Comment by tptacek | Hacker News Reader

Comment by tptacek | Hacker News Reader

Parent Full thread

It really seems like you have two options:

Classic corporate style: all salaries are private, and management has total flexibility in how salaries and raises are calculated.

Fog Creek style: there's a grade system, salaries are near-public (or easy to figure out), and management is locked into pay brackets; a trade of flexibility for transparency.

What doesn't seem to work is anything in between. If everyone knows everyone else's salary and management does flexible incentive/retention/recruiting salary calculation, the situation devolves to "Incentive Pay Considered Harmful"-style teamicide as people snipe at each other and invest cycles in cultivating resentment about perceived pay injustices.

An employee might reasonably prefer one style or the other. It's probably nice not to stew all day wondering if the guy slacking off next to you is making more than you, but it's also nice to know that if you talk to your manager, make an arrangement, and then just completely rock out for a couple months, you can achieve an arbitrary pay bump. "Classic style" is more entrepreneurial.

I agree with that. There's some of the latter going on in science academia lately. Pay used to be Fog Creek style, determined almost entirely on a mixture of years of service (civil-service style) and rank. An Associate Professor with 8 years of experience got a certain salary; a Distinguished Institute Professor holding a Prestigious Chair got the salary associated with that position. Pay and raises were fairly easy to figure out (approximately) because they were entirely tied to these public ranks. There was still a lot of politics, but the ranks at least have some social legitimacy: people are willing to accept that the Named Chair of Particle Physics should be paid more than an Associate Professor of Physics.

As things have become more market-like, it's become a lot more flexible (mainly in science/engineering). A junior professor might get offered more than a more senior and prominent professor because the school is trying to lure her away from elsewhere, or really wants to fill a particular hole, or just because of competition (if someone has offers from three schools, yours has to be in the same ballpark). At private schools, this is sometimes handled classic corporate style, but it's not that private, because sometimes faculty votes are involved in the decision making.

At public schools, this combines with sunshine laws that make any state employee's salary viewable in online databases (in some states). This causes all sorts of shenanigans. Now you have professors realizing that they're paid $90k while someone much less accomplished in the same field is paid $110k, due to the histories of who got hired when. So they're going to need to be offered $120k, or else they're going to threaten to move (and there's a whole bluffing and bluff-calling game in that). This also creates the perverse incentive that people who move around a lot, or at least interview around a lot and solicit external offers on a semi-regular basis, are generally paid more than those who focus their energies on one university's research/education programs.

Overall I don't think it's been a good change for there to be both: 1) disparity in pay that is not tied to clearly public things like Distinguished Professor versus Associate Professor; and 2) that pay disparity to be public, so colleagues know who makes more than who.

As a brief anecdote, I was completely shocked by what some professors earned at the public university I attended. I had several standard professors in finance and accounting who made ~$150-200k/year plus freelance consulting at $500+/hr. If more people knew of the salary potential of being a professor, universities might get more quality applicants.

This is a because a professor of finance or accounting also has the credentials to be a CFO (or even CEO). They're in demand and that's the price that the market will bear. There is probably a similar effect in computer science, engineering, medicine and related fields.

Of course. Most people just don't think you can earn that kind of income in academia.

These high salaries -- medical/law/architecture/business/etc are the same way -- are required in order to lure the superstars into academia and away from private practice. The highest paid professors at my public university were paid $500k+, with the top handful being at $1m +/-$100k.

That's definitely the reason, but I'm not sure it's always worth it. The fact that someone can earn $1m in the private sector doesn't automatically mean that they'll provide $1m worth of value to any university that hires them; the skills aren't identical.

Might be less true in areas where being prominent is a ticket to bringing in a ton of grant money; some famous medical researchers essentially pay their own salary out of grants, in which case from the university's perspective they're free.

I don't know how workable it would be, but I always liked the idea of management's base pay being the average of everyone that worked for them. Any bonuses would have to be a multiple of that base pay; to include stock.

This would ensure that the base salary only goes up if the average wage goes up and clearly define the bonuses. At least for those where the bonuses are published; I'm thinking SEC filings and the like.

In practice it probably wouldn't change much though.

Why do you care what management makes? They aren't your peers. Totally different job.

Because it gives you insight into what your company believes matters and contributes value to the company.

That's all well and good, but managers often have a different incentive structure than normal employees; a manager might command a significantly higher salary, but be out on her ass if her group doesn't meet business performance targets that depend on every member of her group and her own business judgement. An extremely common example in services companies: managers are often responsible for their region's number.

Some of them are, I report to the CIO directly and sit on the Corporate Compliance board of the organization. I care because I think something like that would make more organizations accountable for being reasonable with executive and management pay.

I much prefer the Fog Creek style, where incoming employees can immediately see a clear career path, which is good for loyalty and maintaining an institutional knowledge. And those are two things I feel a lot of companies severely undervalue in favor of keeping salaries below market rate.

A clear path is good...until there's a roadblock.

I just left a company that had a pileup of engineers at the end of the Junior 1-Junior 2-Senior 1-Senior 2 track. The next step up was Principal Engineer (or something like that) and there were only so many of those allowed. And those guys weren't quitting anytime soon.

I figured there were only so many bumps they could give me before I hit the ceiling and stayed there for a decade, so I bailed.

Definitely, but I think that's a situation that should have been addressed by that company, and I don't know if it translates into an argument against a clear career/salary path. They were always free to create new positions or levels.

That definitely was happening to some degree. To me it implied that there was a problem in this whole "ladder" idea when they had to keep invoking Zeno's dichotomy and adding more intermediate steps between Major Title 1 and Major Title 2 to keep people around salary-wise.

Reply on news.ycombinator.com