I believe these systems produce a "dead sea effect". High performer will leave, being able to get better deals elsewhere. Low performers will stay, since they can' find a better deal elsewhere.
For instance, coaches often make less than their star players. Directors and producers often make less than star actors. Hospital directors seem to make less than surgeons.
And in terms of actual value delivered to the business, I doubt that a low/mid-level manager delivers significantly more than an experienced and productive individual contributor.
Organizations need both good managers and good individual contributors. Clearly managers of technical contributors need enough technical experience to make sound management decisions. But that doesn't seem like a good reason to constantly promote people upwards, nor does it seem like a reason to always pay managers more than ICs by default.
However I think in some cases managers end up subject to extra risk if a project goes bad, so they are probably entitled to some increased "hazard pay" for that. (The risk/responsibility structure might be inverted at some toxic dysfunctional organizations, but that's beside the point.)
Also whalers in California, there were groups of guys like "we're a great team, we're men, we know how to swim, let's hunt Grey Whales" and hired a captain. On a ship it is imperative to do whatever the captain says, but that doesn't mean the hierarchy exists on shore with the money. There were also captains who hired sailors, more often.
A lead isn't a manager or boos.
That being said, a lead is frequently more valuable than the followers.
For another example, a guy joined a different team and was killing it, but was getting paid less than another college who was in the company 8 years and was hardly pulling his own weight.
Telling or managing a team of 20 people to put products on shelves is a lot harder than putting products on shelves.
Back when I worked in academia I also had a very similar experience to yours. I wasn't leading a team but, especially earlier in my career, it was incredibly frustrating to be making significantly less than people who were both less skilled and less hard working, but simply had more years of experience. The perpetual theme was "you just haven't earned it yet", but "earning it" was purely a function of putting time in, it didn't matter how great the work you did was.
I left to go to tech and even now that I'm on the older side of things I still prefer the pay structure being more closely aligned with the value of your skills + the amount you're willing to put into the job. I get paid plenty, and have no problem with someone much younger and less experienced then me getting paid more with unique skills and responsibilities I'm less interested in having.
I know several people who have been affected by this, but the most dramatic was a software engineer at AT&T who had started in an entry-level position in network operations. He had received the maximum allowed raise every year, but he was being paid less than 70% of what other software engineers at the same level were making. The request to make a one-time adjustment to his salary had to be escalated to an executive in another office hundreds of miles away (the VPs in our office did not have enough authority) and took months to process. It was not routine at all. It involved a physical sheet of paper with the executive's signature on it.
The blog has a bunch of other good article on related topics.
I actually consider this an anti-pattern that actively encourages coasting.
Coasting can be fixed by firing or layoffs (which I consider a healthy lifecycle for any company).
"Coasters" at least know that what they do today they might have to support for N years following, so design accordingly. (Although I've also heard horror stories when they make it intentionally hard to understand for job security reasons, fortunately never seen myself).
Based on what? You've just invalidated all the tools one would use to evaluate performance.
One is Oxide [0], which has uniform compensation across the board, explicitly with reference to this problem about how performance processes influence work and culture.
Another might be to take LeetCode-style interviews more seriously. We have already concluded that the most important criteria for whether we want to work with someone is their ability to solve algorithmic programming tests under time pressure. Why stop at initial hire? Maybe they got lucky with familiar material. Maybe they crammed and didn't actually internalize it in a stable way. We should probably be giving coding interviews continuously to existing employees. Further, since we have concluded that shades of interview performance are a good way to determine seniority and responsibilities, we could also use these continuous tests in place of the promotion process. Knock it out of the park? Congrats, you're a staff engineer now. Barely squeak by? Back to intern. It sounds facetious but it also addresses the "promo criteria distort architecture" problem and the "YOE isn't ability problem." The civil service is not too different. Officials get to the next level by passing written and oral exams.
Another might be to have stakeholders bid on talent per project. This would match e.g. the creative industry where teams are constantly created and disbanded, and your next gig is based on the department head or director’s assessment of the quality of your work or the experience of working with you in a previous project.
[0] https://oxide.computer/blog/compensation-as-a-reflection-of-...
Its hard though when people see my work history they only let me interview for very senior roles which I usually aren't good enough to do.
Over 20 years, you've not demonstrated that growth, and so it makes more sense for a prospective employer to assume that lack of growth will continue. Compare to a junior dev who can bring the same productivity today, but could rise to the level of principal or staff over the long term.
For the record, I would bet that this picture doesn't match reality. My guess is that you've developed knowledge and skills that would make you much more valuable than you might think. But, you are expected to demonstrate them and use them on the job. Good luck!
If you increase pay regularly on a semi-fixed schedule, you at least solve this problem and improve your employee retention.
If the company has some metrics they’re using to evaluate performance for the purposes of moving on from low performers… why not just use those metrics to move people up/down instead of years of tenure?
I find it funny that people in tech get squirrely over annual raises, but don’t have a problem with multi-year vesting schedules with massive payouts.
Recruiters and managers out there: I read "competitive" compensation as somewhere around median compensation. That will be attractive to undercompensated employees and employees in their early careers. It's hard to get good candidates to leave current roles without some sort of pay bump (20%, say?) unless there's some sort of serious dysfunction or mismatch with their current employers.
Daily's plan is to shoot for median-ish compensation and get "enough great candidates" to reach the next phase of growth. I'm glad they're planning on revisiting in a year or so, though it's easy to kid yourself. Especially when you're taking what current employees are willing to tell you as proof positive. For one, selection bias is certainly happening. Also, in my experience, people tell you what you want to hear. Daily employees that are significantly unhappy with compensation are a bad fit for Daily now given the blanket compensation policy. The best way to address that is to discretely look for other offers.
Under Daily's levels system, I'd have 11 years of "direct" experience and 5 years of "indirect" experience, for a total of 16 years of experience, putting me in their highest band (Level 7) with a salary of $270K.
But as I've told every employer who's hired me since leaving journalism, and particularly as I've transitioned from an IC to a manager, those years of experience in journalism were invaluable. I learned how to ask the right questions; how to handle the stress of always being on deadline; how to be a generalist, quickly learning enough about a subject that you can clearly explain it to others; how to communicate effectively in general; and many other skills that are absolutely relevant today.
Obviously, it wouldn't matter for this banding whether those years are treated as "indirect" or "direct" experience -- I'd be in Level 7 either way -- but I could see it matter for others.
Full disclosure: I applied to Daily last year but they ended up filling the position with an internal candidate.
I'm a decent programmer/developer, but that isn't my primary worth to a company. My primary worth to a company is that I'm a competent developer with additional specializations in both high-level research and media relations/communications.
People grow at all sorts of rates professionally. Some people can grow from a formal level to another in a year as they get a hang for their responsibilities/job. Some people have extremely hard years due to external factors too. This type of system incentivizes nobody. Why work hard? Why do challenging stuff? Why take on the jobs with most responsibilities? Etc
> In the coming months, we aim to develop written guidance on what career growth looks like for different roles, and we'll start experimenting with rewards and recognition other than salary for particularly noteworthy achievements.
How do you reward or give recognition if your system isn’t fully thought through or based on the traditional methods of perceived impact and notable accomplishment? Isn’t that exactly what this would be anyway?
Honestly this sounds like a startup who just landed recent funding thinks they are “disrupting” the market with new unconventional TC methods. Not everyone is the same. One person with ten years of experience is another persons four years.
What fairness is to me is understanding where you sit relative to your peers and market. It is checks and balances of your worth and not political players reaping the rewards constantly. It’s the whole idea that there’s three types of workers: experts, operators, and politicians. The former two actually do the work, the latter just takes the credit more visibly.
Rewards in a system with intrinsic variance are harmful and unjust.
But it doesn’t seem to address the real issue (to which I also don’t have a final answer): the jock/nerd thing is still playing out.
If, as I believe is mostly true, A16 is pretty on the money with the software eats the world thing: hackers “should” today and inevitably will be the highest paid people possibly excepting the best salesperson.
If you worked successfully on an optimizing compiler all day, anything that an MBA teaches is borderline boring.
COVID/WFH only turbocharges this: tall white guys have way less edge over Zoom.
It’s going to be a painful, but ultimately necessary transition where everyone whose math stopped at calc has their TC stop at 150-200k, and that money/seniority/prestige goes to the only truly irreplaceable people, again with the notable exception of the sales guy.
Why do you leave out class analysis? This has far more relevance than arguably either height or race.
White working class boys, at least in the UK, are the demographic least likely to go to university.
The story is likely to be the same in other countries. If you're working class, you're not going to be the intake for an MBA.
Being a tall white guy myself I thought it would get me less crucified.
All said, I don't intuitively buy the idea of Zoom radically changing opportunities. At least as a short engineer, I've sensed zero difference, but then again, I never thought of my height as an actual handicap with regard to my job (studies on initial impressions be damned as the initial impression isn't that relevant once you've built up reputation).
And now to offer a small criticism of your post: I prefer to say "conventionally attractive" over "tall white guys", because that would be more inclusive. Yes, really, I have seen very successful women who present just shy of pornstars-in-real-life and absolutely clean-up by selling to drooling old (dumb) white, male, portfolio managers. The sooner all of this is replaced by passive investment, the better for all customers -- but not big banks(!). After all, as the saying goes: "Where are the customers yachts?"
Silver lining: your comment added insight to the conversation even if it was a response to clumsiness on my part.
Don't expect an "ultimately necessary transition" because it'll likely go in the opposite direction.
Being tall probably matters less, sure.
I do find that ability to communicate in writing with English-speaking audiences is much more important than it used to be. Technical communication and persuasion that used to happen in hallways and on whiteboards is now happening in discussion threads, written code reviews, design papers, etc. In some cases, I expect people that some people that used to struggle now benefit from the ability to communicate more deliberately or without a verbal accent.
I don't know that white versus non-white maps to excellent writing skills as such. Partly because I'm never sure what folks mean by "white" in these contexts.
Mandarin seems to be a pretty credible candidate for a “must know” business language, but even there that’s climbing up hill at least a little.
Even tech companies don't just depend on elite programmers plus an exceptional sales guy. You need good design, good customer service, good marketing, and so on. Yes, there's a lot of bullshit in those fields (not that programming is free of it), but there's real value there too when executed correctly.
Optimizing compiler is a great example of a niche that a few guys should be in that really shouldn't be paid well. The big bucks earned at Google/FB aren't earned because they have better compilers or low level libraries, its because of the business strategies they have.
Yeah, pay the "business" person better who decided, wisely, to fund these kinds of projects. But in my experience, it's a lot easier to find a strategic thinker who can understand my previous paragraph than it is to find an engineer who can accomplish it. It's especially hard to find engineers who can see that opportunity, explain it well enough to get funded, and bootstrap the project until it shows enough promise to justify itself.
You're not wrong, though, that network effects and so on are a much bigger determinant in competitive advantage at a large scale. But "business strategies" can and do include ideas like "don't buy extra data centers".
The optimising part makes languages that are faster to develop in run fast enough that they can actually be used to build useful things.
Bugs introduced in that stack are horrendous to run down, easy to introduce and broad in fallout.
Rather a lot of our modern tech world is built on compilers. It's a great example of where compromising on engineering capability scatters costs and breakage all the way through the system.
Everything is math now. Google et al played a this-far successful strategy where they made the “know your shit” engineer TC 1MM so the hackers wouldn’t rebel and take the whole cake, like they could.
Can you be a little more specific and thus potentially actionable?
I don’t think there’s any shame in that.
What’s your PhD in?
I think you have some unresolved emotions regarding the "nerd/jock thing".
Ive got my knickers a bit twisted that looking like a jock seems to produce more recognition than actually being a nerd. And if I feel like my accomplishments kind of sit in the shadow of my appearance or demographics or whatever, it must be 100x worse for some people, which sucks ass and is kinda depressing.
Code should talk, and bullshit should walk.
As someone who worked in software development during High School, and took time off before University to work in software, this somewhat frustrates me.
Alyssa Rosenzweig has 0 years of experience under this model.
Here I am 44 years later with zero years of experience because I keep adding more years of college and university. I am not exactly the brightest crayon in the box, but I found college "easy" because I had years of professional discipline meeting deadlines.
This idea of counting experience only after you left college is absolute nonsense.
And too add, I never actually graduated from the UK equivalent of high school, which drives HR people nuts, especially when they find out that the CTO of the company they are acquiring is a high school dropout.
The usual reason I see for down leveling is because being technically savvy is not what companies actually look for. I'm talking most jobs rather than being in an R&D division that is PhD heavy.
* Understanding the modern SDLC in a corporate environment and best practices. Academia often doesn't do things in a way that would be considered good production practices outside of it. Both from a process and a technical (CICD, heavy testing, layered frameworks, etc.) point of view.
* The culture of academia differs from corporate which means that while you gain soft skills they are biased versus what you'd get in a corporate environment. That can have subtle or not so subtle impact on decision making.
> Direct experience in our rubric means substantially the same kind of work (coding, design, product management, etc.)
This is a recipe for finding people without "n" years of experience, but instead finding people with one year of experience repeated "n" times. Great if you need a specialist in something, tragic if you need generalists - which most startups do.
I guess this model works if you identify and fire those people early, but in general, this seems like a great way to retain proven career underperformers.
However, my big question is how expectations and performance management scale with level? If someone's not there yet, but hits the years of experience for the next level, are they fired? Likewise, whose responsibility is it for people to get those skills by the time they age into the next promotion?
Quick edit: Also wanted to call out how well written this post is. It lays out the facts, peoples objections, unknowns, and anticipates questions (salespeople remain on variable comp, equity isn't being addressed yet). So kudos to the author for the great writing on this thoughtful piece.
This is absolutely, fucking dumbest idea I ever heard.
Say you have two engineers that both have 10 years of experience, one is barely scraping by and one is working his ass off and significant contributor to the team.
They earn the same money and, more importantly, they both know it. And the team knows it. And the manager knows it.
Can you guess which one will feel treated unfairly and will start looking for a new job?
Imagine a good employee comes to you and says she is going to leave because she has been offered better salary somewhere else.
You have now only two choices:
1) break the commitment you made to entire company,
2) let her go.
You can also decide to promote her, but management is really a different job and you lost your team member anyway.
Over time your business will accumulate people who just barely passed your recruitment process and are just barely competent to avoid being let go.
If you think you will keep the better one just because you say some nice words and give them recognition token, guess again.
Let me explain what this means: it promotes people who sit idly by the computer (because they gain regardless of their involvement) and punishes people who actually give a shit and who try hard being better every day.
It punishes your business HARD. In most businesses, most progress is being done by small minority of employees. And now you are leaving gates open and saying you are not going to even try to keep them doing good job.
Like coming in, making the biggest impact they can eg. do a large spectacular redesign, leave for 10% pay jump immediately and never sticking around for that maintenance nightmare that were hidden in the details?
Incentives will always be a tradeoff because you can't measure skill.
Oh, so because it is hard let's just stop trying?
You can't measure skill accurately. But you can try to find correlations and you can measure other things that are as much or even more important like... erm... results?
Some theories:
* High taxes actually means lower gross pay? (I am someone who strongly supports the "social safety net" -- do not read that question as some kind of weirdo libertarian / low-tax promoter.) As a counterpoint, usually high taxes means higher quality of life.
* Or: Labour mobility is higher in US than many high-tax, strong-labour countries in Europe/Japan/Korea/Taiwan. In short: It's easier to hire and and fire in US. As a result, I see massive income inequality in US, but much less in wealthy European countries -- and Japan/Korean/Taiwan.
Another way to think about it: If software engineers are paid 50% of Silicon Valley in Helsinki, then Starbucks baristas are paid 100% higher in Helsinki. (I have no hard references to offer... but my point: Lower skill jobs pay living wages in Northern Europe/Japan/Korea/Taiwan, but less in US.)
Personal question: Would you prefer to live in Sweden with your current wages, or a place with "up 100% wages for you", but much higher income inequality? When you answer, please assume much higher personal crime rates and visible poverty (or working poor).
I live in a place with simply appalling incoming inequality. The visible poverty and working poor are so depressing. I would easily take a 25% pay cut to build more social housing and help the elderly who collect cardboard to retire immediately and play with their grandchildren all day long!
Different States have different economies due to geographic locale, history, and specialization. Consequently, the US has States that specialize in agriculture, manufacturing, services, technology, natural resources, etc which have very different economics and compensation structures which is reflected in local incomes.
The median income is much higher in Washington than Mississippi, for example, but that doesn't imply anything about the distribution of income within those States. It would be like comparing incomes between the Netherlands and Romania.
There is however a base pension that each senior citizen is entitled to. About 15% of the elderly only gets the minimal amount which in many cases doesn't cover basic expenses, like rent and food, so they need to be on social welfare as well.
But would I accept a 100% salary increase if it meant that social welfare had to be removed and people couldn't afford a place to live and to put food on the table? Of course not. Would I like if people that study hard and get well educated also get well paid jobs? Yes!
According to the Daily level system I should be in their band 5, so $210K, but in England I am paid less than half their entry level salary (at current exchange rates).
Americans don't have IQ scores, or any other metric to suggest being approximately 4-8 times the quality of other developed countries workers, so it's hard to just take it and accept that their compensation isn't due to their ability (on average), and that life isn't fair.
Europeans are just as talented technically as Americans, that has never been the issue. As a broad generalization, European business culture is consistently poor at leveraging that talent to generate value, often treating it like factory work. Because American business culture is so efficient and effective at converting engineering talent into revenue, often on the scale of $1M revenue per engineer, they can easily afford to pay the higher wages while still making a fine profit. This has the side effect of making the market for engineering talent extremely competitive.
In short, European technical talent as a resource is often being wasted by poor business practices, which means there is much less money to go around. There is no reason in principle that European engineers could not earn much more in Europe but changing business culture is slow, though some companies are trying.
Once you get the raise at the review cycle, is this also back paid for the time you were under paid for the role ?
If you are a level N Foo and doing well (as determined by doing some amount of level N+1 work), you might be earning the top of the level N Foo band. If that’s above the bottom of the N+1 band, you might be making the same as or more than the most recent N+1 hire.
The day the company decides that your level “rounds” from N to N+1, you might already be being paid the exact correct amount.
Design of pay scales and how they interact with promotion thresholds is complex enough that many fair systems can evolve. Most systems have evolved to slightly underpay the “almost N+1” employees for a period of time, leading to the expectation that promotion come with an immediate salary bump (and often companies do that to make the promotions “feel bigger”), so maybe the problem is promotions under that system should come with back pay rather than the situation described here being the one where back pay is owed.
I would've much preferred if they had promoted ppl and done salary increases later.
On the other hand, I had a company with a similar salary structure approach me. They were based in a distant country with a much lower cost of living. I pointed out that their salary was about half of what I normally earn.
They didn't "get" it that they were out of their game trying to recruit me.
* Constant pay hikes per level (~30k every 2-3 years)
* Any equity guidelines for level (especially since it is a startup) - I assume this is not a 9-5 job given it is a series B startup?
* No mention of what leadership team makes (VP of Eng is ultimately a managerial role - is it equal to L7? L8? YoE a consideration in this role?)
* Company is fully remote - Remote within the US? Any where in the world?
* How will (if at all) cost-of-living be adjusted (for remote)?
* What is the interview process like (Is leetcode grinding still required - effectively pushing for a "fresher" workforce?).
* If comp affects the "quality" of hire - what is the perf management (and appraisal) culture looking like in there?
I do think the definition of "fairness" is off, though:
> Because using years of relevant experience is transparent and repeatable, both for leveling and promotions, it carries a strong measure of fairness
Or more precisely, there are lots of ways to define "fair". And in this case fair is defined as "more years in post means more money, whatever your job is".
This is not general fairness (perhaps nothing is) but it rewards loyalty. Other types of fairness (which actually their sales teams get) is "create more value, get paid more". I.e. kicking back for 10 years in a role that's fairly straightforward and hard to measure might reward someone as much as working incredibly hard and transforming the business for 10 years. That could well be considered unfair.
I think rather than "fair" it's just "easy to measure", which accounts for the lack of need for promotion recommendations. I've never known them take very long, but yes, a length of tenure calculation will always be quicker.
I would say also that I am curious as to how competitive this can possibly be for attracting talent. Desirable employees who need incentive to move to a company will generally get more money, as otherwise they won't move. Additionally retention might be an issue, as the same principles apply; market forces will mean that other companies that pay according to what an employee will agree to work for will have extra cash to wave at daily.co employees.
Finally, I suppose that in the short term, powered by VC money, this is likely to work, and it's as good a way to spend VC money as any. I don't think we should call it a revolutionary way of working, as having a pit of money to prop up an idea does not make the idea sustainable for other companies. It might remain automatically workable for years to come if the company raises more money without having to survive on its own merits.
I would be level 7 under Daily's system, making more than I do now, but then what's my monetary incentive to improve? Younger, less experienced colleagues can literally set a countdown timer to their next promotion/raise.
It feels a bit lazy, to be honest. Some people have commented that it will lead to coasting. The alternative that I anticipate is up or out: you're a level 5 performer at a level 7 salary. You might be happy at a level 5.5 salary, but sorry, you're out.
I mean if using that system I'd probably set the bar higher, but thankfully I'm not.
Turns out yes, compensation should be increase for hard to find skills that people use to create huge revenue. Shocked.
This seems very attractive as a worker. But even I can see this could be problematic and not align to value production.
