Item — HN Reader

I kind of like the idea of only giving raises to employees when they have a offer letter for another job. That way there is no doubt in the employees mind about how much they are worth.

Why not turn the problem around, instead of only having your most "conniving, disinterested" employees looking for new jobs, why not encourage all your employees to have a look around. Why not even give them some work hours to "assess their own worth". Send out CV's and do phone interviews.

Then when your best employees come back with better offers you will be happy to pay them more. Even better, the guys who are not working out have somewhere better to go and everybody is happy.

Of course, it's a dangerous game and you might not be able to afford more.

I've never read a good plan for doing employee reviews and salary increases.

"Have clear and consistent salary guidelines, and regularly give raises to people who are outperforming their pay level."

The problem is right here, what is a pay level. Just because there is a number somewhere in a spreadsheet doesn't mean an employee will be happy with what you give.

2 comments

I think if you consistently did this you would end up overpaying, for a few reasons. It's pretty common for offers to be made on the high side as an incentive to sign on, for example. People could get higher offers from places that have less appealing work (i.e. the job is not more valuable overall). Generally if you're always matching the highest offer, you're probably paying above the fairest sustainable wage.

Being that open about it would mean employees would let it slip, and you'd be a target by competitors to raise your costs far higher than they'd need to be.

This implies that spending a few hours interviewing is a better gauge of someone's abilities and "worth" than years of working side by side with them.

Do I really need to say that that idea is too ridiculous to be taken seriously?

Haha, of course. Just a silly thought experiment.

But the whole topic is a little silly too right?

A company exists to make money for its stake holders, not pay it's programmers. It's not in a companies interest to make sure each of its programmers is paid well, only to retain the talent for as long as needed. Not necessary the same thing.

You have things very backwards. The way a company makes money is through making products that are better than the competition and doing so as efficiently as possible. The cornerstone of that is retaining highly talented people. Every employee is necessarily worth more than they are being paid. It is generally far more efficient to maintain an environment of mutual trust and appreciation by paying developers well and giving them raises as appropriate than to try to nickel and dime them. In the first case you pay a little bit more but you also retain top talent which more than pays for itself. In the second case you drive away top talent and retain only the dregs. On paper you are paying less money but you are paying vastly more on a per talent basis.