throwaway879168

Thanks. My first employee did actually leave to start her own company, and I did try to be as supportive as possible, although I was sad to see her go. (I did decline to invest, as I wasn't really confident in the concept, but I certainly tried to give any useful advice I could.)

Certainly if I did decide to start paying considerably above-market rate, I would do it in the form of profit sharing, because anything else would be taking a considerable risk should profits decline. However, there's still the question of whether that's the thing to do. I mean, certainly it would be a nice thing to do. But so would giving more to charity, or to my parents. Or lowering the price of our product for that matter. The only difference is that, as you say, the employees help generate those profits. But only to a point; the first developer I hired was after the company was profitable, and she's actually moved on to her own startup. So it would be more about sharing the current wealth than rewarding people for getting us where we are.

Still, obviously it's something I'm considering, or I wouldn't have posted. And I guess it doesn't have to be all or nothing; I can obviously choose to share any amount of the profits.

Really don't follow the last argument. I would hope if my employees got a sudden large raise, they would put most of that money into their own retirement savings, rather than just increasing their spending. But even if they didn't, by your argument the best thing I could do would be to just blow the profits myself buying cars or whatever. I think the money does the economy just fine in an investment account, providing capital to public companies and the government.

Perhaps "just a job" was a poor choice of words. I certainly don't think of my employees as "just" anything. I do everything possible to help them advance in knowledge and abilities, and as I said, I have had extremely positive feedback. My meaning by both that and the risk comment was the same: as employees, they have a guaranteed salary from day one. They're not taking an appreciable risk, at least not as I understand the term to be commonly used. I spent years of my free time working on this project before I ever knew it would make money. Then when it started to look promising, I quit my day job, and built it to profitability myself before hiring anyone. It could have easily failed along the way, in which case I would have been out everything I could have earned in the meantime, not to mention all my free time invested, or the fact that unless I wanted to work at another startup I would've had more valuable experience in my day job.

I do agree with you that there is value in providing a positive work environment and helping further employees' careers, so I'm happy to be able to do those things.

I own a small but quite successful software business and struggle with how much to pay people. Our developers are all quite happy with their jobs and (as far as I know) compensation. Several of them have spontaneously told me it's the best job they've ever had. When hiring, I will ask if there's a level of compensation they have in mind, but I don't press if they don't want to state a number. However, any who have stated a number tend to quote ranges which I find quite reasonable. (In the 60k range for intermediate to senior people.) We're not in an expensive area, and those ranges line up with average to above average from what I can tell on Payscale and such.

So, I end up paying people around, or even slightly over, the top of the range they quote. It's certainly within our means, and being well paid should allow them to focus on the work and not worry too much about compensation. (From my own past experience, normally if you say you're looking for $X to $Y, the employer hears $X.)

So far, so good. I certainly wouldn't want to pay less. However, our profits are still very healthy. In other words, I effectively still make considerably more than my developers. Of course, I would expect to make more given the time I've put in and the risk I've taken. It's just a job to them. And they're happy with what they're making, and it IS market level. But... I still feel awkward about how much the company is making compared to their salaries. I wonder how they would feel if they knew the exact numbers. (Although I imagine they could estimate it fairly closely if they wanted to.) I wonder if I'm being greedy watching my savings rapidly grow while my employees make good but not fantastic money. But at the same time, I have trouble with the idea of voluntarily paying everyone considerably more than they a) are happy with and b) asked for, given that I know the rates we're paying are already competitive and we have no trouble hiring.