit from this, because normally both the employee and the company pay payroll taxes.
If I recall correctly, the employees just picked a charity and Google gave the donation. The "gift" was being able to pick the charity. I don't think there was any employee tax break.
Well the employee doesn't have to pay income tax or payroll tax on the money, so in that sense there is a tax break compared to if the money was given to the employee.
Not a tax break for the employee, since the net effect is still less money. Unless you consider losing your job and having no salary to tax also a tax break.
It’s not “still less money” compared with the situation where the employee gets the money AND donates the money. Of course if the employee was not going to keep the money not getting it is a net loss.
People were mainly just annoyed that rather than getting a free phone or some cash as a gift, they instead got the ability to choose a charity to receive a donation from Google (which has "value" but not monetary or physical value to the employee). The expected to receive a phone/cash so it felt like less compensation/bonus when they didn't receive it.
I doubt anyone was thinking about donation related tax breaks or anything like that. It was simply "sure I will have Google give $500 to this food bank, but why don't I get a new phone or cash bonus?"
Yeah, it depends on what situation you're comparing against.
If you're comparing against the employee getting a gift and keeping it, then yes, the employee was better off before.
But you're comparing against an employee who was previously donating the gift and getting a tax deduction on that donation, the employee is better off now.
Obliquely relevant question: can U.S. sole proprietors make expensed charitable contributions? I'm guessing not, because that would decrease the 13.5% Social Security "contribution", and would be on top of the "standard deduction" that was increased to make Schedule A itemization preferable only in exceptional cases.
I don't know anything about sole trader taxation but corporations can make charitable donations that are treated as business expenses (hence not taxed). They pretty much have to be cash, not in-kind contributions though. Ianaa, etc.
It should be a wash either way unless someone falls into some weird edge case where deductions are limited. The corporation is deducting the payment either way, either as comp paid out to employees or as a charitable donation directly.
That’s probably correct but previously they were also paying your taxes on the gift for you (i know). Since they didn’t share all the details it was hard to figure out if how it played out financially.
I didn’t have a dog in that race bc I couldn’t stand android so I wasn’t even claiming my gift previously but it was interesting to watch the political pickle they got themselves in
Majority of goog employees were making high salary in California so very few people in head office were taking standard deduction especially before trumps tax changes
If you make a donation in someone's name, you get the tax deduction, not them. Google couldn't "pay" the employees in some non-taxable form and then let the employees take the $1000 deduction even if they wanted to (which they don't).
That’s my point. The donation is financially a corporate donation, but is being marketed to the employee as a perk of their employment. That it’s “their” donation.
If I care about cause XYZ and as part of my employment, my company gives $1000 to a charity that I picked which supports cause XYZ, that absolutely has value to me.
My current employer does bonuses based on both individual and company performance, and I think they can be sizeable, but I pointedly never did the math when accepting the offer or since then. I don't want to know.
Base salary is in the contract, bonuses aren't. Base salary gives me a floor for how competitive the offer is. Bonuses, if they actually materialize, could theoretically help keep me from wandering off to a higher-paying job -- but I'm probably not going to do that math until I want to leave anyhow.
It's basically like stock options and whatnot. Lottery tickets.
Well, a) it's based of base salary, so managers may be making a lower base than others, and b) while both bonuses are based on company revenue, managers may have a higher target.
It makes sense to have a larger part of sales' income be commission than, say, engineers, who may have less control over meeting revenue targets.
In 25 years, exactly once have I had someone in my team that was paid more than me.
It was someone who had been in the job 5-6 years longer than me, and consistently been one of the highest performers. I believe I was the one to give him a raise to a higher base than me.
So it does certainly happen, but as you say I think they're outliers.
Usually I think you'll see this happen because companies are poor at having a separate tech promotion track that doesn't lead into management, and so it sometimes happens with people that really ought to have been promoted, but that neither they or you want to become managers.
They've already made more money than they or their descendants (probably for generations) will ever need and are very likely also getting capital gains on that wealth through one way or another.
It would be nice first of all for them not to be tax dodging assholes, who like in the case of ActiBlizz not only didn't pay tax to the US but also manipulated the tax system to get tax credits to the tune of hundreds of millions of Dollars in just a single year¹ while also kicking out hundreds of their employees for short term gain.
And if their companies already use the tax system as nothing other than toilet paper, why would one assume they as private persons would do anything different?
I agree there should be less tax loophole exploitation. I think the best way to prevent it though is through law changes to remove the loopholes.
To compare against Blizzard's 2018 numbers, I checked out Google's 2018 numbers (full disclosure I work at Google, but my words are my own). I could be misinterpreting the document, but it looks like Google paid $14.5B in corporate income taxes in 2017 and $4.2B in 2018.
I don't think I'm intending to deceive anyone. It's an interesting salary setup that popped into my mind when I read CamelCaseName's, ryandrake's, and supernovae's comments.
I'm sorry if it came off as deceitful or misled anyone.
I think they are/were, or at least some of them have been at some points in time during which they had a $1 salary. Although maybe there are different definitions of the word manager and I'm not really familiar with them all.
>Typically, responsibilities include being a decision maker on business strategy and other key policy issues, leader, manager, and executor.
>"We've never been ones to hold on to management roles when we think there's a better way to run the company. And Alphabet and Google no longer need two CEOs and a President," their letter said.
That was said when Larry Page and Sergey Brin were stepping back. So it seems to imply their old roles were management roles and their new roles aren't.
The idea is that a non-manager has minimal ability to affect the company's bottom line. While those further up have the ability (and now have the incentive) to affect the profit of their division or the whole company.
So a worker gets 100k with a 10% bonus, his boss gets $120k with a 40 percent bonus etc. In a good year the boss will get almost twice the worker but in a bad year he will make just 20% more.
Yes, 4x is a big gap, not just % wise, but dollar wise too. I'm sure they don't talk about it during the interview. But if somehow that information slipped in during interview, I would honestly just thank them for the time and walk out because I would never work for a company that believes in the large gap of the output of the 2 groups.
The compensation progression for a manager generally consists of a slow (if any growth) in base salary and most compensation increases come from stock and bonus. I believe this is generally the same for high level ICs. Some companies make it explicit that there is an IC level that corresponds to each manager level and both have the same compensation structure.
I had a similar program and there was also incentives based on year end leveling.
We met all of our goals, but because I was 11 months in they cut it in half.
Then I was supposed to receive the top performance award. However, they gave it to another coworker because I had only been there not quite a year. This of course reduced my bonus by half, but again the monetary award was further reduced again. In the end, even though I was leading all the projects and getting things done I received a quarter of what I should have gotten. The full top grant was given to someone who did basically nothing and came to work maybe three days a week. He was also drunk those three days.
I quit two weeks later. Mostly because a friend called because they had reqs open and they were offering me a 25% increase in pay. That wouldn’t have been as competitive if they hadn’t played so many games.
I heard all on my in progress projects stopped because no one knew what they were doing.
> they spent a lot of time explaining that bonuses weren't guaranteed.
In Israeli labor law, if an employee repeatedly gets the same bonus regardless of any concrete criteria, then that bonus is considered as part of that employee's salary as though it had been part of the contract. This is due to many employers calling a part of the salary a "bonus" so as to avoid it counting towards retirement benefits and other allowances; and for the flexibility of being able to cut salaries without ostensibly having done so.
Bonuses are great if they are very transparently tied to external events (exceeding revenue goals etc) and not any internal politics. Worked at one company where one could take the annual report and apply the published formula to come up with your bonus. That was great.
Making it unpredictable and secret is super toxic though. At one SV hardware company we had a great fiscal year, exceed everything and then they announced that based on their super-secret bonus formula, it came out to 0.05% of target. They actually paid out that 0.05% which felt more insulting than just calling it no bonus this year. I did quit the place after that incident.
A much better way to handle it was at another SV hardware company I was later. Same scenario, best fiscal year ever, etc. But bonus computation based on secret formula came to zero. This company had actual decent humans in charge (based on many events not just this one) so they acknowledged that the formula needed fixes and retroactively changed it to account for the exceeded financial targets. Sadly they still kept it secret but in subsequent quarters it did seem to track financial goals pretty well.
We know how to deal with this in the technical domain - we break things on purpose in a controlled way so that people don't rely on an SLO that is there by mere chance.
Maybe companies should do "bonus tolerance breaks" for the same purpose.
The right way implement this is to tie a sizable chunk of the quarterly bonus to an ambitious company-wide goal that fails 30% of the time. If the company is hitting the bonusable goal 95% of the time, the bar is probably too low.
This happened at the Japanese megaCorp I worked at but wrt overtime pay after the financial crisis.
Everyone worked huge overtime, boosting their pay by 50-80% in some cases. Economy crashed, corporate orders to cut overtime ( but obv not the work deliverables), and people were having difficulty paying their mortgages.
There are differences in types of compensation in the very short term because of IRS withholding rules. I think a lot more gets taken out of a bonus early in the year, although of course it's all the same when you do your taxes.
Indeed, and while it certainly makes a difference for someone who is living paycheck to paycheck, if a person has relatively stable finances in a stable economy and a cash cushion, then money is money.
But bonuses are compensation! At my last job I had a negative slope on my total compensation, because I’d get raises every time that barely beat CPI, but the bonuses kept shrinking by thousands. I ended up quitting because my promotion to team lead came with a net pay cut and the CTO refused a pay increase flat. And thus ended eight years, because they wouldn’t pay me as much as my colleagues, and cut enough bonuses and perks that I was making thousands less than I used to make.
Yes, my experience is that companies always come up with reasons not to give the bonus. Recruiters like to include them as part of the compensation. As yeah you ask X but you get a bonus of Y which makes your request Z salary, awesome right. Of course the contract says it’s a discretionary bonus...
I know of a few companies where the pay isn’t quite competitive without the bonus. If you lose 10% of your income with the same or greater responsibilities (life often gets harder when the money gets scarce), your finances and plans don’t give a shit what you called it, they just know it’s gone.
I meant monthly expenses by financial planning. You shouldn't be missing bill payments because you only got base. Of course you will include it in your broader financial plan.
> Because once you get one once, you feel entitled to it in the future, and it feels like a loss when you don't get it.
That seems to be the risk of any company that tries to convince you that you have to do your absolute best as an employee (also known more succinctly as "any company").
Past some point, it's just more money to put into savings--and lack of it is annoying and something to take into account for evaluating future options but not much more.
But, yeah, you have people making less money for whom the expected quarterly bonus was factored into paying their mortgage.
I think bonuses can work as long as they are an actual bonus. The base salary needs to be correct first. I worked at one place where the base salary was lower, but the bonus made up for it and it was super stressful. I ended up negotiating for a higher base.
One upside I've seen with company performance bonuses is that it can (not always) force even a private company to share more information with employees. This is useful for knowing the general health of the company. Even if the company shares nothing, if bonuses drop significantly or go away that's a clear signal of problems. All too often I see stories of people getting laid off and having no clue it was coming.
My approach is to think about the base salary as the "real salary" and the bonus as "lottery".
I negotiate the base salary as high as I need to make. When discussing bonuses, I politely pretend to be interested, but what I actually think is "this is just some imaginary number, that maybe I could get if I win a lottery, which probably is not going to happen".
My family budget is calculated on the base salary. If I get a bonus, I will probably immediately move it to a savings account, or maybe use it as an extra payment on mortgage, to get it out of sight.
The compensation expert Graef Crystal was for a long time a consultant to executives who were negotiating their contingent bonus packages. Sometimes there wouldn't be any bonus at all in bad quarters/years and his clients would claim bitterly to him.
As to eBay, for people who aren't truly poor, running your expenses up so close to the limit that losing 6% means your financial life is in ruins is a very bad way to live.
>And the one quarter, we didn't get the max bonus. In fact, I don't think we got it all. People screamed and yelled and were pissed. At the company all hands they spent a lot of time explaining that bonuses weren't guaranteed.
This is only understandable if the company didn't perform well but did the CEO and other executives not get a bonus as well?? If they didn't it's 100% reasonable. Not so if they continued getting their fat bonuses while everybody else didn't. It's understandable employees become unhappy about this. Let's face it, compensation is mostly one of heaviest factor considered in a job and bonus is factored in to some extent. Hence from bonus to no bonus make that position look less attractive. Pissed? It's an overreaction but maybe it's time to move on. If there are better pastures some people will not hesitate to go. I'd appreciate if the downvoters tell me how is it fair that executives don't get affected by a downturn at all while everyone pays the price collectively, sometimes even the executives mistakes. It completely eludes me and I'm sure I didn't get downvoted by executives.
One reason to do a company with variable comp is if you have a handshake agreement with the hiring manager that they will guarantee to the extent of their ability a high multiplier.
This approach is used a lot in companies where the average tech talent isn’t highly valued and so genuine talent is otherwise unattainable. It’s 100% misusing the system to overcome flaws elsewhere.
This is sort of the deal on Wall Street. You get a "discretionary bonus" and its more mysteriously tied to the performance of the firm. This is the secret, you can't give people too much of a formula. Bonuses have to be conjured up in a nonsensical way, otherwise stuff like this happens.
Its usually both. So you get into the great situation where you did great but the firm did poorly, so you get a doughnut. As you move up the ranks, the process becomes less murky.
Is this natural dynamics in an increasingly large company? As a company grows, individual's impact diminishes and so does visibility, and revenue per employee dwindles. Consequently, resources increasingly concentrate to the top. That's why we hear Microsoft's engineers below level 68 complain about pay, and Amazon's entry-level engineers are known for their relatively small package. Ebay's situation was probably even worse, as their business stopped growing fast long ago.
All the more reason for working for a blow-out small-to-medium-sized company, except for those few who are truly good at climbing up corporate ladders. The accumulated chance of getting outsized equity return is larger than working for a big company.
Depends. The US is a bit special and not everyone works to maximize salary. But where I work, small startups absolutely struggle to compete with large banks on salary (Hong Kong, we do banking like France does croissant or the US middle east wars).
It doesn't matter, the perks. In fact each time I hear of some I think they must have huge salary issue vs the competition and try to find leverage points real company cant follow (a bank wont do your laundry, as I heard FB was offering at some point).
Yeah it was clear, it was because the total company profit didn't meet the internal target, but that hadn't happened ever in the history of the company, so people were surprised.
Does it really make a difference? Seems like it should be set fairly high, if your company is aiming for growth, and sometimes growth is slower for various reasons
In my view, it does. Maybe this was a good company with reasonable management who set realistic targets. Maybe it was a not-so-good company, someone in management saw the line item for bonuses and decided to "solve the issue" by setting a target he was sure would not be achievable, just so they could reduce payroll costs with minimal hassle. I am sure both happen in the real world.
Pretty sure my old job did this. People on programs that were successful would get a little bonus. This ended up changing to “every program across every sector must meet all business goals for bonuses to be paid.” That made it impossible to get a bonus when some programs were experimental or R&D type things that were kind of expected to run on a deficit for a while.
Depends how scalable it is. For some products you need to accurately predict how much you can produce and sell. So targets are a matter of everyone executing their part on schedule.
Same with stock RSUs. Most tech companies have been blessed with rising stock prices - it wont last like that. Sooner or later big names will disappear like Enron, Lehman did.
How? Company should withhold just as they would any other pay. Even if you get dumped on and it bumps you up a bracket it likely won’t have a huge impact as you’ll likely not have a ton of pay in that bracket.
> I remember being in shouting matches with our signal integrity team about among other things, how many capacitors we needed.
I think the place where big companies go wrong is by having teams that are too specialized. If you're the Signal Integrity team, the only thing you care about is signal integrity. You should just say no to anything but the most conservative arrangement possible; you're responsible for Signal Integrity, not profit or time to market! Block the project until the signal integrity is as good as it can be, that's your one and only job.
The even bigger problem is that the existence of the signal integrity team means that signal integrity experts aren't embedded on the product team. The product team can happily say "they're handling that", and cut whatever corners are necessary to get their $25,000 bonus, not caring at all about the tickets the Customer Service Team will have to handle as a result of poor signal integrity, the weird bugs the Software Engineering Team will have to work around, and the terrible reviews caused by a computer that randomly flips bits in memory.
Engineering is a discipline about balance, and I think the balance has to be done inside the team. You need to make a conscious decision to trade off a lower BOM cost for more customer service tickets, and the team needs to own that decision and plan for the future under the constraints of that decision. (Instead of sending out an order for capacitors, send out a req for more customer service.) If there is someone in the "out group" that you can pass your concerns off to (i.e. that makes the cost of your balance decision cost 0 for you), then you'll never make the right balance for the product and company as a whole. You'll just maximize for your own gain. From there, you ship your org chart, the company becomes entirely about politics, and you're out of business... just like DEC apparently.
(I guess I also want to comment on the article as a whole -- being bitter about too small a bonus. Something similar happened to me and I sure was bitter about it. I actually quit over it. It all sounds very rational to me, knowing how humans work, and I can't believe management would do something so stupid. It's the kind of thing that kills your company, and yup! it killed them! If there is one constant in the field of engineering, it's that we forget the mistakes of the past much too quickly. Except Therac-25, everyone remembers that one, but integer overflows are still killing people to this day. Sigh!)
That's true but what can you do about it? It's a direct consequence of building large/complex products. To me it seems that you're just advocating for only building small/simple products.
Typically you have a chief engineering team that is in charge to strike that balance, and drive the compromises with all the specialists.
Special Teams don't get ownership of anything, can't veto anything. They're there to answer any and all questions from the product team and to set the stage for how the product team may solve a challenge (i.e. present a menu of relevant approaches with expert commentary on the applicability to the problem, but implementation is the product team's job).
This limbo position helps tamp down on the prestige of a Special Team relative to Product while still attempting to harness expert value.
So how do you measure the value and contribution of the product and special teams including compared to each other. Somehow promotions, head count, budget and so on needs to allocated. Without ownership or the ability to veto it's not fair to measure the Special Teams on any product related metrics. But if you can't measure them on product related metrics then what do you measure them on? Feedback by other teams which will result in endless games of politics?
The existential political threat has to be reined in as the check on the Special Team. No one wants to be under Damocles' sword, but if you want power, it's the way it has to be.
Give them a veto if you want, but it paints a target on their back. No veto and only able to use soft influence is probably a mercy to the position.
Issue with this approach at some companies though is when Special X Team is measured by the quality of X, but has little authority over Product teams, who have no incentive to do X well.
Maybe hire more generalists, make it easier for people to move around the company, have a 2D team structure (i.e. maybe you have a signal integrity team and a PCB layout team or whatever, but then you would also have a subset of each working together on the CPU Card team). There's probably a name for that.
In my last job I worked at a company that paid slightly below the market rate, not including the bonus. At the time I got the job, I didn't realise that I was already being significantly underpaid. I thought it was a bit low but didn't realise the extent of it. So when I got the new job, I was blown over by the huge jump in salary and couldn't be happier. What was better? I was entitled to receive each year up to a 10% bonus for just doing my job, 15% if I went above and beyond, or 20% if I was a "role model".
At the time, both the recruiter and my new manager explained to me that I should think of the 10% bonus as a baseline expected part of my salary "you will always get this unless you are doing something egregiously wrong". This was indeed what everyone was told, and what management was told to tell people. Of course, this made me recalculate what I thought I was worth and it did in actual fact bring my salary up to roughly market rate.
What the recruiter and my manager said was right. Come bonus time, I and almost everyone else in the company got their bonuses (apart from the people that did egregiously bad, and they saw it coming). In the second year I even qualified for 15% and when I got paid out I really felt that I had actually gotten a bonus. I was banking on 10%, but not 15%! I treated myself to something I'd wanted for ages but could never justify.
Then Covid hit, and suddenly upper upper upper management started signaling that bonuses might not be paid that year. Needless to say, absolutely everyone apart from the CFO was up in arms. Morale, which already wasn't amazing because of Covid, plunged even further and the number of "hallway conversations" increased significantly. People started to leave in larger numbers because the bonus was an expected part of their salary. Each year they waited expectantly to receive it, and if they weren't going to get it this year they would need to go and find a job that paid market rate as base salary. The thing that made this worse was that we were working at one of those few companies that actually did better during Covid. For better or worse, we sold a service that had an increased demand for Covid.
By this time I was a manager, and we were told in a leadership meeting by our head of department where we were all vocally pissed, and were told that we had to pass the message on to the people we managed. Clearly, this is what had happened to him, and to his manager.
The company didn't want to come out and say "you aren't getting bonuses even though we're projected to do better" presumably because it would provide a platform for people to ask why. Instead, they thought it would be better if it came from the direct line manager. Great idea except that we received the message from someone who at the same time said to us "I can't imagine how they'll get away without giving bonuses". It just served to add to the feeling of being cheated.
Anyway, they ended up actually paying the bonuses because the annual revenue figures had increased so much that it was basically impossible for them not to pay them. When we got them, we didn't feel happy that we had received a bonus, we just felt bitter that the company put us through hell for seemingly no reason.
This is what I think of when companies offer the passive-aggressive "unlimited vacation time" policy.
It's not unlimited, and you shouldn't start off your employer-employee relationship with an obvious lie. Set a policy and make it clear that you are exchanging x dollars for y amount of work.
At some companies they call it “discretionary time off” to make it clear it is between you and your manager but the concept is the same. What many companies fail to do is properly train their managers (1) how to manage this with their reports and (2) to consistently take time off as an example to the people that report to them and to set expectations. Without a program in place to encourage people to use it, people don’t use as much as the company typically intends. Due to legal nuances, it is a bit tricky to officially track performance in this regard.
Most companies that I’ve worked at which had this type of vacation policy had a directive for managers to ensure that every employee took at least 3-5 weeks of vacation every year (the minimum varied with company). It wasn’t always successful but that was the objective. More than that was fine too.
One of the original motivations behind these policies was the burst-y nature of some types of engineering work. Companies wanted to allow engineers to take 2-3 months of paid vacation after a relatively intense 12-18 months with few breaks working to ship some product. Giving people multiple months of vacation is surprisingly difficult without also running afoul of other legal and accounting complexities around vacation time in various jurisdictions. The “unlimited / discretionary” policy is essentially a loophole in US law that originally allowed managers to reward people with large amounts of time off. It has been generalized, and has other accounting benefits, but this was the original use case.
Be interesting if there is a roll of a dice each day that increases if you have too many accumulated working days. If you get hit, you are forced to take that day off.
Or alternatively just accumulate holiday days the way it works in the rest of the western world!
In the U.K. the rule is you accumulate holiday but all employees MUST take all their holiday before the end of the financial year. Employers must give at least 5.6 weeks of holiday to each employee, however can give more (either as a fixed amount or unlimited amount). There are some rules that let you roll holiday over to the following year in some circumstances to allow a little flexibility, but in general the rule is you have to take them.
Legally employers must ensure that all employees take all of their 5.6 weeks of holiday, so it’s not a “use it or lose it” situation. Employers also cannot pay their staff more to have them work during their holiday, it’s got to be time off (up to 5.6 weeks, any holiday over that point is discretionary).
Because of this, all employers will pressure employees to take their holiday ASAP because if everyone postpones it you will have everyone off in the last few weeks of the financial year.
As a small caveat, the 5.6 weeks (28 days) is allowed to include the eight statutory bank holidays, and almost always does (i.e. the worker can't insist that they not be paid for the bank holiday, and take the holiday day some other time). So the minimum amount of non-discretionary holiday that a worker can accrue is usually four weeks.
In practice the actual baseline offered in many jobs seems to be five weeks, plus bank holidays.
As a further caveat, bank holidays are actually not different to the remaining holiday allowance in law.
Employers can dictate exactly when you take all of your holiday allowance by law, it’s just that this doesn’t happen in reality. Similarly they can force you to work bank holidays.
It wasn't unlimited though. If startups will let you take 4 weeks, or 8 weeks, or 12 weeks, or whatever - they should simply publish that up front.
I am fairly certain that they would have had an issue with you taking 52 weeks of paid vacation time off per year. The actual policy number is somewhere between 2 and 52.
I agree that 2 weeks of PTO for an employee per year is too little, but I think we are talking about different things.
When employer says “unlimited” they actually mean “take as many as you like as long as your manager is happy with your work” so I doubt you can formalize that in the offer. It’s good deal tho for people who can deliver the goods
If you do really good can you take a year off? If not, then it’s still not unlimited. I’d like my salary and benefits be quantified in my contract rather than “manager discretion” which can go south in a hurry if you have a terrible manager.
In reality I saw employee #1 switch to a different project and take 3 months off. Seems reasonable.
I was happy taking a Friday off here and there when I needed and taking weeks off when I moved. This was in addition to my regular vacations prior to the pandemic.
Everyone anti-unlimited PTO seems to be completely missing the forest for the trees. It’s nice to be respected and trusted to do your work. It’s also nice to fuck off whenever you want.
The argument here is that of course you can’t take a year off and reasonably do your job. Well; we all knew that already.
Genuine Unlimited time off creates an environment of respect between the employee and the employer. If I do my job; I can take some time off. You can’t really do your job if you’re never there, so I don’t get your point.
At every place I've worked there was an infinite amount of job to be done. If I were to take 4 months off I would do less of it than if I've taken 1 month.
So that just shifts the conversation from "how much vacation you have" to "what amount of work is considered enough". Which doesn't seem all that different to me, or at least it would not have been at any place I've worked at.
to be fair, "what amount of work is considered enough" is still an issue with the traditional PTO setup. following the HR manual to a T is not sufficient to keep a job if you never finish anything. I do prefer the traditional accrual system as I feel it makes expectations more clear, and it slightly reduces the impact of the "did I get a reasonable manager" die roll.
also some people (like me) just don't take a ton of PTO. I look forward to cashing out the max accrual at my final salary whenever I end up switching jobs. unlimited PTO essentially penalizes people like this.
I think a fair few of us have been burned by companies where this level of respect absolutely did not and could not exist and engineers were treated equivalent to you, an amateur, calling a plumber to your house and then hovering over them telling them everything they're doing wrong. Informal PTO would have just made the situation even worse.
If you want to be real pedantic I can counter with the fact that at least in the US and with the “at-will” contract just because they promised you 25 days of vacation doesn’t mean you can take it whenever you please or at all.
Fired might be different, but if you leave some places won't pay out vacation or only 50%. Some places have learned not paying out banked leave leads to poor outcomes but others still get away with it. Not paying out vacation is a good way to get someone to take all their vacation right before they leave so you get no time to offload work.
Also depends on the state (for example, in New York State employers are mandated to pay out accrued vacation time unless it's a stated, formalized policy not to).
If you give people defined vacation time, you have to pay it out when they leave in CA. If it's undefined it's worthless, which is good for the employer.
Yeah I think it creates an insane inversion where the people there the longest can effectively have unlimited PTO and the people that are new are fucked. I was just talking about this with my wife.
I’m back to a traditional place after unlimited. It’s annoying waiting to accumulate time, but I prefer the lines being clearer. The way my old company did unlimited felt like a cheat to not have to pay a vacation accumulation out if you didn’t use it, but you also felt like you were put on the naughty list for taking too much vacation. If you took beyond a certain amount of leave, someone from higher and higher up the chain had to approve it. Well, you can’t the time of day from the upper echelons of management, so getting your only exposure with them to get approved felt like getting a spotlight put on you for the wrong reasons.
I take about 3-5 weeks of vacation a year + our 14 company holidays.
I typically do one big road trip for ~2 weeks and then a week randomly through the year plus random days fishing, doings tuff with kids or just taking a break from work.
Similar story from a friend. The privately held company paid record dividends in both 2020 and 2019, but used COVID as a cover to do without both bonuses and raises. The only way to see this money would be to become a stock holder in the company, which is only offered begrudgingly.
> both the recruiter and my new manager explained to me that I should think of the 10% bonus as a baseline expected part of my salary
If a company does this in Europe [I think generally in the EU], I believe it would then be considered a contractual entitlement and part of your salary - so the company would legally have to pay it anyway.
I work London finance. Bonuses are a big part of the pay package (in many cases over 100% of your base, sometimes even 10x base for guys who work on successful algo-trading projects).
Every place I've received a bonus from gave me a gigantic, in-very-clear-terms, no-nonsense page to sign that said I acknowledge the this bonus is discretionary, it is not to be expected, there is no expectation to ever receive another one, etc.
This is most likely done because everyone expects to get some kind of a bonus (if you don't receive a bonus, unless the company is basically going bankrupt, that's a really, REALLY strong sign that you should probably your bags up and GTFO). It is considered part of the basic pay package, but then again, one of these years, there might not be a bonus, and they want to make it absolutely clear that you can't expect one in that case.
The reason for this is that most hedge funds pay bonuses out of their performance fees, and if you have a shit year in the market, there isn't any money to pay bonuses.
This reminds me of my first job as a developer, age 21. I haven’t shared it before, so here goes...
There was a ‘crunch’ coming up at work (i.e. IMHO, bad planning) and so the boss offered everyone a bonus if they performed well.
However, the older employees warned me that the criteria for such bonuses were often ill-defined. I therefore pushed for clear achievable objectives. These pre-agreed objectives were promised, but never provided.
Anyway, we all work hard, some more than others, but we met all the deadlines.
Then comes bonus time, and they propose that I be given 30% of the maximum bonus. I explained that I felt this was entirely unreasonable, as I met all my deadlines. No other objectives were set, and therefore I felt I deserved the full bonus.
They didn’t agree, and we went three rounds of meetings with more and more people in the meeting. Each time they tried to convince me what I was asking for was unreasonable.
At this point I should add that I had seen this boss (CEO, small company) be what I would now call abusive. Verbally abusive to junior staff members, and insulting members of staff behind their backs. So my loyalty was, well, absent.
So on the third round of weirdly manipulative meetings, we come to an impasse. So I explained that I still stand by my request, and I pulled out my letter of resignation.
At which point there is a long silence. My boss puts his head in his, and the other two people in the meeting (another boss, and my coworker) looked surprised, to put it mildly.
After collecting his thoughts, my boss asks: what is to stop me threatening to resign every time I don’t get my way? To which I calmly explain that he didn’t have to pay (Ie. I could just quit).
After a bit more stunned silence, the boss relents, and agrees to give me the full bonus.
I wait until the bonus is in my account then I hand in my notice anyway. Abusive bosses don’t get loyalty.
The best part is, the coworker in the meeting also didn’t get the full bonus, despite working much harder than me. He’d only asked her into the meeting to try to guilt/manipulate me. So not only did the boss have to give me the full bonus, he had to do the same for her too.
After that I went freelance. And 15 years later I can say it was the best decision ever.
> After that I went freelance. And 15 years later I can say it was the best decision ever.
Every time I've left a job, I've been uncertain and conflicted. Every. Time. Then, a week or two into the new job... Every. Time. ...I thought, "Wow! I should have done this sooner!"
I’ve worked for a startup who was giving 866 stock options per month. Had I known they are valued $125 today, I would have:
- Shut up a few more times because I’d trust more the managers, and just followed the stream,
- Accepted to be patient about being a developer on a boring project, because what stressed me was “I don’t know enough to reach the career level that can allow me to ever buy a house.”
- Made 4 millions instead of 1.
I regret leaving and aggressively seeking for a better career, but at the time, things snowballed negatively because I wasn’t getting enough emotional attention. Of course it was a rational choice on both sides, but it was a mistake overall.
On my leaving card, all my colleagues wrote variations of “To the most motivated guy every” – proof that I was putting in decent work, albeit not working cleverly enough.
You really shouldn’t feel bad, because what happened has a low probability.
It’s like saying I should’ve invested in X which got quadrupled in price last year.
Most stocks (even very promising ones) didn’t achieve anywhere near that growth.
So you choosing the right one among the many to “shut up and stick to it just a little bit longer” has a low chance of exceptional returns on your investment.
You cannot see the future, even the most sophisticated analysis can be wrong, and even the best companies can stagnate for a loong time before getting lucky.
Exactly. This is like being dealt a horrible set of cards in poker and kicking yourself for folding. Let's say you got 2,7 and then found out the cards on the table turned out to be the rest of the 2s. Folding was still the right move
I wonder how widely the concept of expected value is discussed outside of poker or statistics. Simple concept, but it can really help with all kinds of decisions in life.
The problem is that people make lots of claims towards the direction of "stock options are always worthless" when they should say more like "stock options are often worthless but sometimes can be ridiculously valuable". Startup game just provides high returns to small minority, and some people after couple of negative experience seem to decide that everything must suck then and spread it around in here and other forums.
The mindset you should have (I know it's easy for me to say) is that you made the best decision with the data available at the time.
For every success story, there are many more failures, where after years of hard work, the company still doesn't succeed, where the managers that look like idiots are really idiots, and the stock options end up being totally worthless.
Regrets are pointless. Had I known what I know now I'd have put my (unused) beer budget into crypto this time last year and be looking at retirement now.
Ignore the money, divorce your happiness from money, and do what makes you feel happy. Sometimes you're ahead, sometimes you're behind. The race is long, and in the end, it's only with yourself. Your choices are half chance, so are everybody else's.
Counterpoint: they sell ~8 hours of their day. Selling that to the highest bidder ignores that there's different environments that might be better or worse for everyone's general sense of fulfilment. IMO, chasing highest pay only is a recipe for an unhappy life that only pays off on the short term.
No one should sell themselves short, but choosing, say, a 100% worse environment or a dead-end technology stack for a 5% higher pay (or whatever) is not wise.
Why? My job is extremely easy with a great team and manager. I could get more, but I'd have to work in a high stress environment, and life is too short for that shit.
I think the grandparent was implying all other things being equal. If the highest bidder requires that you work in significally different and more difficult conditions, then it's not really comparable.
The problem is evaluating the size of the bid. Salary is only one part of the equation and people rarely get wealthy on salary alone. There are multitude factors when evaluating the "bid" of the company and to actually understand what is valuable and what is not is the difficult part.
It's not. That is an independent contractor relationship. Employment means you play ball for the stability of the paycheck. If you want to throw a tantrum every time you feel slighted, you shouldn't commit to a full-time permanent job.
Employees are not the top of the totem pole, there are always other factors that people making these decisions have to consider. They don't always have to share that with you. It's a nice idealistic view to think otherwise, and I truly hope you always find work in places like that. But this is not the lived reality for the majority of people, and it's actually not a bad thing.
They pay me because of my work/because I am valuable. From the story, the poster was valuable (otherwise the boss would not have paid him/her out).
> Employees are not the top of the totem pole, there are always other factors that people making these decisions have to consider
And that is entirely his/her thing. If I was promised this and that for a given task, I should be getting it, even at the detriment of the company, his her own paycheck, whatever. I am not responsible for the well-being of a company, it’s not your “family”.
Of course, during unexpected events (like COVID), things like an
OPTIONAL temporary pay reduction for every employee (very much including the bosses themselves) is acceptable, and I think any employee planning to stay there will gladly accept such if the leadership is otherwise not exploitive/fair.
"Value" does not just comprise of "coding ability". "Attitude" is a key part of it, and I guarantee you the vast majority of all hiring managers everywhere would eliminate a candidate if they demonstrated high entitlement during the interview process.
If they somehow get hired because that quality was hidden somehow during the interview process, the moment it surfaced, there would be behind-the-scenes discussions on how to cut that person from the team or company, because they are destroying morale with the rest of the team.
I am intrigued by the downvotes, because I am not saying anything controversial or disconnected from reality. People may not like it, but if they're so sure of their position, I do encourage them to put an equivalent line of the counter-argument on their resume when they're applying for their next job.
One more point: I make my comments having done all sides: Employee, independent contractor, employer. You are never prevented from leaving to start your own thing, as the original commenter indicated. But harbour no illusions that working full time for someone in an employment agreement allows you to act like you're an independent contractor that can randomly walk away. You can certainly give your two weeks notice and do so, but after the 2nd time, you'll be radioactive in the job market.
> "Attitude" is a key part of it, and I guarantee you the vast majority of all hiring managers everywhere would eliminate a candidate if they demonstrated high entitlement during the interview process.
I do agree with you that not only technical abilities are considered, for good reason. But not standing up for ourselves and letting us being bullied and exploited by higher ups is not an attitude in my book. We may have read the story very differently, and of course we only got one viewpoint on what happened. But I think you would agree that there are exploitive bosses (just as there are many great leaders), and there are many who simply can’t stand up for themselves in a corporate environment.
Certainly, there are plenty of exploitative bosses and we should definitely encourage people to stand up for themselves. I provide new hires with several books, one of which is a book on personal finances that includes a chapter on negotiating a higher salary. It's important to me that people are empowered in their work and their lives.
But this is not the story of the comment I was engaging with. The original comment stated:
Boss: What's stopping you from doing this every time you don't get your way?
Commenter: Nothing. That's how negotiating an employment relationship works. Holy shit.
Again for context, the original story stated that the bonus was brought up but the criteria for receiving it was never officially documented or agreed upon. The bosses decided on 30%, and the poster felt entitled for more. He's certainly entitled to feel that, and he's certainly entitled to make his case for it. He's also certainly entitled to resign if he didn't get his way.
But to threaten to resign if he didn't get it, and then resign anyway once he did get it, is just poor form. Like I said, he can do it, he did do it, the company can't and didn't claw it back after he resigned, it's now 15 years later, but this story does not portray the protagonist in a positive light for hiring again in the future.
That should not be a controversial statement. You should always know your value and worth, and this goes BOTH ways. I would say the same about any role, whether it's sales, marketing, HR, ops, customer service, or whatever else. One can't be unreliable in a company, and expect that not to be a problem for future job opportunities.
You seems to have a very 'personal' view of the employee/employer relationships. But i think the core of the issue is that for the last 40 years, corporation in general, have work very hard to "depersonalize" this relationship to the point where most employee have lost any sense of loyalty. So the way to see this is as a legal business relationship where every party maximize they own interest and they is nothing wrong about that. An employer should'nt takes is personally.
I see this weird dichotomy every time on asker news or in corporate america : Companies treat employee like a resources and try to extract maximum value out of them (like promising a vague bonus and giving only 30% of the target without clear explanation) and get confused when employee do the same.
> But to threaten to resign if he didn't get it, and then resign anyway once he did get it, is just poor form
No the bonus was paid for service rendered. After that his continue employment was subject to renegotiation. Let's not forget that the employment term were probably "at will" on the demand of the employer.
OP felt that his employer broke his trust ? Would you work with someone you don't trust ?
> That should not be a controversial statement.
I honestly think it is. And i think your statement are really pro employer and doesn't reflect the current state of the average modern employer/employee relationship.
> One can't be unreliable in a company, and expect that not to be a problem for future job opportunities.
That OP did meet his requirements meant he is not unreliable. If OP wasn't providing value at the company , he would have been fired a while ago.
Reliability, as everything has a cost, in this case it was paying the full amount of the bonus...
I do respect your opinion on the topic and you seem to just look at the story from the employer’s point of view, as opposed to perhaps the majority of people here, who rather “root” for the underdog.
But I still don’t disagree entirely with the quoted part.
> Boss: What's stopping you from doing this every time you don't get your way?
Downscaling the dramatic effect of the exact text a bit, I think the response is fair, if we mean under “don’t get your way” something significant. Like how about a transfer to a different building? A good boss should ask a given employee beforehand, whether it is feasible for him/her, but if it was already decided and the employee can’t have a say, pretty much resignation is the only “tool” he/she can leverage. Even at pay negotiation, while seldom brought up explicitly, resigning is there implicitly.
All in all, I think talking about the exact incident is fruitless, because we only got an anecdotal story without both sides, so I think you and I “drew” the rest of the story differently.
Negotiating is expensive, and constant renegotiation is bad for morale. Employers wishing to avoid that should not change the terms of the agreement by eg requiring or expecting crunch time. Such a change is an act of renegotiation, and employees will leave (BATNA) or negotiate for more compensation. If employers do not wish to add additional compensation to match their changed expectation, well, OP had his resignation in hand.
> I guarantee you the vast majority of all hiring managers everywhere
You're qualified to speak for a majority of hiring managers everywhere?
Maybe you meant in a relatively small geographic area, in a relatively small number of companies? Maybe some of the same ones that colluded to keep salaries low by making illegal agreements amongst themselves?
The problem with most discussions on this topic is that everyone thinks their own experience is universal.
Incidentally, what you're assuming is that your internalized reality (of being allowed to resign at most twice per career) is real for everyone. It absolutely is not, which is why you're getting downvoted.
You're qualified to speak for a majority of hiring managers everywhere?
As I stated, feel free to place your counter-point in your resume next time you're looking at next steps. We are unlikely to cross paths in the professional world, but I would be happy to hear about your positive success in the job market with these statements prominently displayed.
your internalized reality (of being allowed to resign at most twice per career) is real for everyone
That is not what I stated so please don't misrepresent it. The discussion is about resigning or threatening to resign whenever you don't get your way in a company. The original comment stated:
Boss: What's stopping you from doing this every time you don't get your way?
Commenter: Nothing. That's how negotiating an employment relationship works. Holy shit.
Again for context, the original story stated that the bonus was brought up but the criteria for receiving it was never officially documented or agreed upon. The bosses decided on 30%, and the poster felt entitled for more. He's certainly entitled to feel that, and he's certainly entitled to make his case for it. He's also certainly entitled to resign if he didn't get his way.
But to threaten to resign if he didn't get it, and then resign anyway once he did get it, is just poor form. Like I said, he can do it, he did do it, the company can't and didn't claw it back after he resigned, it's now 15 years later, but this story does not portray the protagonist in a positive light for hiring again in the future.
> As I stated, feel free to place your counter-point in your resume next time you're looking at next steps. We are unlikely to cross paths in the professional world, but I would be happy to hear about your positive success in the job market with these statements prominently displayed.
Which statements ? like saying on your resume "I quit my job because i didnt get the bonus i felt entitled to" ?
This is hardly a good metric. Most people when reading a piece of information would have the tendency to assign blame to the party they do not identify with. The way to look at it, if you were to ask the employer to add to the job description "The last guy who this job quit he didn't get the bonus he felt entitled to" would equally deter job applicants.
And second , some people can absolutely pool this off, depending on how valuable they are to the company.
I allow my boss to be very demanding. Want me to take an important customer call during holidays? Sure, I can convince my wife to allow that. Want me to work a week in a different timezone? Let me check first, but should be doable.
But. Do. Not. Ever. Touch. My. Compensation!
Being promised 100% but arbitrarily receiving 30% would be a no-go for me.
> I allow my boss to be very demanding. Want me to take an important customer call during holidays? Sure, I can convince my wife to allow that. Want me to work a week in a different timezone? Let me check first, but should be doable.
That's a really hot take. That shows that the company is very fickle and very bad about planning.
And frankly, I'm not going to shed a tear if they badly planned a business meeting on my vacation and then expect me to attend.
Now, given my position, I specialize in "accidents" or the recovery of. I get paid well for that. And I can decide when and what my schedule looks like. Outside of that and the appropriate pay for that skill, I expect my hours to be stable and consistent. In exchange, I will deliver consistently and stably and get money for that.
Tl;dr. Touching my hours (aside real unplanned disasters) IS touching my compensation, and you will not do this without appropriate offsets.
I should probably add that given the amount of holidays / parental leave we get in Sweden, these interruptions feel like a refreshing break from holidays. :))
But I agree with you. "Available randomly" is something I charge for.
After you pulling a resignation notice as an argument, an experienced boss would instantly know you would not be an asset he could rely on even mid-term, so his best option from a business perspective would be giving you no bonus at all (or the original one), and immediately starting to look for a replacement (and probably firing you).
This is an employer-employee power relationship. In general the employer has the power, but it cuts both ways, to some extent.
Pulling a resignation notice shows that relationship to have broken down, probably irrevocably, I agree. But, the employer initially broke the relationship, by not keeping their promise regarding the bonus.
The employer (perhaps here the boss's boss) knows they have treated the employee unfairly to an extent that could become legal, which would have an associated cost, and also could impact upon the other employees' motivation (and how employees evaluate the promise of future bonuses).
If the employee is essential and their replacement cost is high, then there's an significant additional cost to firing them fast.
The employer might have to weigh up the costs, and could reason that it's cheaper or otherwise better for the business to pay the bonus.
> However, the older employees warned me that the criteria for such bonuses were often ill-defined. I therefore pushed for clear achievable objectives. These pre-agreed objectives were promised, but never provided.
He asked for clear conditions and management agreed to provide them, but never did. They were playing him. The comments from the older employees suggest this wasn't the first time they used this tactic.
> what is to stop me threatening to resign every time I don’t get my way? To which I calmly explain that he didn’t have to pay (Ie. I could just quit).
This might be my English failing me but I can't understand your answer; it doesn't seem like it's actually addressing the question that was asked to you.
Could you elaborate a little further? I was met with that question before and would like to learn how to handle it well.
It's just pointing out "yeah, if you're worried that I'll keep doing this, then feel free to just let me resign - but if you want me to stay, you'll have to live with the risk that I'll do this again". It's not assuaging the manager's fears at all, because there's really no way to do that.
This reminds me of a story back around that time about a guy who was, like, employee 200 at Amazon. He goes to the can, and sees a vestment sheet for the early employees, and realizes that he’s been hired just after people were getting stock grants. Just just prior to him are shortly to become millionaires, and he’s sitting there with a regular job. He quit because of the inequity, and did a tour with this story as a “comic,” but it was just bitter. (I can never find this story any more.) Anyway, the point is that he has a great job at a booming company, with nothing but bright days ahead, and he can’t enjoy it because he knows other people are getting a lot more. I mean, I get it, but everyone can point to someone who has made a better deal for themselves. It doesn’t mean you have to despise the deal you got. I know I can’t make that kind of money because I know I don’t have the personality or family situation to make that kind of deal. And that’s ok. I can’t complain. I do alright.
There is something buried deeply in our minds that recoils at being treated unfairly. I have a good job, the pay is decent, the work is interesting - but I'm in the process of looking for a different job because I didn't get a promotion. Some junior members on my team did get them though, and it feels unfair (I absolutely have no idea if they don't deserve it, and I like them as team mates). However, I had previously talked to my about the promotion, set the targets, and went above and beyond to meet those ambitious targets.
I've introspected a bit, and I admit it's weird reaction - nothing changed about my job, except knowing my colleagues were being recognized and getting something I am not. The perverse thing is, if no one got a promotion, I wouldn't be this pissed.
Wow. I had a similar experience last Monday. A coworker I like personally, but who I consider myself more senior than, was given an important role on the team that I had been working towards and discussing with my manager. I felt this incredible, irrational anger as soon as it was announced and it stuck with me for days. I went to bed angry and woke up angry. It really surprised me how visceral and uncontrollable my reaction felt. It consumed my thoughts. I’m halfway through a four day weekend to disconnect and try to reset myself mentally because while I still think it was unfair, I can’t actively feel this way and still function well at work. Time will tell if this weekend was long enough...
I experienced the same thing more than ten years ago. My coworker and I we were even of the same CS class, and my grades were better than his and I worked two years longer than him in the company but yet he turned out to become my boss.
In my case it seems to be simple to explain why. Have a look at my profile and perhaps you discover the probable cause.
Now I stopped working as an employee and I look forward to never return at slaving away.
One of the companies I worked at previously made a big deal about employee
-driven performance review / promo packets every year. Everyone's title had a level like a role playing game. There was also a culture of compensation transparency among coworkers. I thought it was all quite toxic, leading to a lot of very well compensated people stressing out and complaining. At its worst, it lead to instances of passive aggression and depression across many teams.
My current company encourages regular direct feedback, mostly lacks titles internally, and there's a culture of compensation opacity among coworkers. Folk don't talk about money outside topics of general interest, and managers and HR are responsible for periodically reviewing and adjusting compensation for fairness. I haven't had to worry about or discuss money professionally in years, other than to get called into a short meeting to be pleasantly surprised by an adjustment. There's no bonuses other than the occasional verbal praise I receive from appreciative coworkers and management, and I think that's worth more than incrementally more money.
One time I did offer to pay out cash to any coworkers that reduced network traffic on a particularly over-utilized CAN bus, at a bounty of $0.10/Kbps. One sucker, er, respected coworker fell for it. Best $20 I ever spent!
There's a famous psychological experiment where people are split into pairs and given a pot of cash to share. One person decides how it should be apportioned, and the other decides whether to accept that share. If they reject it, neither person receives any money. The logical decision is to always accept the money, because a small amount is still better than nothing. However people don't do that. At a certain point, the desire to punish unfairness outweighs the desire for the money, and people will reject money in order to prevent the unfair person getting anything either.
On repeated version of game, it pays off to reject unequal deal. So that the other person is incentivized to offer more. So apparently, the desire to punish feeling is optimizing our behavior for repeated game.
Pls, if we are competing in some sense, say socially, then it is better for you to prevent advancement of person you are competing with.
Which is exactly why I'm comfortable turning it down if it's not equal. I didn't lose anything.
Neither person did any work so I don't understand your point. Why would you offer someone less than half the money when you are no more entitled to it than them?
The only reasons I can think of is to take advantage of them settling for less, or because you think you are entitled to more money. Both of which are morally wrong to me.
You write as if "equal" is the objective correct way to distribute.
It is a really fun experiment which they replicated in different cultures and got vastly different results. Even both extremes of the spectrum are good ways to describe expected behaviour in some cultures.
In some places, the first person would take all the money, and the second would happily accept that split. He could have been first after all and would have done the same thing. In other places, the first person would give everything to the second, who would still reject this split. Neither wants to receive money 'undeserved' by being lucky in getting first or second.
All participants would describe their local approach as fair, despite the split definitely not being equal.
There's literally a biblical parable about this (though sort of in reverse). I'll paraphrase it (it's from Matthew Ch 20):
A man goes out in the morning to find workers for his vineyard, promising them each denarius for the day. Around lunch he goes to find more workers. During the afternoon, he goes to find even more workers. At the end of the day the man pays everyone, starting with those who arrived during the afternoon. To these folks he gives a denarius. The workers who had arrived earlier see this and think they're about to get a bonus, only to then also receive a denarius apiece.
The main purpose of the parable is to describe that everybody who makes it to Heaven is there on equal terms. But there's another truth to it that the article also describes--if you agreed to work for a wage and then receive that wage, can it really be called unfair?
> The main purpose of the parable is to describe that everybody who makes it to Heaven is there on equal terms.
I believe a closer reading of that passage suggests that the purpose of the parable is to show that Jesus is upending the social order that currently exists* to show favor to the those who are currently the downtrodden and outcast. See the end of chapter 19 where Jesus says the rich will not enter the kingdom of heaven and the first will be last.
Then chapter 20, the parable in question, and the parable ends with:
"Am I not allowed to do what I choose with what belongs to me? Or do you begrudge my generosity? So the last will be first, and the first last."
Jesus would die for sinners, both Jews and gentiles. The gentiles would be grafted in, as Paul says in Romans 11. An incredibly offensive idea to the Jews of the day but demonstrative of a God who is rich in mercy.
> But there's another truth to it that the article also describes--if you agreed to work for a wage and then receive that wage, can it really be called unfair?
FWIW, I think you are exactly right on that part.
* I don't think this meaning parallels or supports current cultural efforts to "upend social order." Completely different culture and circumstances being discussed and Jesus' desired outcome is very different IMO from what I see many in our current culture fighting for. He was concerned primarily for people's souls, not their economic or political standing. In fact, that was one of the reasons he died the death he did...to show that his kingdom was not of this world, his concerns were not primarily those of this world, and his disciples should do likewise.
> But there's another truth to it that the article also describes--if you agreed to work for a wage and then receive that wage, can it really be called unfair?
You define what's fair based on what information you have. If new information reveals that trade was not only unfair but a blatant rip off you are within your rights to feel something about it.
Still, I think one should accept the past trade. But there's no reason for that, combined to the new information to guarantee a continuous relation.
In other words, renegotiation based on new information that substantially change the deal is moral.
This a very one linear way of looking at the world.
Sure, it might be about "power games" but feelings do matter and morals too and how one feels about it does give you the extra energy and drive to succeed at a (re)negotiation. So... how can one ignore all that?
The original debate was if it's unfair.
I think taking advantage too much during an initial negotiation is unfair but since the other side did agree it is a "fair" trade for the other party (based on the partial info they had).
Once extra information is revealed, the trade is not fair in retrospect. But new information should only apply to future trades: as such, negotiating or quitting is moral.
You might be sub-estimating how good people are at power games. Quitting out of spite is know to happen so people are willing to take a loss due to unfairness.
Assuming rationality and ignore feelings and morals while focusing only on the technicality of "power games" is super simplistic.
This isn’t really the situation GP was talking about. The company offered early employees stock. At some point obviously they have to draw the line and stop doing this. GP felt they were ripped off only after learning not that they missed the boat, but how close they were to being on it. The company wasn’t unfair to them, especially since GP agreed to a certain wage and the company was willing to pay that wage.
the parable leverages our feelings of injustice tickled by the very relatable narrative to carry one point home, the Heavens part.
the other, secular reading, has a heavy taste of prosperity gospel, putting employers into God's boots to justify blatant injustice and better margins, fka profits. it is and remains unfair to offer different employees different wages for the same work.
please don't use the gospel to justify injustice.
btw,bI'm amazed there are employee owned companies.
For example whenever there is another round of Huawei bashing I remind myself that Huawei is fully employee owned with no majority shareholders.
The exact situation is (intentionally or not) very obscure to outsiders. There’s a research paper[0] dedicated to the question of who actually owns Huawei. Its authors found that:
> The Huawei operating company is 100% owned by a holding company, which is in turn approximately 1% owned by Huawei founder Ren Zhengfei and 99% owned by an entity called a “trade union committee” for the holding company.
> We know nothing about the internal governance procedures of the trade union committee. We do not know who the committee members or other trade union leaders are, or how they are selected.
> Trade union members have no right to assets held by a trade union.
> What have been called “employee shares” in “Huawei” are in fact at most contractual interests in a profit-sharing scheme.
> Given the public nature of trade unions in China, if the ownership stake of the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.
> Regardless of who, in a practical sense, owns and controls Huawei, it is clear that the employees do not.
For what it’s worth, Huawei’s own legal chief described[1] it as a private company back in 2019.
The idea that a software engineer being bitter about his still probably high compensation being an injustice is laughable bordering on insane.
We live in an age where you don’t even have to get out of your house in order to make a very good living and we have the audacity to call it an injustice when somebody else receives something that we didn’t instead of just being happy for them. As if the key to modern happiness is found in personal financial gain.
> remind myself that Huawei is fully employee owned with no majority shareholders
You know it’s a Chinese company right? That employees have as much control over it as they do companies that are formally state owned enterprises, none? That it’s run by the internal CCP committee?
My view is: everything is comparative but if you make everything a comparison, boy you are in for a world of hurt. Life is mostly unfair so better treat the good times like the bonus that they are.
> Anyway, the point is that he has a great job at a booming
> company, with nothing but bright days ahead, and he can’t
> enjoy it because he knows other people are getting a lot
> more.
That's only partially true. You might have just realized that you're worth more, and that you could do about the same job at a different company and get better remuneration.
I can offer an anecdotal example: back in my first job I had reached quite a happy point. I was able to do my job without much problems, I was competent for my tasks, and my compensation was okay-ish. Not great, but I could sustain myself and get me something nice every now and then.
Then I started seeing people as competent as me leave and get waaaay better remuneration, doing jobs maybe different but still interesting/engaging, still rewarding.
Anyway, I stayed there for about two more years, then I left. My next job was a ton of fun, got competent at it again after some initial ramp-up, and was making waaay more than my first job.
Mike Daisey, the guy who got caught lying about conditions at Apple factories, so not sure how much I believe the story about finding a vestment sheet.
I actually think bonuses and equity grants are terrible for comapany morale. I've seen it many times, and heard many more stories.
On top of the issue in this story, there are others too.
For example, if someone wants to leave, but the bonus or vesting is coming up, they will stay, and you don't want people on a project who don't want to be there.
As another example I know people who work at companies that are going to IPO, and nobody at the company is working at all. They just spend all day thinking about the IPO, and afterwards, checking the stock price.
I don't expect this to be a popular opinion here, but anything outside of a salary for compensation is just a bad idea.
I think the equity thing might be real in a very small company, but I don't think it works the same at a mega-corp where your contribution is generally a drop in the ocean. For example, I currently work for a Fortune 500 financial company and the default company match option is in company stock. I don't think I've ever heard of anyone talk about doing their job better in the context of the stock price.
> If you pay in part in equity (or performance-based bonuses), you can balance that somewhat.
that reminds me of a post i read some time ago...
Basically anon was in the middle of a job interview with this startup. the founder/ceo was willing to pay an important part of the salary in stocks, arguing that the stocks grantet for first year alone would have meant anon would get at least one million dollar.
Anon asks if the boss/ceo would be willing to pay no stock but sign an agreement to just pay out one million dollar in one year. After all, it should be the same amout of money, if not less, since the ceo was talking about "at least one million".
> No pay structure is a substitute for strong leadership
Can't emphasize this point enough. Frog$kins are necessary, but not sufficient, for retention. Especially when the talent has enough resources to decide that it isn't tolerating a manager or customer with the personality of a dented wastebasket.
On the other hand a poorly designed or executed comp system will cause unhappiness and distraction even when everyone is paid well. It’s an unforced error of the business world.
We stack rank where I work. My mgmt can't imagine any other way to evaluate employee performance. And the manager I report to isn't very technical, so he can't evaluate actual performance. So he goes by tickets closed, word of mouth from his peers, and how gung ho you are. Since he's not technical, he can't set realistic goals for his staff. So promotions, raises and bonuses are all political.
> but anything outside of a salary for compensation is just a bad idea.
In the hedge fund industry, you can't be a successful firm without a bonus compensation model.
- The profit is usual attributable exactly to specific people. If they don't get paid their share of what they brought in, they'll quit and go elsewhere where they can be paid their share, and you'll be left with all the worst people.
- Some years are successful, and others aren't, meaning you can't have a stable high salary, since that will risk bankruptcy in unsuccessful years. You could adjust salary up and down each year, but that's no different to having a bonus.
In a "normal" company where revenue is stable over time and each person's contribution isn't so easily quantifiable, I can see your point.
> If they don't get paid their share of what they brought in, they'll quit and go elsewhere where they can be paid their share, and you'll be left with all the worst people.
You are selecting for lucky people that way not competent.
To a large extent I agree. It'll come down to the type of strat they're running. If it's a very short holding period, performance is more correlated with skill, and the bonus should therefore be more correlated with individual performance.
>For example, if someone wants to leave, but the bonus or vesting is coming up, they will stay, and you don't want people on a project who don't want to be there.
People shouldn't stay at a company based on money? Isn't money one of the main factors causing people to stay at a company?
Or are you more saying they're staying only for a few months then quitting? Yeah, I see that. But maybe the answer isn't to get rid of bonuses and equity, but rather to spread them out over a long time. Don't have yearly stock vests, instead have monthly ones spread out over a year or more.
Startup I work for was acquired within the past year; came through as a "key employee". Don't like the new environment. Huge management hierarchy and management culture, command/control, siloed decision making, and etc.
Unfortunately my reward, as such, is tied up in retention based compensation. Not phoning it in yet, but struggling to reach the 1 year cliff. Honestly coming around to the idea..
I'm likely headed back to a more "lifestyle" business working directly for the founders though. Lifestyle in the sense that the company is aggressively focused on the work culture and including the engineering staff in the entire process of building the product/business. Worked at a place like that once and didn't appreciate it enough at the time. That's not the typical definition of a lifestyle biz..
Making it through the year is going to provide a significant boost to my retirement savings/investments and put compensation cut on the table so I can focus more heavily on work environment. Why am I saying all this? I guess I need to get it out and maybe it gives some further insight into how retention based compensation incentivizes people, and how acquisitions can cause a lot of stress to those who aren't getting the life altering payouts.
Bankers and Salespeople have a different structure they get a minimum salary too low to live on and then get bonuses based upon performance.
My son was an O'Reilly Auto Parts store manager, turned out he didn't realize his salary was $500 a month until he was in an accident and was out for a six weeks... he was stuck, he had to go back to work even tough his femur was just broken in half.
Couldn't disagree more. Want to see employees work hard and be motivated? Give them equity that is a meaningful amount. I know it works for me... I work 10x harder for my current job where I have equity and stock bonuses than at previous jobs that were all salary.
You are right - there is no reason to prefer equity over cash. Cash is better, if the company could afford it. But many employers cannot afford it now, and they offer equity instead.
> I actually think bonuses and equity grants are terrible for comapany morale.
Not just morale, even when things go well it can be a disaster. My wife's company just paid out a massive bonus and 5 people, nearly all of the people in this one small department, quit.
Incentives happen because they are empirically effective. I would contend that the issue is less the content of the incentives but rather the perception of fairness.
If everyone is aware how the bonuses work and feels their 'fair' share is obtained, then it just becomes another part of the calculus.
I speculate as a non-manager that bonuses are a good way (in the federal contracting realm, from the company perspective) to incentivize employees without inflating their base salary to the point that the company isn't competitive for new work.
> If everyone is aware how the bonuses work and feels their 'fair' share is obtained, then it just becomes another part of the calculus.
If everyone is not aware of how a bonus works, lots of people assume it's just smoke and mirrors and disregard (the correct strategy). You're not incentivized to care about your "incentives", so you don't.
Honestly I feel like you have a lot more faith in businesses behaving efficiently[1] than I do. I think the normal reason for a firm to do things is random chance/business school/copying competitors. See also: “algorithms” style interview questions, brain teaser style interview questions, and using complicated distributed tools like Hadoop.
[1] by efficiency, I mean settling on doing the most effective things and dropping ineffective things.
This is exactly what happens. So then why not just include it in the salary at that point? All you are doing with bonuses is just causing an opportunity for issues.
I think changing a bonus is a lot easier than changing a salary, especially if the bonus can be tied to the performance of the firm and therefore go down—salaries tend to be very sticky (ie hard to decrease)
I think it's a wash. If your company is performing poorly and needs to cut costs, eliminating a bonus will cost you staff. Lowering salary will also cost you staff.
I knew a guy who put his two weeks notice in just before the annual Christmas bonus came out. So they stiffed him on the bonus.
They ended up paying for that in spades.
This was in the planning field and he was moving from a private consulting firm to a government job. Government is where the real power is for this industry.
If they were one minute late "Sorry, we are closed/you missed the deadline." If they had any errors in their paperwork "Sorry, reapply after you fix this."
Etc. Ad nauseam.
By. The. Book. Every step of the way. Zero wiggle room.
It had to have cost them more than the bonus they denied him.
This is a moral conflict if I ever saw one. Assuming that the guy was a pedant only against his former company and not everyone around.
On one hand, a sleazy company gets karma-whipped.
On the other hand, the overall harm from a public authority enforcing the law unevenly because of a personal grudge is not negligible either. Junior people working with him will normalize this behavior and repeat it.
Neutral public institutions are a great achievement that helps the entire society grow.
Public institutions will never be neutral as long as we have people staffing them and interacting with other people. It’s inevitable that these power dynamics would form: it’s heartening though that it can only be at the edges. That’s a very good sign.
I find it tiresome that so many people think they can know for certain what was going on based on a third-hand retelling after the fact and are so certain he was up to no good.
I am reminded of the importance of the "innocent until proven guilty" standard. Once people get it in their head that, clearly, he's guilty of something, all rational assessment seems to be readily abandoned in the name of a zeal for supposed righteousness and justice.
He may have only been engaging in petty schadenfreude. Given that they stiffed him, they may have been chronically a day late and a dollar short and counting on people to make an exception "just this once" (every single time) because of some sob story or other.
Telling them "no" instead of falling for their con job wouldn't be corruption.
I'm not condoning corruption. But I do certainly find the story funny.
Being strict and enforcing rules with one company while being tolerant and forgiving with others is how real world corruption often works. And for that matter, how bias in general works. Or nepotism.
Absolutely. Please lead me not into temptation with regards to giving me yet one more reason to bitch about how much it sucks to be me with regards to sexism on HN.
But in this case real corruption would be a former employee of theirs regularly bending the rules for them. If no one else was chronically a day late and dollar short and expecting accommodation and understanding for it, telling them "no" and expecting them to actually comply with the rules is called professional ethics not corruption.
Lots of shitty people get away with their shit by counting on other people being "nice" and honorable no matter how badly they themselves behave. That's actual corruption and such people often want to argue that not going along with their garbage is somehow you doing something wrong when, in fact, going along with their expectation of special dispensation in the name of "niceness" is the bad thing.
Giggling at their crap biting them in the ass because someone is actually enforcing the rules for once instead of rewarding their manipulative BS is not corruption. It's schadenfreude.
People who are used to doing the right thing even when it pains them very much are not bad people for getting a small thrill out of karma being a bitch to chronic assholes who think the rules don't apply to them.
I don't know if this was an instance of corruption or not. Neither do you. The devil is in the details and neither of us knows all of the details.
But, no, "clearly and obviously corruption" is not true. There are other possible explanations.
Having dealt with asshole customers who wanted the moon when the rules explicitly forbade that, I can well imagine this was only schadenfreude and he didn't know how to clearly explain that when he told the anecdote years after the fact to a group of friends.
Do you really think "good government" means someone staying late and doing work off the clock because their jackass former employer is showing up again just as the place is being locked up? If they weren't routinely a minute too late, this wouldn't have cost them anything on the order of the amount of money they screwed him out of.
I don't think such accommodation would constitute good government. The fact that being held to the rules was a constant source of friction that cost them royally implicitly suggests they didn't play by the rules. It implicitly suggests they routinely and regularly were late and their paperwork was botched and they expected to simply get away with it.
Being screwed by them wrt the bonus money may have protected him from stupidly "being nice" to them and thereby ending up on legal charges for corruption. That is often a slippery slope where "just this once because we are friends" becomes "in for a penny, in for a pound" and you don't know how to back out of it without being burned.
I'm surprised at the pollyanna-ish dismay on display here that this type of behavior is NOT common place. It's literally the way the world works, and has worked forever. Every middling manager, bureaucrat, or supervisor over anyone has always lorded it over others and used their influence to build little fiefdoms. Hell I deal with three of them in my job everyday. I personally think the reaction here, to your story, is a manifestation of techs exaltation of "meritocracy" and a rejection of the notion that, their ability, skills, technical knowledge maybe don't really matter that much in the end. Horrifying thought to many technologist. Just my opinion.
I personally think the reaction here, to your story, is a manifestation of techs exaltation of "meritocracy" and a rejection of the notion that, their ability, skills, technical knowledge maybe don't really matter that much in the end. Horrifying thought to many technologist.
I can imagine that being a factor in some of the reactions here. It would fit with things I've read wrt sometimes very competent people have trouble keeping a job because they are basically assholes and no one wants to work with them and no one can seem to get them the memo.
Some people want to believe that like House, as long as they are simply brilliant, people will put up with their crap.
At a certain multinational company that Anon(a close friend) is currently employed at had this way of distributing bonuses when the pandemic hit.
Context: the company is chasing a $100mn y-o-y growth at this point.
- All employees in the US offices get a hefty bonus for the profits they contributed to
- All employees in the India office were to not receive bonuses/increments because we wanted to cut costs (not to forget, Indian salaries are 20% of their US counterparts)
- All employees in the US were to get reimbursements for stylish/modern/gaming chair while working from home($300 a piece)
- All employees in India had to get their $40 chair approved from the manager (request denied in most cases, "unnecessarily too costly", he said)
- No more bonuses for India offices for the next year or so because we spent all the money on the US employees and the managers bonuses
- Indian new hires are getting offered the salary that someone with 5 years exp is already working at in the company
<puts on tin-foil hat>: distribution of bonus/increments seem to have an upper limit. the less you distribute as a manager = the more you have for yourself and your favorite juniors
<anecdote>: ^^ one of the favorites from above actually quit the next day after getting the bonus. it's common to put in your papers right after the increment letter.
I can relate to each one of those points. It's awful to feel treated unequally even though you're doing the same work. Before this trend of remote work, usually the solution was to just migrate to a developed country.
In most contexts this would be more open to interpretation, but since (a) I just asked you to stop posting nationalistic putdowns (https://news.ycombinator.com/item?id=26803989, https://news.ycombinator.com/item?id=26809750), and (b) you've been breaking the site guidelines repeatedly and egregiously, I've banned this account. Please don't create accounts to break HN's rules with.
This reminds me of the holiday gifts at Google. By the time I joined, Google had already switched from physical gifts (e.g. a new Pixel) to allowing each employee to choose a charity to which Google.org would donate $1,000.
Even years later, there was still bitterness among the employee base about the holiday gift. It was a bit mystifying to me (as I never had the expectation of a $400 electronic for a holiday gift from my employer), but really shows the power of anchoring. Once people have an expectation for some reward or benefit, any downward deviation from that expectation is met with great distress.
Hm, but it was the way they managed the transition. When I joined (actually I believe I joined literally the day before the cut-off for the holiday gift so got it even tho I started in December 2011)... it was "free Nexus" (and so on, choose from a list, etc) and then it was "very cheap hardware devices we have excess inventory of" and then it was "donation to a charity we chose" and people got miffed because it just smelled like a big tax write-off.
They would have been much better off just eliminating the holiday gift with a heartfelt letter from Larry explaining that he didn't want a creeping culture of entitlement and we were all aware we were compensated handsomely anyways so happy holidays, you'll get your annual bonus soon anyways. Pretending the charity thing was a gift was a bit weird. At that point I was giving 5-10x that amount in my own cash to charities anyways.
It's handled a bit better now, because you get to choose the charity, and it's accompanied by a good matching charity drive program etc.
Step 0: remember that people have been creating scam charities for a long time, so the IRS looks for it, knows more than you do about it, and does not like it.
It was just a joke. I'm not from US and have no idea how any of this work :)
To me the whole idea of a gift where the employer donates money to charities in a name of a employee seems like "The Human Fund" sketch from Seinfeld rather than anything that would actually exist in a real world.
Dopamine reward signals in the brain are coded by how expected a reward is. Why? Because it's a learning signal. You've done something that you don't expect a reward for, but get one anyway? Hey, dopamine rush, I need to notice that positive outcome and learn what happened because it might work again. Conversely, if you do something that you're used to eliciting an expected reward and nothing happens, negative outcome, dopamine crash - I need to learn about this disappointment.
This post is a classic example (although there are other factors, such as the slowness of other teams who didn't know about the programme) - the people who weren't expecting a bonus were much happier with a much lower bonus. Add in the crappy way they hid the programme, so others didn't realise what was at stake and it was a recipe for disaster.
If a bonus is expected it's not a "bonus", and only sets up expectations that lead to huge disappointment when it eventually doesn't happen.
This past year we received our usual bonus (despite the fallout from COVID), but we did not get our annual 3% cost of living adjustment. Instead that money was used to keep people like janitors, fitness facility people, food people, etc. still receiving paychecks even though campus was (and still is) closed down for quarantine. Some people complained, but I thought it was a good way to take care of our fellow coworkers who couldn’t work through no fault of their own.
My bonus this year was reduced, and also didn’t receive any increase. While it sucks, all I can think about is how lucky I am to get a bonus and still have a job. Many others weren’t so lucky.
Top tech talent, even in software, weren’t making the kind of money they are today. Top new grads going to the hottest employers could hope to make $50,000 all in (not counting stock options paying off down the road). $100,000 in guaranteed comp was all but unheard of for ICs. Programming was not yet at the doctor/lawyer level, much less the banker one.
That started to change in the dotcom frenzy but that was still a couple of years away at that point.
Yep, my first year out of college (1998) I was making 50K at a local public tech company. Anyone in tech would laugh at that nowadays, but that was considered a "good" starting salary.
When I started at Microsoft in 2000 I believe my initial salary was 62k just as another reference plus some stock options (honestly I can't remember the details of that part). This was a very good comp package for a new college grad.
There was a reset between then and now: The Great Recession around 2008. Starting salaries were below 50K, and I was really surprised when a few years later I got an offer at that amount (also right out of college) - I remember looking around for what to expect, and it was more like 35K.
Those are for the Bay Area, not New England (probably important) and for software (less important). He said he'd been at Digital for 10+ years by then, so for a Bay Area salary, I'd guess he made $100k. In New England, I wouldn't be shocked if it was more like $60-$80, so the bonus was up to a third of his salary.
Dewitt (hi!), this isn’t about an annual cash bonus though. This is for a “hit this target and we’ll do award X”.
Given that a number of “achievement” awards are in the < 5k realm today at major tech companies, I think this should be compared to those, not annual bonuses. So in Google terms this is like an outsized spot bonus opportunity with clear (flawed) rules.
The incentive is in the mind of the beholder. $42,000 captured the mind of the author; for its promise, he worked extremely hard and long, mustering a productivity far and above what he normally would have achieved. Then, when he in fact received not $42,000 but $3,666, less than one-tenth what he expected, he convinced himself that this was not a loss but a win because $3,666 is $3,666 more than $0.
What is your lesson here? My lesson is to become the house, because the house always wins.
In 1996 college grads were pretty excited about $50K-$60K paychecks. So I can't imagine a senior engineer getting more than $120K or so, but they definitely were not only getting $50K.
> We are lucky enough to have a regular bonus program even now at work, it’s been going on for years. Every time it is handed out my boss will say something like, “so we had a good bonus this time, but don’t count on it in the future.”
"Good night, Westley. Good work. Sleep well. I'll most likely kill you in the morning."
I get that in other contexts. In this case I would feel bad for the person with the lower bonus because they were never made aware of the program. If management let them know, then they might have sped up and earned more. Isn't that the point of the bonus program - to reward performance so that it will provide an incentive for it?
I've seen the opposite too. Managers have violated policies to my detriment, sometimes benefiting other team members. I don't resent the other team members - in the cases I've experienced, they deserved the highest rating/bonus. I have also recieved that level of rating/bonus from those same managers. I don't feel guilty about it as I had no power over the decision. I might feel pissed off about it, similar to when it has happened to me. I don't respect those managers though, and I think it will end up causing issues in my performance and the company as a whole.
Bonuses should be: infrequent, irregular, unannounced, and large.
Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to pay their bills.
It’s stupid to make it a part of your overall compensation package because if you do, then the bonus is always weighted based on overall company performance. So if the company has a bad year no one gets bonuses even if individual teams crushed it. Conversely at most companies, everyone gets a bonus in good years even if you have underperforming teams. Add on top of that these stupid requirements that bonuses be paid out on exactly day X, and you end up with lots of people who do nothing until they collect that fat bonus check and then give their notice the next day.
The bonus system as it stands at most companies incentivizes completely the wrong behavior.
I think it helps employees if they understand that bonuses are not rewards, or for incentivizing behavior, though they might incidentally do that. They are built-in pay cuts that companies can use when their financials don't end up matching what they plan for.
I've only ever been at one company that went out of their way to regularly present and show company financials in a digestible way, that when the year ended, it was clear to me at least why we got bonuses one year and why we didn't the other.
> Otherwise you end up in this trap where people expect the bonus and worse yet, count on it to pay their bills.
Kind of like tipping in the USA. It has nothing to do with service, is a standard percentage of the total bill (cork a $200 bottle of wine versus $20?). And the managers pay the wait staff less with the assumption they’ll make it up with tips.
I currently tip well. I would RATHER the costs be upfront and the complete wage and quality of service be covered by the company.
I would, correspondingly, love to see both a national minimum wage increase AND a ban on including tips in someone's expected wage as a single update to the laws.
At Google there are bonuses known as peer bonuses and spot bonuses. They are indeed infrequent, irregular, and unannounced, though not large at all. People feel way happier receiving these sub-$1000 (or slightly above $1000) bonuses than the rather more predictable but large annual bonuses.
I have a story. The first year I was at Google, I was working on payments. I remember checking the internal version of the documentation for our to-be-announced-at-Google-IO product, and noticed that it has accidentally been made available publicly, spoiling the surprise of the launch. Our director was visiting and was roaming around the office, so I flagged him down and let him know. (Actually, I spent quite a while convincing him that it wasn't some quirk that allowed guest WiFi addresses to also view secret documentation.) The end result was that he said "I'd give you a peer bonus, but I've already given my quota of peer bonuses this quarter." It was so awkward. I didn't even want or expect a bonus. I just wanted the problem to get fixed. (I also found it weird that directors / VPs are running around giving out peer bonuses. Pretty sure they had other ways to reward direct reports.)
I would concur. The bonus system at prior fine employers usually looks like Company_perf_scaling * Bonus_pool * Group_political_pie_slice * Personal_perf; I usually assess it as "magic money".
Yearly bonuses IMO should be rolled into base salary raises. Bonuses otherwise should be project based IMO. "Good job on the big projects, have xyz $/stock".
Bonus structures for ordinary engineering / programming where a bonus might be >20% of total salary seems to be out of line with our normal work output.
Oh man I hate bonuses so much. At my last job we had a monthly bonus that made up to 33% of our total income.
These were based on certain KPIs we had to achieve. The thing is, everyone can cheat the KPIs. Even more so if such a big part of your income relies on it.
I also felt they killed creativity and intellectual freedom completely. You were not able anymore to work on something else that you'd consider more important because the targets for the bonus were set. I found some fraudulent users who were using our product but instead of doing something about it I decided to just keep in line with what was expected from me after talking about it and having discussions about it with my manager.
So instead of acting on the values and mission of the company, the culture was to chase the money, and you could see it and feel it everywhere.
Worth noticing, at the beginning there were no bonuses but management wanted us to have some 'skin on the game'. I think they blew it by making it such a big percentage.
I went through the same thing in my previous work (consulting firm). Management set up monthly targets related to billing enough hours to the clients (something like 85% in average in our team of 5).
Most of the time we met the criteria even if not everyone was making the target. Usually, 4 were 100% billable while 1 was the anchor :).
One month, I spent a fair amount of time of documenting something because it was the 3rd time that the same errors were showing up so I told to my manager to decrease the target for that month. It was agreed and understood by everyone that the target could be lowered when required (leave, training, etc ...). Except that my manager refused to lower the target so I spent 3 months talking to CEO/CFO to get this bonus paid (more for my colleagues than for me) but I never managed to convince them. So the same feeling as you described kicked in in the team. People started to work only billable hours, neglecting everything else to make sure we met the target all the time.
I obviously left this company after a serious discussion with my manager. I still remember sending an ultimate email asking for the bonus on my last Friday at 4pm.
So yes, give a decent comp and say that bonuses might be paid if the company is performing well. If they are ever paid, I will take my family for a nice dinner and buy some books with them. Else than fine, my mortgage is not in danger!
I don't know if that was the lesson I would have taken. The lesson I'd take is "don't work for a company that tries to manipulate employees to work ridiculous hours for the possibility of more pay".
First of all, it's a bad idea for all of the classic Goodhart's law measure-becoming-a-target reasons. Management throwing money at a problem reveals a certain amount of stupidity fostered by desperateness. Second, it's a very devious practice. This person made 2,000, but most likely worked an extra 10-20 hours a week for a few months. That's 2,000/120 = 16.6 dollars per hour. The company effectively got a lot more work out of some employees for a pretty cheap price. Yeah, sure the other team got a lot more. But never, ever work your ass off for the possibility of more money.
What's fascinating about this post is how the author manages to frame his exploitation in terms of how he was ungrateful or unreasonable. Yeah, sure, for your own benefit you shouldn't care that much about bonuses and you should be grateful for what you have. But that doesn't mean you should let your company exploit you! It's perfectly okay to fight your damnest to get more money from the company. Lord knows they're fighting to pay you the least they can get away with.
Luckily when I started at my company, FY-end bonuses had already bounced around I learned to treat them like a Christmas present. The individual performance aspect existed on paper, but no management chain exercised that because it ruined team dynamics. The only time I saw that done was because someone was basically no-show but it was too hard to fire them, so they got 0 bonus, and their share got spread to the rest of the team.
Awards are similar. I rarely get them for the things I really deserve them for. Sometimes I'd get $250 for 2 hours of work helping some big project and got roped in the list because I was on an email chain. Sometimes I'd get one because the project I did the year before got eclipsed by something else, and nothing this year under my VP merited it.
Folks get angsty about what/who deserves one and what doesn't. It seems the less talented/hardworking the person, the angstier they are.
I try to teach the newer folks around me:
- Don't expect them
- Don't get jealous, you don't know the whole situation.
- Just be happy when you get a little cash.
- You won't get them when you should, you will sometimes when you shouldn't.
You have absolutely no control of end-of-FY bonuses. Buy something fun (a new TV, game console, or hobby thing) and stash the rest. Do not use it for a down payment on something like a new car/boat/house (unless it's just tacking more on to something you were already buying). I've seen too many people do that and end up underwater the next year when we get nothing and they were banking on it for payments.
I once worked for a company where bonuses were literally Christmas presents. They gave them out at the company holiday party and everything.
I remember being enraged when the company Christmas bonus was $50. It struck me as showing that management stopped to think about it before deciding that a larger bonus was too expensive. It felt like an insult.
I enjoyed reading that far more than I expected to. Thanks to the author!
I'm now realizing that, yes, I do feel completely entitled to my FAANG bonus. But...the recruiters for all of the companies (FAANG and non-FAANG) involved in my last interview loop all factored target bonuses into total compensation during negotiations. This was 2 months into the pandemic, too, when things were somewhat gloomy. So how am I not supposed to feel entitled to it?
I don't see it any differently from my salary or RSUs in terms of deserving it. The only thing I see different is the potential to exceed the target, and get more than 100% of the original target %.
Everyone is focusing on the bonus part of the story but man, I really enjoyed the computing history about working inside DEC in those days.
Anyone got other good computing history books/stories to recommend? I really enjoyed Masters of Doom and Hard Drive (about old-testament Gates, not new-dove Gates)
I just recently finished "The Dream Machine: J.C.R. Licklider and the Revolution That Made Computing Personal" It was really well researched and written.
It's actually become an interview question for me of "is there a bonus scheme" where I'm hoping the answer is actually no. I've yet to work in a company that has a structured bonus scheme that hasn't resulted in a worse culture for it.
The worst was in a company where your max bonus was depending on getting a "5 out of 5" performance review - however the whole business unit needed to average out to a particular number (I'm fairly sure it needed to be down the middle at 3 out of 5). What this meant was for every exceptional employee, someone else had to be under-performing in the eyes of the company. The end result was two types of teams: no one would rock the boat or have any initiative so everyone was perfectly average, or completely cut throat attitudes leading to burn out and animosity.
YMMV but to date I haven't had a good time in a company that has bonus schemes (even if I personally have financially benefited from it - the cost came at culture, stress and work life balances).
Around the same timeframe as the Op (late 1990s) I worked for a no longer existing IT company where management some time before I started had the brilliant idea to pay sales bonuses based on forecasted sales. If you didn't make the sales you had to pay back the bonus on your next monthly pay.
Needless to say this really put the pressure on sales to get the contract signed - feasibility or profit margin be damned. Turnover in sales was really big as well, but then the company went from more than 300 staff to about 60 in the 2.5 years I worked there.
The company also had a matrix organization, where everyone in middle management had two bosses, one national, and one international. At one point my then boss got a new title and responsibilities on a Monday, for it to be changed to something else on the following Wednesday.
"One of our things is that money follows; it does not lead." --Dan Gilbert
In my experience, successful people go work hard and are excited about "the right things" and incur financial benefits along the way. If you are working on the right stuff in the right way, on average you should get good comp/bonuses.
On the flip side, if your only connection to your work is the bonus then you're probably unhappy anyways.
"Sometimes people mistake generosity for not being fair. Generosity is good, entitlement is bad, and they can easily be confused, so be crystal clear on which is which. Decisions should be based on what you believe is warranted" -- Ray Salio
Other comments talk about becoming entitled to bonuses, while they are genuinely discretionary. Broader, people get used to any perks and complain if they go away. This is reality of life on one hand but a flaw in individual thinking on the other.
Personally - as an employee I seek places where I can feel good about the relationship between the company and the people. When that's right, I'm more understanding if bonuses are tight during a lean year or the espresso machine gets downgraded. As an employer I look for the same thing in employees. Why would I hire those who don't care about their work mission in an emotional way? It's not that everyone has to love derivatives trading, it's that the best people find a way to connect and care about what they are working on and be genuinely excited about it and want their team to win. It's a great attitude and I believe it leads people to much more success (and none of this is to say you should stay on a sinking ship or tolerate a bad work situation -- never do that. But there's something to say about maturely weathering the ups and downs of a worthwhile relationship)
In a good company, it's ride or die together and both the company and the people feel that way. If this is crazy to some people I feel they are missing out on some genuine upsides of what work can be like.
> In my experience, successful people go work hard and are excited about "the right things" and incur financial benefits along the way. If you are working on the right stuff in the right way, on average you should get good comp/bonuses.
Is this true, or a form or survival biais ? I am most of us agree that working hard is somewhat a requirement for meaningful success. What is in question here is whether it's sufficient.
We all know a lot of hard working people who aren't successful
From my experience, in the business world, unless one if very lucky or incredibly talented incuring financial benefits doesn't just happen from hard work. And the first step is the ability to ask a fair share of the value one is generating.
> "Sometimes people mistake generosity for not being fair. Generosity is good, entitlement is bad, and they can easily be confused, so be crystal clear on which is which. Decisions should be based on what you believe is warranted" -- Ray Salio
I think one can be unfair in the way one is generous.
> And the first step is the ability to ask a fair share of the value one is generating.
I feel like you missed my point. I am talking about getting into a employer-employee relationship that you can feel good about. Compensation is obviously a huge component of that and you should absolutely make sure it's what you need and deserve. The point I am making is that if your relationship with your employer is so weak that you're walking out because of what happened with a single bonus, then you weren't in a good relationship to begin with.
> I think one can be unfair in the way one is generous.
Yes and it doesn't matter. The example that Ray Dalio uses in his book is this - the company office is in Connecticut and a lot of employees commuted from NYC. So at some point Ray bought a bus to shuttle employees back and forth. Sounds like a purely good thing, right?
Well, some Connecticut-based employee complained - the NYC-based people got a "gift" in convenience and cost of their commute, so he thought that Connecticut people should get something to improve their commute too (ignoring the point that their commute was never as bad to begin with). Ray points out that this is a huge entitlement - just because you gave a gift to someone, doesn't mean others deserve.
The point is - you can't manage your company and your life to meet the whims of the most unreasonably entitles. And on the flip side, the less unreasonable expectations you have, the happier you will be.
Call me a cynic, but annual expected-not-guaranteed bonuses are mostly just retention tools right? You get paid a bonus and suddenly you’re much happier and less inclined to change jobs. If that inclination comes back later then you have to weigh the loss of the proportion of your bonus earned so far in the downsides of leaving, since the bonus is never paid in part if you leave during the year.
That's how I see them as well. It makes people who are unhappy with jobs "just stay until the next bonus". They might quit just after getting it, but if they hesitate and don't do it on the spot, soon they'll be already in another bonus cycle, and again it makes more sense to wait till they get it etc. The effect is strongest of course if the bonus is substantial.
Many years ago I managed a small company that gave out bonuses. It was miserable for the most part. People did come to rely on those bonuses as if they were actual pay.
I worked with the owner to develop a system where if the quarterly bonus was over a specific amount 6 quarters in a row we translated that into a pay raise for everyone and that would effectively remove/lower the bonus but give the employees more stability. It has been a lot of years since I have been there, but the last I heard the bonuses were very small but the avg. pay was nearly 2x over any other company in the same industry. Turnover is near zero and the number of people waiting to get a job there was significant.
I really don't think the message of this article matches the state of the industry today. Annual bonuses in many companies - especially in the tech industry - are practically considered part of your compensation, and often times base salaries are adjusted to account for them (I've seen as much as 25% of comp laid out in "bonus").
It's a flat out awful structure, as people will legitimately wait until they get that annual bonus to quit, which can mean unhappy people staying in a job they don't want, making others around them unhappy as well.
This was a joy to read. My aunt, Carli, worked at DEC for a number of years and I recall fondly how proud she was to have a job there. Thank you for sharing this small bit of New England high technology history.
A lot of people forget that Altavista (one of the first web search engines) was created there, and that at some point in the time of the internet, a lot of people mistakenly went to visit http://altavista.com instead of http://altavista.digital.com looking for the search engine.
The general sentiment in this thread seems to be that bonuses are bad for morale in the long term, because people start to feel entitled to them. It's interesting to look at this from the side of the employer for a second.
You want to do right by your people (you know, if you're not a complete arsehole). Hopefully you pay them well. But revenue isn't always easy to predict, and once you give someone a raise, you can't take it away again (at least not easily). So you can't pay people excessive amounts all of the time, because the money might not be there all of the time. Of course the effect of a single large bonus (annually or one-off) is much greater than 1/12th of that same amount tacked on every month. On top of that, some bonus plans can have tax benefits (though I suspect this widely differs between countries etc). Bonuses seem like a pretty good way of paying people what you'd like to pay them, but without the risk of it bankrupting you.
I'm a little bit torn when it comes to bonus amounts, however. Some companies give everyone the same bonus. Or perhaps everyone within the same department or job category. This is nice from a "we're all in the same boat"-perspective. But it ignores the reality that some employees do much more valuable work than others (I'm sure there's a fancy pareto-like name for that, but I don't remember it). On the other hand, it might encourage some employees to "go above and beyond" in a way that's unhealthy.
The author would have you believe that it's an issue of personal morals, outlook and psychology.
I would say that these kinds of programs are manipulate and exploitative (beyond how salaried work is exploitative fundamentally). In the author's situation I would probably say I'm giving up on the bonus from the get-go; would not sacrifice any hours of sleep; and would just try to do a good job.
... or rather, I'd probably redouble my efforts to get people to unionize.
A bonus like this, I would never expect to actually get any portion worthwhile. Even if I performed well, there's going to be someone who doesn't. And it might even be me that doesn't perform. Who knows?
Instead, I would just work at my usual pace, which is already quite fast, and I'd probably already have been being smart about the cost of components anyhow.
In general, this leads to good outcomes anyhow, and I didn't have to stress out about it.
I did just this about a year ago. Big project, lots of "company will fail if this project fails" type of talk. So they trot out a bonus system. I literally didn't read the email.
Turns out it had a 2 part payment plan. Our team nailed the metrics for the first payment...and then didn't for the second. Which left management in the weird position of explaining how even though we had just signed 5 customers (in a quarter that had anticipated maybe 1 sale), we hadn't met metrics...and so no bonus. Watching execs peddle obvious bullshit to an undeniably successful team not interested in the smell was more my bonus than anything.
I reminds me of the Frans de Waal monkey experiment where they rewarded them unequally and the under rewarded monkey gets annoyed. I actually did an edit of the video as I thought it was funny / interesting https://youtu.be/-dMoK48QGL8 44 seconds to get to the funny bit
This felt like a bonus episode of Halt and Catch Fire. If you haven't seen it, it's the story of a fictional Texan calculator company entering the frenzied IBM PC clone market. Period piece, skunk works, early hacker culture and surprisingly good character development - highly recommended.
Nice post. 366 MHz office hardware in 1996...yeah that would have been pretty awesome.
The story also made me wonder about bonuses in European countries where private employee salary numbers are publicly available (or so I've heard). Is the same true for bonuses, if they are offered?
In Germany you have laws to ensure equal treatment in the workplace. So you are allowed to go to your HR and ask what up to i think 6 other people in a similar position & experience level as you are in earn. HR will of course not disclose the names.
I see a lot of comments bemoaning performance-based bonuses, but consider the following:
> I remember being in shouting matches with our signal integrity team about among other things, how many capacitors we needed. These tiny devices evened out the power of the system, but they wanted far too many to be added to allow the design cheap and easy to build
> Meanwhile I was waking up at 4AM on most days, in full-stress-insomnia. Sometimes I would just give up on sleep and go into work at that early hour, and while there, sometimes run into other stressed-out engineers who also could not sleep. I had shaved as much time as I could possibly get off the schedule, and a little cost. A $25K bonus was out of the question at this point, but $10K or more, still in the running.
> Because manufacturing, as discussed, was not on the secret bonus program, did not even know it existed, and had very little incentive to speed up the rework. As far as they were concerned the project was slightly ahead of schedule, so why rush the job and make another mistake? More time ticked by. They actually did make another mistake anyway, and mounted incorrect rams a second time, which I remember being really mad about.
> Meanwhile, our sister project had managed to minimize their cost target and beat the target schedule of their project, such that each member of that team received the full $25,000.
Sounds to me like the bonus program was working exactly as intended. OP got into shouting matches with other stakeholders to trim overly cautious expenses. He and his teammates voluntarily worked far outside regular working hours. Both him and his sister team succeeded in delivering a successful project ahead of time, with lower costs, and were ultimately tripped up only by the incompetence of other teams that had minimal bonus incentives.
I've noticed a huge difference between orgs where people have skin in the game, and orgs where people don't. People with skin in the game, have a real fire under their ass. It's inspiring to see how much they are able to get done, and how quickly. At orgs where people don't have skin in the game, I spend half my time sitting in meetings, discussing what doc we should write next, what format we should use for the doc, and when to schedule the next meeting to review that doc. It's as though people are more interesting in impressing one another and putting in facetime, rather than actually getting stuff done. In fact, I've noticed that people often add a net-negative value to many projects - their urge to add their 2 cents and make their impact felt, results in goalposts getting constantly shifted and launches getting continually delayed.
Is it possible for a badly designed bonus program to produce disastrously bad results? Definitely. But there has to be a better way to give people more skin in the game, when it comes to doing their job as effectively as possible.
I think you're drawing conclusions on a very biased sample. It's easy for me to write examples of bonuses causing all the wrong problems:
1. Introduce a huge amount of technical debt to get it under schedule.
2. Working really hard to get the bonus and either not getting it or getting much less than you expected/deserved. This is probably 5-10x more common than your scenario - you can even find comments on this submission with examples. Working 60-80 hour weeks to get a tiny bonus is very effective in inducing poor morale.
> In fact, I've noticed that people often add a net-negative value to many projects - their urge to add their 2 cents and make their impact felt, results in goalposts getting constantly shifted and launches getting continually delayed.
It's amusing you write this as an example of not having skin in the game, given that I often see this behavior from people who want to appear as if they have skin in the game, so they can claim a portion of the bonus. Almost every major initiative that is introduced in the company ends up with this.
This is just highly dependent on the structure of the company and the ability to objectively determine an individual's input into the final profit of the company. Small companies, sales orgs, hedge funds have an advantage here. If you're not so lucky, your industry / company size may result in bonuses getting handed out completely based on who your boss likes, and no one can argue because it's subjective.
Spend months sorting out a rat's nest of code that your predecessors created? Over the long term, this is value creating behavior for the company. Is a portion of the bottom line measurably attributable to it in a particular year? Maybe, maybe not.
I consider shouting matches an unalloyed bad thing in a workplace. I won't take part in one and I won't work somewhere they're considered an acceptable form of communication. Incentives which promote shouting seem like bad things to me.
I don't know if I would describe the solution as just skin in the game. I don't dispute that it might lead to results (though some studies might argue otherwise https://novarete.com/motivate-employees-monetary-incentives-...). At least anecdotally, the companies I worked that most closely tied comp to bonuses or had the most stock, were not the ones that had the hardest-working individuals. I tend to believe that it's more the culture of the company, and also how closely your results tie to direct impact to the company. So, small companies, here often being startups, end up being ones where you see such impact, and also happen to be ones where you get stock and ownership.
Your "skin in the game" should not be arbitrarily tied to a metric/achievement that is not under your control or else working to the same objectives. If manufacturing have no motivation to go faster, I have no control over their speed, and I know they'll just take as long as the schedule allows? then screw it, getting it to them early won't help me get my bonus.
Now, if manufacturing was also getting a bonus dependent on an early shop date, you're in it together. Or if manufacturing reports to me, I can tell them what to prioritize.
It sucks but you can't just get bonuses for trying hard, especially when your company is on the verge of collapse or getting bought up for scraps. It's not always fair but in this case, the OP was still getting a good salary. They decided to take a risk together with their employer and it didn't pan out as well as they'd have liked.
If the goal is to increase the productivity of the employees, then what you want is for the employees to be trying harder. To do that you'll want to incentive trying hard, e.g. through bonuses. The main reason bonuses are awarded for achieving good outcomes instead of for trying hard is because the former is easier to measure. Intentionally rewarding the achievement of good outcomes (which is a matter of chance) instead of good efforts will lead to strife, as those who put in just as much work but weren't as lucky will feel cheated.
I once worked at a company that paid bonuses based on a portion of profits, appropriately named "profit sharing". As long as the company turned a profit in a quarter everyone got extra money. Company financials were shared with everyone each quarter (even though the company wasn't public) and the percentage was calculated based on a specific formula (details of which I don't remember but included years of service, title etc) so everything was pretty straightforward.
It's definitely possible to make bonuses work via profit sharing (even for private companies) as long as the company is not trying to cheat its employees.
I would hold bonuses as a con, if comparing companies to work for. I might even use it as an excuse to leave a company for another one. Why do you want to work for ACME anymore? Because they offer bonuses and you don't :D
I've gotten to the point in my life that I just require the salary to be enough to support me. There has been nothing but stress, centred around my previous jobs, where bonuses are involved. Mainly that pressure of, you better perform optimally else you will affect our bonuses --mentality.
This creates a toxic work culture IMO. My job is stressful enough. I don't need it more so.
I've been thinking about hiring a couple of interns to work on projects that I don't have enough spare time for. One thing that came across my mind is whether I should have some sort of an incentive for coming in under budget or ahead of schedule. On one hand, with hardware projects, sky is the limit for the potential costs (and they wouldn't have a reason to not overspend). On the other, having such an incentive would bias the planning and could result in issues seen in the article.
The problem would be estimating the budget and schedule in the first place. If you are too aggressive it will seem unfair, too lax and you could actually slow the project down.
Pay your bonuses to those people who show up for work on time, work well with others, make smart decisions, and who you would like to work with again in future.
I guess I have no problems with the bonus structure where I work. The base salary is so strong, that equity and bonus is exactly that - ownership and reward for strong quarters.
With that said, I have been under valued and depended on bonuses before, but i guess i don't let that shape my current positive experience. I make sure I only budget for my salary and nothing else.
As others have said, the extras are funny money until they're cash and never forget, taxes on bonuses SUCK
A grad school officemate had previously worked at Thinking Machines, but, to do the number-crunching for his doctoral dissertation, he instead had a slightly-old Alpha workstation/server under his desk.
He was big on efficiency (e.g., out of the lab by 5pm, but intensely focused while there), and I'm sure that him coding his models in C for a 64-bit dedicated Alpha box was more productive than getting supercomputer time.
I will always take a high salary over any kind of bonus structure/program. I worked for a big aerospace company and earned what I considered to be a pretty mediocre salary but we had a profit sharing program that was about 4% of your annual salary, plus we frequently received spot awards and a decent holiday bonus (one year I got a bonus that was worth approximately 2 paychecks). It was nice but it always felt inconsistent and unpredictable, and then one year they basically stopped all of these programs and also restructured our benefits programs such that they were contributing far less to our health insurance premiums AND they stopped paying into our pension fund (yes, we had a pension!). At that point I calculated my total compensation was actually significantly less than it had been in years past and there was no reason for me
to stay. I found another job with a 50% bump in pay and since then I have only accepted positions where I could count on a consistently high salary or rate (if I do a 1099 kind of project).
I think that’s a bit irrelevant. Finance has had a culture of paying a lot and paying based on performance for quite a long time. It is also mostly easy to measure performance of a trader’s accounts or of the firm as a whole. I think some just-so arguments for this structure are that the skills are transferable and the companies are all competing with one another, so someone can easily jump ship, and performance is easy to measure so people know what value they are creating.
Two downsides of this are that it can be unfair to people who just get unlucky (eg working on a less-profitable desk), and that it encourages taking large risks for higher returns, which is especially bad if they are taking on long-term positions. One way to try to address the latter is with a partnership structure where partners are incentivised to rein in big risks, but having joint and several liability is unusual and scary.
Excellent read, but not only for the bonus part. If anyone else enjoyed it for the EE / computer engineering part, I recomment The Soul of a New Machine, by Tracy Kidder.
He followed, in a sort of embedded way, a team of Data General computer engineers in the late 70's, as they went through a death march to produce a 32-bit micro. Sort of like this blog post, but the book got a pullitzer.
Thank you for writing this. you brought back some good young adulthood memories of VMS, OSF/1 and Tru64. All seemed like alien technologies at the time :). Thank you for your service and hard work
I have literally never received a bonus that was present on an offer. Not that I'm a terrible employee they have invariably been cancelled or otherwise unreachably cancelled before I received a penny. Sometimes it was a full cancellation, sometimes it was a change in the language that would tie bonuses to unreachable revenue goals (very difficult needle to move as an engineer, at least in the 1yr time scale).
I have basically come to see any kind of potential money as never going to see it money.
While I see the value in gratitude as described by the author, the lesson learned still rings with a certain amount of complacence with the situation at hand. Had there been more transparency in the bonus program, there's a chance it would have been reformulated as to not fuel internal wars and allow for the long term success of the company. While it's important to always exercise gratitude, it's also important to demand good incentive structures.
These seem to be mostly accounts of bonuses for software developers or other, typically salary positions.
(As an aside - I wonder whether this more correctly reflects companies making people "salary" as a means to pay them less overall for working long hours. I've seen "salary" be given to people making less than 33k usd/year, pre-minimum wage increases. Might be a rarity on HN.)
My takeaway has been that these incentive schedules aren't properly implemented. Also, people get very toxic if they see others making more or less pay than themselves. Yearly bonuses based on global factors are nice, but probably are too far from what an individual adds to the business to properly impact their work effort. You want the worker doing marginal thinking with marginal incentives - i.e. the classic paying car salespeople a commission on each sale. This is clearly a more difficult calculation for the IT field.
One idea - pay the bonus per pay period. This addresses people sticking around for a once per year bonus and then quitting. It could be based on the last year's (or quarter's - depending on the business) figures, for instance. Maybe have it be known the full, remaining bonus will be paid out if the person leaves on great terms during the year. i.e. Absolutely no one in your department - not even the custodian staff - has a negative thing to say about your performance.
Another - rethink paying people salary. Salaried employees can be pushed to work OT. But if people can make 1.5x pay for doing demonstrably important work (say, presenting it during the next team meeting) then they'll naturally work those additional hours. It's up to the business to figure out the hourly pay rate correctly, of course. Also, pushing people to work OT as a standard practice generates lots of toxic behavior - another reason to not use that as a standard practice.
Another - pick a metric that definitively impacts your business and is easily measured and high visibility. Use that to determine the next pay period's bonus. i.e. "Everyone in the IT department gets a $300 bonus if system uptime is greater than 98% for the previous two weeks. The bonus decreases by 1% for every percent decrease in uptime from 98% over the preceding two weeks. i.e. you're getting (100%-18%) of the 300$ if the uptime was more like 80% the last two weeks.
> The issue with there being five volt rams on our board was, the power supplied to these chips was three volts, not five. Our design was made to power a variant of the chip that could run on three volts, but the board apparently had the wrong chips installed on it.
Ah yes, classic manufacturing error (I'm not being ironic here). BOM says X but why can't we use Y?
I don't get the idea of bonuses. If employer wants people to do more work, they should just pay more. I'd never work under "if you achieve X you'll get Y". Too many times I found it to be a manipulation or just a scam to get more work for free. Not worth the mental health damage.
We maintained some Wildfire systems on Tru64, which somehow took all the possible coolness of the "Digital Unix" name and inverted it into bizarro horror, into the late 00s, and it was mostly just depressing seeing what happened versus what could have been. Icing on the foot-gun cake was the IA-64 replacement ended up being EOLed before it was even delivered. That one came in on HPUX, which seemed to have been more often pronounced PHUX.
The minicomputers can get pretty expensive iirc. I haven’t looked in a while, but you may be paying a couple grand for one. For some reason, AS/400s are the same.
I bought a low end Alpha (DS10L) off of ebay about 2 years ago. I turn it on to play around with VMS occasionally. Alphas (and DEC, in general) were amazing.
I bought some 10+ years ago, and they are in storage, and I am also feeling that urge to go dust them off and power them up. If memory serves, I think I ran netbsd on them.
I love stories like these. Reminds me of the PacificTech graphing calculator story (https://www.pacifict.com/Story/). Oh the weird things motivate some of us weird engineers.
Interesting write up. The whole article, with its stressed out overtime, inter-team fighting, and testing the computer using a game reminded me of "The Soul of a New Machine", which is a great read for anybody who hasn't read it.
The bonus system in sales seems to work pretty well. Maybe what's measured and the individual's ability to move that needle is more the question than a variable comp plan
There's a real mischaracterization / straw man mentioned in some of the comments here about set bonuses, which is different from the special bonus structure in the OP.
A set bonus is part of your employment compensation. It's not a "nice to have". If the company hits its goals and you perform well, you are supposed to get it. When this is broken, that's a problem, and it indicates a deception by the company.
Yes, if you want you could just increase all salaries by that much and not worry about the bonuses. The reason they come in a bonus structure is two-fold: so the company can not pay it out if they don't hit goals; because management has the idea that it will make people work harder. Both of these reasons serve the company alone, don't act like this is a case of employees feeling entitled.
The asymmetry between how employees agonize over their behavior towards their employers vs how employers think of their employees never ceases to amaze me. Never forget that your employer will gleefully lay off their most loyal employees if doing so is somehow in alignment with some executive’s comp. I’m not saying you should ever behave unethically, I’m just saying that if you’re on the field, you should be aware of what game you’re playing.
> Never forget that your employer will gleefully lay off their most loyal employees if doing so is somehow in alignment with some executive’s comp.
I'm old enough to remember that people retired from the jobs they spent their whole lives working at... and wondered why those barely older than me were already struggling to find meaningful futures within their careers, nevermind within their company.
Reaganomics and the new business method of short term gains at all costs destroyed company loyalty and loyalty of the employee.
Many employers agonise over laying off employees, I would go so far as to say the vast majority do. Many employers try to keep on employees in situations where they really should be laid off, putting their own jobs at risk.
Don’t get into the the mindset that employers are all psychopaths - not only is it not true, but it will damage your career thinking this way.
I've been on the 'lucky' side of many layoffs. It is always good to remember that the responsibility of a corporation is to shareholders, not employees.
Yes, but it is not quite so clean. Employers are humans and in my experience they care far more about the people they know (employees) than abstract people (shareholders).
(This is just my opinion; and I have never been personally laid off -- the quotes in my first message are more about the fact that I actually might have been better off if I was...)
Your manager is likely to care (not always in my observations), but there can be various reasons for that (affected deliverables (compensation); bad experience of delivering the news, etc.). His manager may care. Next level manager is much less likely to care, and so on. And the decisions are usually made on the level where I doubt people care much. People on that level may not like that they have to lay off people and have some sympathy for those affected, but they will lay them off as soon as they think it is necessary for one reason or another. It's their job to keep _the company_ going, not to keep _you_ employed.
Thank you for saying this. It’s frustrating to see all the hate against employers. It really depends on the company and people you work with, and that can be said for both the employee and employer.
This is how employees should treat their relationships with their employers as well. Do what's right for you and your family, and don't act on some misguided sense of loyalty to your employer.
Sometimes the company has no choice as the alternative is everyone loses their job.
I don’t think employees should think of the company as their family, but don’t get into the mindset that all employers treat their employees as disposable cogs.
Yes I'm in total agreement with this. I see many people here who get absurdly passionate about programming that they forget a lot that management is not as much. The business world is brutal so you gotta hedge the odds in your favor. Busting my ass for the potential to make a significant bonus isnt worth it. As is going above and beyond. Just game the system and wait for management to figure it out. And if your managers don't monitor you, exploit the hell out of that. This is why I consider the Gervais Principal one of the greatest reads of this modern world for office laborers.
The Gervais Principle changed my life. Not all for good, but it did open my eyes wider, and it also helped explain some things that I couldn’t understand beforehand. (For example: I never understood why I found LinkedIn to be so depressing, until I saw that it was dominated by what Rao calls “the clueless” engaging in what he terms “posturetalk”. Many, many useful mental models in that book.)
For me it was the realization of being a loser, but being the difference between being a loser that busts your ass (dwight) and a loser that "gets it" (stanley).
It opened my eyes and I stopped caring about getting fired at my low paid office job. And guess who never got fired even after slacking hardcore?
> Never forget that your employer will gleefully lay off their most loyal employees if doing so is somehow in alignment with some executive’s comp.
I work at a global mega corp run by private equity guy. This is definitely not the way our management works. From my manager up through our BU head, people are valued as a long term investment and are not casually discarded. Yes, if you are not productive, you can be dismissed. But valuable people are not taken for granted at any level of seniority in my experience.
Sure, but the existence of good management in one company run be a PE guy does not necessitate that this will always happen.
Additionally, management is an incredibly hard job to do well, and most people suck at it, so most management chains do incredibly short-sighted things.
I've made the opposite experience (in germany). No company will ever fire anyone. If they really need to, they give you a generous leaving package. The only exception is if the company going bankrupt, in which case the state might help (Kurzarbeit or bail out).
Op got robbed. Not only did he work way more hours to meet a milestone but in the end he got the bonus because it was structured in such a way that he did not have sufficient control of the outcome. It always surprises me how genius level folks can’t do simple math to realize that salaried employees get compensated on the compensation/hours worked formula and if compensation is fixed and hours increase you are getting a screwed.
The manufacturing folks got the better deal because they worked at fixed hourly rate and got and equally sad bonus
structured in such a way that he did not have
sufficient control of the outcome
Yeah, I worked at a job once that tried an incentive program that failed miserably for this reason.
We were supposed to hit X number of billable hours per month. For the first few months I worked my ass off and achieved this.
However I wound up with almost zero bonus. It turned out that the actual bonus was based on what the clients actually paid, and when they paid it.
We had clients fail to pay, or they paid late, or had been given discounts. So most of my hours didn't count, or were shifted to subsequent months... which also happened to be months were sales wasn't able to provide enough billable hours to us for us to reach our bonus.
Total BS.
As you say... and similar to the linked article... I worked my butt off for the bonuses, and fulfilled my part of the bargain. But was then denied, for reasons 100% out of my control.
I quit. Even as a 23 year old that was obviously crap.
Right, as I read it they worked themselves to exhaustion and relations between teams were breaking down. It sounds miserable, and even if the full bonus had been actually achievable it wouldn't have worth the risk of burnout.
And presumably this was the intention, tricking people into working unreasonably hard for an uncertain reward. I was surprised the ending was a note about gratitude and not about leaving the company and its abusive management.
Yeah I didn’t expect that either. I expected the author to realize he got cheated and leave for a better spot. It surprised me that he wrote that whole thing and never realized how badly he got cheated
This is literally a plot point in Christmas Vacation.
Is also why I think it is silly for startups to provide too many perks. It sets obvious precedent and will upset more folks when you stop. Find ways to invest in the company so that success is it's own perk. If the company truly has more, work that into raises where you clearly tie the income to the success of the company.
aka, equity compensation. Because i sure aint gonna consider it a perk if a CEO (or owners) to get richer, while i just get praise for making the success!
> Peter Gibbons: You see, Bob, it's not that I'm lazy, it's that I just don't even care.
>Bob Porter: Don't- don't care?
>Peter Gibbons: It's a problem of motivation, all right? Now if I work my ass off and Initech ships a few extra units, I don't see another dime, so where's the motivation?
Before I started working at MASSIVE CORP I thought Office Space was a comedy.....
When I come to the "I just don't even care" state, I start looking for another job.
I was at a startup company that in my opinion got a great idea and with enough focus, we could have been successful. I always tried to think about the product, the impact, the roadmap, the quality... And after some time I realized that I just annoy the founders and I care and worry more about things then they do. So I decided to care about half as much as they did and in the meantime look for another job.
Today, I work at a big corporation, I was again motivated to be able to change things, improve things. The feature I recently worked on was just put on a roadmap with a ridiculous deadline, our work is blocked by like 5 different backend teams around the country, and somehow I should bend over backwards to deliver on time?
Keeping your motivation is hard when everything around you is trying squash it.
And I am not even sure it's a problem. Of course I wouldn't say this at my next job interview, but in reality, if you are motivated, most often you will get disappointed really fast. On the other hand, when you just go in to work, do a reasonable amount of effort, then you can work better with others with less stress, and in the end, who cares about "those few extra units"?
I somehow understand you. However, I had some time to reflect on this (because I am similar to you, in a way) and the best I got to is: it's just business.
You can be motivated as much as you want, but tomorrow you can be replaced. Your company gets acquired, and you happen to be in the "wrong" office. Bye bye. Or whatever other reason. Covid! Bye bye again.
We are just minions with a good technical knowledge. And if you don't step up and get closer and closer to CTO level you'll be "just" working on features, sporadically "exceeding the goals set" and get rewarded for that. Yay. Get the most out of it and that's it. If that's enough for you, so be it.
Learn, develop, make shit happen, iterate.
Do you want to have a major impact? It takes hours and stress from your own personal life (I couldn't stress this out more), things don't come easily.
If you want to have power you need to be your own boss. And even then I wonder how much power you truly have.
I have worked directly with several CTO/CIOs and one thing stood out. The y kissed my ass but no one kissed theirs. It is a very tenuous position that normally gets replaced when the weather changes. I was being groomed for the spot at a company, riding shotgun with the then-CIO. Weather changed, our CIO was out, I was retained (aggressively so) but my path to C-level was gone just the same.
If it falls in your lap, take it. But don't count on it. Leverage the extra money under the assumption that you're out in three months. It's position formed of a certain mix of competence, pedigree, communication ability, and politics. Tenuous.
> On the other hand, when you just go in to work, do a reasonable amount of effort, then you can work better with others with less stress, and in the end, who cares about "those few extra units"?
That's exactly my MO. The extent to which many people start to overidentify with their job is almost comical. If they are lucky it may actually pay off at least. But more likely than not they are just deferring the inevitable conclusion that work is at the end of the day just a (hopefully enjoyable) waste of time so you can afford living.
Yeah, of course it is. But you also spend a lot of time there, so I don't think it's unreasonable to try to find something you can be proud of delivering.
Sure. As long as you're able to deal with nobody else sharing that pride, expressing gratitude, offer a reward or even notice your feat. Then you're set. If not - you're up for a rude awakening many years later realizing that all those things you were proud of didn't make any actual difference - not even for yourself.
Hm. I'd say that wasn't my experience so far -- plenty of gratitude and recognition. But I kind of wish I would have focused more on things I was actually excited to work on instead of prioritizing stability above everything else.
That said, life is very short. Big companies are a great way to make pretty good comp in exchange for dealing with a ton of dysfunction. I know people who don’t get bothered by it at all - they separate themselves and their 8-10 hours a day and compartmentalize.
If you can’t do that, though ...
The only reason to work for mega corps once you’ve got enough in the way of assets that you are already dialed in for the normal retirement age is because you’re vesting out a package.
are you, or anyone here, aware of a co-operative modeled SV style startup? I think 10yr (or 20 if that's possible) options is a good step towards that model so that you get back compensated for your contributions regardless of how long the investors resist IPO
if it's cooperative, then the workers are themselves the investors, and they would have had to put capital into the company. There's no need for options in that case (since those workers already would own the shares for putting in the capital!).
What you might be referring to is to have workers who _didn't_ put in capital, but still get given long dated options, along with their salary. This is funded by investors. So - the problem here is that there's no downside for the workers. If due to bad luck, they lose out on the value of the options, but still get paid their salary in the mean time, and yet get the upside of the long dated options should the company succeeds. The only people to lose out are the investors - who had to give up some of their shares (as options), for almost zero upside. I dont think it will work - no investor is going to be that sucker.
The John Lewis Partnership[0] in the UK (which owns a chain of department stores[1] and the supermarket chain Waitrose[2]) has more than 80,000 employees and operates like a cooperative.
Technically it's a Public Limited Company (albeit one wholly owned by a trust for the benefit of its employees), but it does run an internal democratic system.
Profits are distributed to employees as bonus, which is a uniform percentage of their salary. 2021 is the first year they won't distribute a bonus (because of Covid), but historically it's been between 5% and 20%.
That’s cool but isn’t it similar to the incentive pay programs or RSUs/ESPPs offered by traditional employers? Not to mention that once the company is large, it’s hard to feel you have that much control over the success of the entire company.
Employees of JL don't own any shares. They cannot be bought or sold or given to employees. 100% of the shares are owned by the Trust.
That also means that every employee effectively has the same stake in the company - those high up in management, for example, don't have a lop-sided number of shares compared to those on the (both literal and metaphorical) shop floor.
JL employees also elect colleagues to hold the management to account, and appoint people to the Board and Trust. How many "traditional employers" allow that to happen?
I don't doubt you can make a large co-op. What I do doubt is that working at a large co-op is much different from working at any other large employer (I guess unless you're on the executive team).
At Mondragon, employees can choose their managers by vote (the corporation is run like a democracy inside), perhaps that can make some difference. I have no experience, therefore no strong opinion on this; sounds good to me, but maybe it introduces its own problems that I wouldn't guess.
I saw it in the theater when it came out and thought it was funny but obvious over-the-too satire. I was at a small company at the time.
About two months ago I decided to watch something and it popped up on the suggested items. I figured what the he’ll and watched it for the second time ever.
I work for a megacorp and have for most of the last decade.
If anything, office space is too subtle. Instead, I realize now that my reality would be so insane as to be considered unrealistic and too exaggerated. Even “Disrupted” doesn’t actually capture the insanity, dysfunction, etc.
I have joked/threatened for a few years that I would write a book about this place but as I compile an outline I keep asking myself if anyone who hadn’t already had the same experience would believe any of it. The mountain of mediocrity, sure, but the intrigues, scheming, backstabbing, insane and systemic incompetence in every domain? No way.
I'd say the motivation is mainly intrinsic. I don't know about you, but I've generally just felt better when I've worked like I care. I've found there to be a correlation between my overall happiness and well-being and the effort that I put into work. This doesn't mean going overboard and working overtime, just to care about what I'm working on.
I suppose the extrinsic motivation would not be noticeable immediately but should be noticeable over time (ie. taking a 10 year view) as you would (hopefully) earn more than peers who just do the minimum to avoid being fired. If you get laid off, I'd guess you'd also have an easier time finding a new job as well.
I’m not staying at a job past 5 unless I have a share of the company. Screw that. Every startup owner thinks they are unique and that’s why 90% of them fail. If you are working at a new startup the stats says it’s going to be time to look for a new job anyway in a year so why go any extra miles when you don’t have stake? Silicon Valley isn’t a charity
> I’m not staying at a job past 5 unless I have a share of the company. Screw that. Every startup owner thinks they are unique and that’s why 90% of them fail.
Not all companies are the same, and not all companies are startups. I'm back working at the same company which was my first job in tech. Not for the second time, not the third either, but the fourth time now. I was first hired there over 22 years ago in tech support. It's always been a good place to work, that takes care of it's employees (even if it can't pay a huge amount for some positions, there's always a lot of recognition that everyone is needed to make it work, and everyone is appreciated), and I never left because I disliked the company or the work, but because I wanted to focus on school, or explore a new opportunity, or work with family, etc. Our customers love us, and my fellow employees generally like working here, to my knowledge.
They don't expect me or my fellow employees to work past our normal hours (except when on call, or it it's a night-op for sysadmins, which you can generally just take chunks of time off the next day if you like). Yet people do work a little later to finish stuff, or check in to make sure something they did earlier in the week isn't causing problems over the weekend. Because they care about not making problems for their fellow employees, and not adversely affecting our customers, which have a high opinion of us.
All that is a long way of saying that not every company is a startup or behaves as one. People in silicon valley are somewhat conditioned to look for the startups and make that gamble, but there are other choices, and they aren't always nearly as bad as people have been led to believe. Many jobs that are considered shit work can be rewarding if approached the right way. Even IT or programming at a bank can be rewarding if you're lucky enough to have management that mostly gets out of the way and if you cultivate a relationship with the people (the other employees in this case) that you're serving, and see how you make their life better an easier (and there are always opportunities for this, if you pay attention).
> even if it can't pay a huge amount for some positions, there's always a lot of recognition that everyone is needed to make it work, and everyone is appreciated
I can't pay my rent in recognition or appreciation though.
What point are you trying to make? Nowhere in the post does it say the job doesn't pay enough to cover rent. If you are spending a large amount of life employed, it's reasonable to trade off a percentage of the maximum possible renumeration you can achieve in exchange for making that time as pleasant as possible (eg if you luck out and end up working with a group of people you care about and who care about you). It's not as if any extra money you make can ever buy you that time back
There's nothing wrong at all with just seeking maximum income at all times, but that's normally to some end (happiness, security etc): if what you're seeking is partially served by a given job, then you often aren't really gaining much by sacking that job off for one that pays more
But it makes it easier to stay motivated to keep working. Of course, at the end of the day you still need enough to pay the bills. You still have a better, healthier, less stressful life than if you feel you are being exploited or not recognised.
There was no mention of the job being underpaid, was there?
Then, if your definition of “underpaid” is “lower salary than one could get elsewhere”, well, we are all underpaid. But it matters only if your salary is not enough to cover your lifestyle. Bearing that in mind, I’d rather be paid less to work in a nice working environment than better paid in a stressful professional nightmare. I’ve done my share of nightmares already.
If the extra money is enough you may have enough to become your own boss after some time spent being miserable.
I've been quite miserable whenever I worked as an employee (I carefully picked the companies I worked for and I don't really have many complaints - I just can't stand company politics, power plays and stupid decisions from above) but I used my time as an employee to save some money and use paternity leave to build a family. Also, as a sleepless parent, my brain is not in top shape and I'm ok with doing what I need to do to collect a paycheck.
Now, those 5 years being miserable will translate to buying a property in cash somewhere with nice weather, lowering our expenses tremendously (more than half is rent right now) and allowing us to live off some almost passive revenue stream (think, 1 man micro-saas). We're planning to use the free time to build more products and edge ourselves against the risk of not being able to afford our lifestyle and have to go the employee route again.
I mean "some people" is clearly not the person you're replying to and I agree with them. I'd much rather get paid for the work I do. Unless I have a stake in the company, the company is not my family and my work is a means to an end
> the company is not my family and my work is a means to an end
That's fine. I wasn't making some argument that you should work for someone that's like family, just that there's a whole spectrum between "caring about my company stops at shift end" and "my identity is bound up in this place I work".
I think most people would agree that money isn't the only thing most people care about when choosing a job. There's plenty of people here that would balk at writing better missile targeting code, or exploits for a government, or spying software marketed to spouses, or even writing video games that trigger compulsive behavior. For some people, dislike of the work outweighs the fact that they can get paid very well doing it.
FWIW, some of my time in the past was spent working for my brother at his IT company, which also employed our other brother. It's great working with family until it isn't, and when it isn't, it really isn't. I don't recommend working for family most the time, and I don't think people should treat their coworkers as family. I do think people should try to find a job where they enjoy the people they are around and are proud of the work they do, if they can afford to choose a job like that. If you're going to spend close to half your waking hours doing something, I think it's much more fulfilling and better for your mental health to care about more than the amount you're paid if you can afford to.
> But using your money to buy happiness after your ten hour work Saturday is not going to be a big success, either.
It depends. If working 10-hour Saturdays for a year results in me buying a yacht, you can be sure that actual real money bought the happiness that came with my yacht.
It's all a tradeoff and for some things you are unlikely to get the big payoff without a risk involved. Determining where your personal boundaries are with the risk-taking is an individual decision.
TLDR; you can't win the lottery if you don't buy a ticket.
If you have a reasonably high income, I think the tradeof is actually never worth it, because the marginal happiness from money gets so low. Sure I could buy a yacht but that's not going to make me much happier. Buying a mansion by the sea would not really make me much happier either. Sure I might do it if I had the money because why not but that would not accept to work on weekends for a few years to get it even if it was guaranteed.
> It depends. If working 10-hour Saturdays for a year results in me buying a yacht, you can be sure that actual real money bought the happiness that came with my yacht.
Great. Now you have to pay for maintenance, staff, and insurance. So you need to keep making that amount of money or you’ll lose it. The added stress and expenses make it a bit of a poisoned gift.
> TLDR; you can't win the lottery if you don't buy a ticket.
Then you will be stuck working 10-hour Saturdays to pay for the running costs and maintenance of said yacht, which still leaves you with barely any time to actually enjoy your yacht.
That's not meant to imply they don't pay well. I included that as a nod to some people I've known in the past that thought they didn't pay well enough, but I also know they've been much more competitive for tech positions the last decade or so (you have to, being SF adjacent). As for tech support (where I think a majority of grumbling traditionally was), I'm not sure what that's like now. It's also a problem of supply and demand though, lots of people are qualified for that.
It doesn't matter how much you like a specific company if they don't have a need for your skills or your skills don't provide enough to live off of. I'm not saying abandon your tech career to work as a janitor at your favorite company, just that there are lots of other choices for someone in tech other than working at a startup. Some pay okay, some pay quite well. Some may not pay well at all. What someone thinks is worth it is obviously up to them and their circumstances.
> They don't expect me or my fellow employees to work past our normal hours [...]. Yet people do work a little later to finish stuff, or check in to make sure something they did earlier in the week isn't causing problems over the weekend.
You know, managment will become accustomed to that. My first scuffle with US “work ethics” came when I spent a year in a fairly well-known company and yeah, everyone was enthusiastic and passionate and... management expected no less than total dedication and zeal from their underlings.
How does it go? “The beatings will continue until morale improves”
After I left I heard of more grief and drama, burn outs and bitter separations.
> You know, managment will become accustomed to that.
Eh, I'm sure they can, but I think I wasn't communicating that it isn't all people and it isn't all the time. It's not the same people always staying late. It's sometimes that someone stays to finish that last bit or to stop at a good point, but people also take off early routinely to counter that, and feel free to run errands in the middle of the day as needed. It's less that management is getting extra time out of a lot of people than it is that people feel flexible with their time, and willing to give a little here and take a little there, to make sure other people aren't left in the lurch, and neither are they.
I am management and I work at a company that is similar to the post you are replying to and I would never get used to it. If someone does get used to it they have serious value issues (same as if employees take bonuses for granted).
Well, unfortunately it’s something inevitable like entropic decay.
The guy that hired me was someone like you, but was kicked out and replaced with a more ambitious gentleman who must have promised to squeeze us more efficiently.
The problem is that if you look beyond the rhetoric and the propaganda, employee well-being are only second-order to measurable and targetable outputs. There always will be someone that promises to achieve objectives in some other manner, and given enough time they will get their chance and ruin everything
Equity is just another way to not give you money in most cases. Unless you are at the founding level, wasting years of your life for just a few extra thousand dollars? Imagine if you were getting paid $150K instead of $100K + options. In three years, do you think your options would yield $150,000 in case of a liquidity event, in the BEST case scenario?
> Nowadays, stock options given to employees often end up being worth nothing, even on a successful exit.
This seems unlikely.
Exits and IPOs have much greater valuations now than they did ‘back in the day’ so far more early employees end up with a significant infusion of cash.
Super-early employee here. Pay for your options your first day of employment. They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them). Then when you leave, you get to keep all vested shares with no tax consequence, no need to pony up any cash, and no need to sell right away. Worked out great for me.
This is the way for companies to do right by the first few employees (and have a longer than 90 exercise window when leaving). I know a super early employee who left and had to take a loan to exercise and pay taxes. It's kind of sad to think about it.
> They should be inexpensive; and your employer should be willing to give you a signing bonus to cover it (after all, the money just goes right back to them).
The first part of this can be false. If you're 1/2 way to billions IPO then your options can easily be a year or more of salary to exercise.
About the second part if the company gives you that as a signing bonus you're still on the hook to the IRS for the bonus so now you're 10s of 10000s deep on an illiquid position.
If your company allows for it, you can early exercise and file a 83(b) election so that even as your options vest over time, you only pay taxes for the spread between your strike price and the fair market value at the date of the early exercise, rather than the date of vesting. The taxes can be 0 if you early exercise when the fair market value _is_ the same as your strike price.
It's called election 83(b). For it to work, the company grants you restricted stock instead of options. The restriction is that the company can buy back the stock on a vesting schedule, so it's effectively equivalent to stock-options. The difference is that you can buy all of them on day 1 at fair market value and pay no tax.
It's usually done for early employees who join before multiple rounds of funding occur.
You pay ahead, and if you don't make the cliff, or if you leave after the 1 year cliff but before the full 4 year vest, you get the shares you vested, and a refund of the cash that didn't end up buying the rest.
You need to consider that a very, very small percentage of companies have IPOs.
Many "successful" exits are actually acqui-hires, where a larger company acquires a dead or dying company for its talent. Often the product from that company is immediately shutdown, or at least shelved and no longer actively developed.
Other "successful" exits pay some percentage back to the recent preferred shareholders. Earlier investors are not made whole. Common shareholders generally get nothing.
Founders will still spin these "exits" a positive because they didn't have to shut down. The reality is the venture was a failure. Employees got jobs... that they could've had anyway.
In my 30 year career, I have never had a stock option worth a single penny. When I have someone talk up options as part of a compensation package, I tell them that options are nice, but my experience is that they have had no value in my past and that's the value that I'll assign them in the present and the future.
> First, overwork doesn't lead to more productivity for knowledge workers. You get to pay that piper one way or another in the end.
I have never seen any research showing net negative productivity for any job for under 60 hours a week of work. Overwork sucks but if you have evidence that it’s bad for productivity please cite it.
From the academic paper linked to in that news article
> the hours at which output is a maximum is at 67 and at 64, respectively. In fact, there are a few cases in which actual observations on hours of work exceed 67 and 64 meaning that, in these instances, average observed hours were at levels where the estimated marginal product of hours is negative!
In repetitive work of course more time is always gonna be more productive, with diminishing returns. Until the worker/slave mind or body breaks at least.
Mind you, I'm not saying the same doesn't apply for knowledge workers. Just that this specific articles doesn't provide evidence for knowledge workers.
I imagine that there will be more science being done for productivity on knowledge workers once there's some decent way of measuring productivity for knowledge workers.
My original claim was that there’s no research showing negative productivity for any job for less than 60 hours a week of work. If you have anything to the contrary please share.
There is no reason to believe knowledge workers are any different than manual workers here. Your productivity turns negative when you make so many mistakes that you’re destroying value, not creating it. The article may be only weak evidence for knowledge workers but it certainly isn’t no evidence. Other forms of evidence while not rising to the standards of publication certainly don’t point to 40 hours work a week being optimal for productivity of most knowledge workers. Physicians, professors at research institutions, top tier lawyers, all these people work insane hours.
There is no evidence that working less than 60 hours a week is better for productivity, anywhere, just a bunch of people wishing really hard.
> Your productivity turns negative when you make so many mistakes that you’re destroying value, not creating it.
One thing to consider about knowledge/skill workers vs unskilled labor is that most complex systems are house of cards style situations where a single mistake can both destroy a network effect of value, but also take several orders of magnitude of time and effort to detect and rectify the actual issue.
Introducing a subtle, but value destroying, bug into a system can do value damage to the N systems it interconnects with, and can lead to a near total loss of the whole system (eg: drop table). Of course there are safeguards that can help avoid this like backups, but still the point is a carpenter wouldn't make the whole house worthless by a misplaced nail.
Because manual workers and knowledge workers get mentally weary in the same way and make mistakes in the same way, using their brains. Your muscles are perfectly capable of going longer. Your attention span, working intelligence and executive function are going to get messed up whether you’re putting 60 hours into putting the right amount of powder into every container or checking the Excel formulas are all correct.
Manual laborers are people no less than accountants or mathematicians.
Ok, there’s just so many facts contrary to all normal experiences, so I’d like to see some sources. For example, I can easily work twelve hours per day while painting the facades of my home, without being mentally fatigued, only bored. But my body is surely sore after climbing up and down stairs all day. On the other hand, I’m hardly capable of doing six hours of really focused mental work per day.
Feel free to name any category of professional where working over 40 hours a week isn’t quite normal. Doctors, lawyers, engineers, professors. It sure looks like people who work more than 40 hours a week on average do better than those who don’t. This is not a claim about what I wish was true, but about what actually seems to be true.
The actual research on this is scarce to the point of non-existence. It may actually be non-existent for knowledge workers, at least published work.
> Feel free to name any category of professional where working over 40 hours a week isn’t quite normal.
YMMV but the only time I ever experienced the myth that "working over 40 hours a week is the norm" was when I started working at a US-based company.
And the only reason unpaid overtime was the norm was that managers, specially skip-level management, did a piss-poor job establishing sane goals based on realistic time-frames, and typically threatened to fire people pretty much each and every single week if they did not met those unrealistic goals.
Strangely enough, everywhere else people managed to do their job within the 40hours work week.
> YMMV but the only time I ever experienced the myth that "working over 40 hours a week is the norm" was when I started working at a US-based company.
Even in France, where the base legal hours are only 35 hours a week, intellectual/upper professions in a full-time position work an average of 43 hours a week.
That's the average which includes women, who work 10% less (in terms of number of hours worked) than men. If you only consider men, you reach an average week of 45 hours for those professions.
Yes, many places are willing to have lower productivity in exchange for higher quality of life. The US has a different culture and has most economically dominant companies.
> The US has a different culture and has most economically dominant companies.
The US's post-WW2 dominance doesn't explain why layers of lower management from the US stationed abroad insist in scheduling 3 weeks worth of work into 1 week in spite of being fully aware of how long the task takes, and afterwards boast to their leadership that their non-US teams outperformed US-based teams by a long shot while leaving out that team some non-US developers had to pull consecutive all-nighters to pull it off.
> YMMV but the only time I ever experienced the myth that "working over 40 hours a week is the norm" was when I started working at a US-based company.
Irish lawyers and doctors work well over 40 hours a week on average too. I feel pretty confident the same is true in finance. Tax professionals in Spain do too. That about exhausts my personal knowledge of working hours in Europe but I kind of doubt management work less than 40 hours a week anywhere, even the civil service.
> and typically threatened to fire people pretty much each and every single week if they did not met those unrealistic goals.
The secret to greater American productivity and hence wealth. People just work more hours.
> Feel free to name any category of professional where working over 40 hours a week isn’t quite normal.
Just because something is considered "normal" does not mean that it's actually efficient, or "good".
Certain job sectors, like social jobs, have been chronically overworked and underpaid for pretty much as long as they existed. Even during non-pandemic times burn-out, depression, and suicide rates of people working in healthcare have been way above those of the average population, particularly the people who actually do all the "grunt work" like nurses.
A situation has become much worse during this pandemic, yet remains largely ignored.
> It sure looks like people who work more than 40 hours a week on average do better than those who don’t.
Tell that to people working in logistics, those people delivering you packages the next day. Ask them how many hours they work and how "well off" they are financially in exchange for giving up large parts of their private life.
As a matter of fact, only two out of the 4 professions you listed are actually considered overworked to a degree of burnout: Physicians and attorneys [0].
The vast majority of the rest of the list is populated by professions that are generally not considered well-earning even when working massive hours: Nurses, social workers, teachers, school principals, police officers, public accounting, fast food or retail.
Most of these professions would have a very lasting and visible impact if they were gone, it would make society overall objectively worse to be missing them, yet somehow society at large still refuses to properly recognize that trough proper financial compensation even with many hours worked at very important tasks.
Working any number of hours isn't "normal", it's a trade off between free time and money (for example, colleagues who work part time in order to sleep late) and a consequence of social pressure (e.g. competitive attitude) and practical constraints (e.g. keeping a shop open at constant and useful hours).
In some cases people want to work, to some extent, because their job is more pleasant than their free time activities, but it cannot be considered "normal".
Medical error is apparently the third-leading cause of death in the United States (see https://www.cnbc.com/2018/02/22/medical-errors-third-leading...). It certainly seems plausible that our culture of overworking doctors contributes to that significantly.
Specialist doctors are not staying late on a Friday or working the weekend. While a walkin clinic doctor might be pushing 60 hours.
An average business owner might spend more than 40 hours a week. The most successful business owners hire people to work for them while they enjoy their lives.
8 hours of tired programming gets less done compared to a well rested 3 hour work session.
> Specialist doctors are not staying late on a Friday or working the weekend
This isn’t true. Obstetricians work 24 hour shifts as standard. Babies don’t get born 9-5.
If you come into the ER on a Friday night with severe brain damage you’re seeing the neurologist immediately. If you have a punctured lung you’re not waiting for the pulmonologist to clock in at 9AM.
Nearly all medical specialties work shift patterns or are required to be on call.
As best I can tell the specialty with the lowest annual hours worked is pediatric emergency medicine at around 52 hours a week. Vascular surgery average 66 hours a week. If you want to check my calculations the below paper has annual work hours for different specialties.
> 2018 Average Physician Hours Worked Per Week
Physician Type Average Physician Workweek
Age 45 years or less 54.73 hours
Age 46 years or more 49.87 hours
Male physicians 51.89 hours
Female physicians 50.46 hours
Practice owners 51.96 hours
Employed physicians 53.73 hours
Primary care physicians 50.64 hours
Physician specialists 51.76 hours
Maybe plastic surgery, dermatology, rheumatology, and psychiatry don't, but other doctors are going to be splitting weekends and call among the members of their group. For specialties that have fewer doctors nationwide like vascular surgery, cardiothoracic surgery, and neurosurgery you can expect to be on home-call every third night and covering the weekend every third weekend. You might have to come in to operate every other call, and on the weekend you'll have to round on all of your group's patients on Saturday and Sunday and operate if anything operative comes in.
My sister-in-law is an Ob/Gyn. Yes, there's call, but that gets compensated for by fewer hours during the M-F week. There's a reason why doctors on the golf course on Wednesdays is a cliche.
employees should negotiate whatever compensation they think is fair for the work they provide. bonuses and perks can be part of that, but it's probably better to just ask for a base salary that is fair
salaried employees are generally not paid by the hour, and it's rare that 40 hours a week (or any maximum) is specified in a high compensation contract. if I know that a job won't be "9-5", I'll factor that into whatever base salary I ask for
Bonuses are very rarely negotiated, but they are added by the management. It is very stupid to assume something about bonuses because I've seen it so many times that they can be unpredictable. Negotiate your salary and other perks, if you get bonuses on top of that be happy but don't except that you will get those bonuses in further negotiations.
Having unreasonable schedules thrown on you is the sign of a bad startup. Working overtime means tomorrow will suffer. It might be worth it for that critical moment but tomorrow will come and the rest piper must be paid.
I don't see why a startup would even offer a bonus or perhaps why employees would expect one if they aren't already showing a profit..., but I've experienced the latter first hand.
The typical startup problem like the above is a more extreme example of people mailing it in until bonuses are out: people mailing it in until the startup is acquired or goes public because the company is doing well and they lose their shares/options if they quit
Don’t EVER work for a company that will take your shares if you quit. It’s a psychological trap and you are the prey. Any startup owner that strips your stake if you leave deserves to become the personal target of an obsessive and vindictive IRS auditor.
Generally I think the trade is that you can keep the stock if you quit but you don’t have stock. You have options that expire if you quit, so if you want the stock you must pay a lot of money to exercise the options, and you then pay tax based on gaining a high value of stock (potentially more tax than you could afford) even though its real is quite undetermined.
In other words, the company takes your shares if you quit.
The solution is to put the option strike deadline at 10 years in the future which is iirc what YC recommends. It's possible for these terms to be employee-friendly.
Most of the time it’s not vindictive founders. It’s that the options cost money to buy. And if the company is successful one might have to pay taxes on the stock options too.
It's a weird incentive model when you get down to it. It's rare for individuals who have been with a company for a long time to be fired. While RSUs/guaranteed equity incentivises individuals to leave when they get bored. Options provide an incentive for bored/uncommitted employees to hang on.
I wonder if this is why mid-life startups that stop growing start to feel "stale". Too many people who just want their money and to get out of dodge.
Yes, I noted guaranteed equity as a class as there are a multitude of instruments which can provide monetary benefit after separation.
I once worked with a guy who had been with an 8 year old startup for around 7 years. The company had stopped growing at around the 200 million dollar run rate and he’d stopped really trying to do much other than get by. Someone once directly asked why he stayed and it turned out he had a million+ options. He was never bad, never good, and never took risks or did anything that would make him stick out.
6 years later the startup is still private and hasn’t grown (it’s probably smaller today than it was then). When I think back on the experience there were a number of people who felt strangely trapped into working there and didn’t give a crap.
I worked at one other company doing the options game and saw the same thing - anecdotally I never saw this at companies giving RSUs. As a manager, it would be tough to part ways with someone if you know your stripping them of a million dollars in equity.
By "they lose their shares/options if they quit" do you mean vesting? Because if you do, then you are not losing shares that you have already earned. And founders also have vesting.
> It sets obvious precedent and will upset more folks when you stop.
Isn't another solution to make perks not variable, and clearly outlined in the contract as part of the employment package? You only have to worry about what your employees will do if you take away a perk when it's actually something you can consider taking away. If you treat it as part of the guaranteed compensation, you'll budget for it accordingly just like your employees do.
If you want to give bonuses, like the parent said make it a flat guaranteed amount, or tie it to a number based on company performance that people can see and make plans for (profit sharing with published numbers at regular intervals, preferably more often than it's paid out).
Indeed, but in many countries this is done via a 13th payment.
To be honest I've never seen 13th payments offered in dev careers, so when I hear some of my Scrum friends demanding it I'm quite surprised since I know they make comparable amounts to me.
I'm a dev in Belgium, and I get both my "13th month" in December and double holiday pay in June. In fact, I've never seen anybody here who was traditionally employed (i.e., not contracting through a zelfstandig) who didn't get those perks.
Is it? I've exclusively seen it refer to the extra monthly salary at some point during the year (typically around December). I guess it depends on the country.
And the one quarter, we didn't get the max bonus. In fact, I don't think we got it all. People screamed and yelled and were pissed. At the company all hands they spent a lot of time explaining that bonuses weren't guaranteed. Some of the lower paid folks were actually crying about not making critical payments because they counted on the bonus. Morale went way down. People left because of it.
Stories like this are one of the stated reasons Netflix doesn't do things like bonuses or any sort of variable comp. Because once you get one once, you feel entitled to it in the future, and it feels like a loss when you don't get it.