It is true that some people bring in ten times as much money as other people. I'd say the questions to ask are (a) Does that mean they should be getting paid ten times as much? If so, why? and (b) What is the relationship between 'money brought in' and 'value produced' here? It's not obvious that the two can be equated, or that anybody can produce ten times as much value as a skilled teacher.
It's a question of how much it costs to hire a person. If there are only a tiny number of people who can do X, then companies are effectively bidding for them. If everyone can do it then there's no incentive to pay high amounts.
Yes. But more specifically, it's a question of how many people there are who will do X for Y money. So for instance, I doubt Ben & Jerry's would have had such trouble with their income-multiplier policy if they'd been based in Japan, where from what I can gather, nobody expects to be paid a thousand times as much as their employees. Or towards the other end of the scale, it's not as if there's a mad surplus of qualified nurses, but they all expect to be paid quite badly, so they are.
Japan does have low income inequality - it seems to be ingrained into their culture. In fact, checking Wikipedia they have the lowest income inequality in the world. How they manage that, I don't know. Japan's culture is very different to most other countries though, and I'm not sure I'd want to live somewhere more like that.
The problem nurses have is that there is no market for them - the NHS has centralised pay, so it doesn't vary from place to place (which causes all sorts of other problems, as costs of living vary dramatically across the country). Of course nurses aren't paid terribly (any kind of specialist, midwife, health visitor, etc. is on at least £30k) - but you can't really move from one place to another to do the same job for more pay.
Yes, there's a lot that we might be happier without in Japanese culture - but the point stands that pay is fairly clearly largely a cultural thing, not a pure economic thing. That is, it's allocated through the game of economics, but the parameters of that game are cultural as much as they're numerical.
And I'd like to see a culture of saying 'fuck you' to people who won't do their jobs unless they're paid hundreds of times - (or even just dozens) as much as other people. I think the knock-on effects on society of having some people being that rich are deeply negative, and even if we're not agreeing to tax them for 90% of their income or whatever, I don't think it's right at all to say 'their money, their business'... and that starts to seem like a no-brainer when the state ends up bailing out companies at least partly because they have been funnelling so much of their income into the hands of a few individuals.
but what does that mean, they bring in ten times as much money? Economics tells us that a price is just a collective opinion, that the price setting people claim that its worth that much.
Imagine a job field, say programming. Now some programmers are much more productive, this is true, some people can produce good code almost as fast as they can type. And some people produce a lot less junk in their code.
Ten times as much good code though? I think that's a stretch. Can you think of any programmer that would have to be replaced by ten other people?
And most jobs can't be analyzed as easily as programming. But there's almost no people that are 10 times as valuable as their coworkers, are there?
Plus, I seriously doubt that those programmers are getting paid much more than their lumpish coworkers. Performance isn't paid for, at least not here in the United States of Liars and Bootyshakers.
There are coders that are worth 10x as much - but not many of them (and AFAIK that's born out by the fact that there are few coders that are paid more than £100k in salaried positions).
Most of the ones that are worth that much are worth a lot because they have domain knowledge, are maths geniuses, or something similar. They're the people that write languages for fun, or can produce incredibly complex models of things that are useful to people with lots of cash.
Google, MS, etc. pay a lot more than the average - but they demand the smartest people.
Apple's market capitalisation in 1998 was $6 billion. Then Steve Jobs came back as CEO. Jobs gets most of the credit for Apple's turnaround since that date, which has given it a market capitalisation today of over $300 billion. Jobs has been worth at least $100 billion, and probably over $200 billion, to Apple. Got any examples of schoolteachers demonstrably generating $200 billion in value?
And when Amelio was ruining Apple, he earned almost $1 mill a year in salary, plus benefits and options. People don't get paid what they're worth. They get paid what they can negotiate, which is an arbitrary opinion of a handful of well placed people.
<irony>Schoolteachers who teach people like Steve Jobs to be people like Steve Jobs?</irony>
OK, that was more funny (to me) than it was actually a good point. I think actually good teaching would make value for the country in general, but I couldn't put a figure on how much -- almost certainly not that much for all sorts of reasons.
If someone is ten times better than me, I don't have a problem with them getting paid ten times more than me.
If, of course, I'm paid twice as much as someone who does half the work that I do (if that's how you define generating value, I guess. "Generating value" is a pretty terrible way to define how much to pay staff, since it's something lower level staff are often actively prohibited from doing)
I'd like an open policy to pay disclosure internally at companies, I think that's a great idea. But only, absolutely only if it went hand in hand with open appraisal grading and disclosure about what work people were doing. That way you'd know that Jack was doing very little work, had a rubbish grade but got paid £30k while Jill was doing vast amounts of great work, got the top grade on her appraisal and was earning £20k because she was technically junior to Jack.
Of course, the other hilarious implication in all these pay structures is that these highly paid people hate their jobs and are ridiculously shallow and only motivated by money.
While different people may disagree on where the line is drawn, there is a point where you cross over from "something approaching average" to "rich" and then to "able to live in luxury". Why should you need to pay for a luxury lifestyle in order to attract them to a job? Is it that being a senior person at a corporation is actually terrible and that's the only way to keep them? Perhaps HR should do a review and see if they can make the job better, so they can attract staff who WANT the job and will do it well, so don't have to be lured there with a bonus.
For example, when I left my previous job, I was getting paid around half of what you started on at your current work (if I remember correctly).
If a senior exec's salary is justified if he's generating ten times as much value, were you simply generating twice as much value/doing twice as much work as I was... or was one of us over or underpaid? We were both working for similar kinds of companies. Unless we have the kind of jobs where we do close deals with clients or make cuts/find efficiencies or work in sales, how the hell can you compare the "value" we generate?
I wrote three responses and got rid of them all, I don't think I can explain this to you if you think this is how markets work.
Salary and expectations of salary are almost a class structure at times, and particularly at certain chokepoints.
"School leaver" "Graduate" "Manager" "Executive"
All of these terms (graduate is rapidly changing, so is slightly different) are ones that can effectively put you into a certain strata regardless of actual skill. It's something I've seen when I looked at jobs. The market that you're talking about is one that is artificially constrained to act irrationally. If it was acting rationally, a lot of graduate schemes would not exist because they're paying a premium for people who may have the same skills as someone who is cheaper because they didn't get as good a degree in a field unrelated to the job five years ago.
There's also (in my experience, no doubt for you it'll never have happened) a strong disinclination in companies to avoid people whose salary isn't in the right band. When someone applied for roles at my previous job that they were a good fit for skills-wise but paid a lot less than their current role, they were rejected because of that. Similarly, when I applied for jobs that were around £6k more than my current job, I was told not to because of the salary difference, even though I had all the right skills. The company would have SAVED money by hiring me, but they expected to hire someone commanding a higher salary, even though I fit the job advert exactly. This is a very artificial market.
Also, for very high level staff, they are supposedly being attracted because they are "the best." If I do my job badly enough, it'll reflect on my manager. If she does hers really badly, it'll reflect on her boss and so on. If you hire Bob to be your Dude In Charge of Important Stuff because he was amazing at NerdCo in charge of their Srs Bsns division, you're really hiring him and paying him because his division did well.
This is why I am generally in favour of low salaries but good (long term) performance related bonuses. Someone's past performance in a previous job means, for many jobs and a lot of the kind we're discussing here, very little as regards future performance. If Bob Smith is an exec at Bank of Scotland and his division does well, so he gets headhunted by HSBC, how the hell are HSBC able to unpick what Bob himself did from what his direct reports did, and from what the BoS Group as a whole's strategy did? The higher level someone is, the more chance there is that what you see as their successes are someone else's. Maybe they encouraged and "facilitated" them, but unless they bring that person/those people... you might miss out.
Fundamentally though, based on things you've said previously, I don't think I can explain about motivation to you because we see it, and people, utterly differently.
I'm paid twice as much as someone who does half the work that I do (if that's how you define generating value, I guess
I define "generating value" as "increasing the value of the company". Whether by bringing in more cash directly, making the company more efficient, or otherwise contributing to one of the above.
I've seen executives throw away hundreds of millions of pounds on silly ideas or by leaving areas in chaos, and others make the place far more efficient, or pushing the company in directions which made us a fortune.
And it's not about whether they would hate the job - it's about the competition in the job market. If company X is paying twice what company Y is offering then the chances are that they will get their pick of the execs, and thus get better ones.
So what about companies where staff simply can't generate value that way unless they're already at a senior level? Would it be okay to have a massive pay disparity there, even though staff who could in theory generate value aren't actually allowed or given the opportunity to?
At the the company I used to work for, there was a suggestion forum. Someone made a suggestion that saved the company huge amounts of money. He got an ipod, as I recall. He wasn't, of course, a director.
Also, are you suggesting that people at that level are primarily motivated by money? Because to me, that would suggest it's not a case of attracting the right people to company, it says pretty clearly to me that you are attracting exactly the wrong people unless you want to perpetuate that system.
Every time I've been given guidance on how to prepare for a job interview, they don't tell you to say "you're offering lots of money, woowowooo", you're meant to say things like "I want to work at this company" or "this job sounds really interesting." In effect, you're meant to give the impression that it's NOT just the money.
From some things you've said on other, but similar topics, I think we have fundamentally different views of motivation though.
I'm far more motivated by a sense of achievement than money.
But given two jobs which look like they'll provide roughly comparable levels of achievement, I'll go for the one which offers the most cash. Because I like stuff, and cash provides that.
I do think that people should be rewarded well for things that save the company money - but markets also depend on what the buyer can get for what investment. If the company can get things that save them money for iPods then great. If they'd get _more_ of them by offering larger rewards then they should so so. Proving to them that they would is, of course, tricky.
my original argument, though, is that if you have $3 mil to just throw around, you got too much money. That's an obscene amount of money for something so frivolous.
![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
no subject
no subject
no subject
no subject
no subject
no subject
no subject
The problem nurses have is that there is no market for them - the NHS has centralised pay, so it doesn't vary from place to place (which causes all sorts of other problems, as costs of living vary dramatically across the country). Of course nurses aren't paid terribly (any kind of specialist, midwife, health visitor, etc. is on at least £30k) - but you can't really move from one place to another to do the same job for more pay.
no subject
And I'd like to see a culture of saying 'fuck you' to people who won't do their jobs unless they're paid hundreds of times - (or even just dozens) as much as other people. I think the knock-on effects on society of having some people being that rich are deeply negative, and even if we're not agreeing to tax them for 90% of their income or whatever, I don't think it's right at all to say 'their money, their business'... and that starts to seem like a no-brainer when the state ends up bailing out companies at least partly because they have been funnelling so much of their income into the hands of a few individuals.
(no subject)
no subject
no subject
Imagine a job field, say programming. Now some programmers are much more productive, this is true, some people can produce good code almost as fast as they can type. And some people produce a lot less junk in their code.
Ten times as much good code though? I think that's a stretch. Can you think of any programmer that would have to be replaced by ten other people?
And most jobs can't be analyzed as easily as programming. But there's almost no people that are 10 times as valuable as their coworkers, are there?
Plus, I seriously doubt that those programmers are getting paid much more than their lumpish coworkers. Performance isn't paid for, at least not here in the United States of Liars and Bootyshakers.
no subject
Most of the ones that are worth that much are worth a lot because they have domain knowledge, are maths geniuses, or something similar. They're the people that write languages for fun, or can produce incredibly complex models of things that are useful to people with lots of cash.
Google, MS, etc. pay a lot more than the average - but they demand the smartest people.
no subject
no subject
no subject
OK, that was more funny (to me) than it was actually a good point. I think actually good teaching would make value for the country in general, but I couldn't put a figure on how much -- almost certainly not that much for all sorts of reasons.
no subject
I don't think it's too late to do that in fact.
no subject
If, of course, I'm paid twice as much as someone who does half the work that I do (if that's how you define generating value, I guess. "Generating value" is a pretty terrible way to define how much to pay staff, since it's something lower level staff are often actively prohibited from doing)
I'd like an open policy to pay disclosure internally at companies, I think that's a great idea. But only, absolutely only if it went hand in hand with open appraisal grading and disclosure about what work people were doing. That way you'd know that Jack was doing very little work, had a rubbish grade but got paid £30k while Jill was doing vast amounts of great work, got the top grade on her appraisal and was earning £20k because she was technically junior to Jack.
Of course, the other hilarious implication in all these pay structures is that these highly paid people hate their jobs and are ridiculously shallow and only motivated by money.
While different people may disagree on where the line is drawn, there is a point where you cross over from "something approaching average" to "rich" and then to "able to live in luxury". Why should you need to pay for a luxury lifestyle in order to attract them to a job? Is it that being a senior person at a corporation is actually terrible and that's the only way to keep them? Perhaps HR should do a review and see if they can make the job better, so they can attract staff who WANT the job and will do it well, so don't have to be lured there with a bonus.
no subject
If a senior exec's salary is justified if he's generating ten times as much value, were you simply generating twice as much value/doing twice as much work as I was... or was one of us over or underpaid? We were both working for similar kinds of companies. Unless we have the kind of jobs where we do close deals with clients or make cuts/find efficiencies or work in sales, how the hell can you compare the "value" we generate?
no subject
That's how markets work. I'm confused - I know you understand this stuff, I'm baffled as to your line of quesitoning.
no subject
Salary and expectations of salary are almost a class structure at times, and particularly at certain chokepoints.
"School leaver"
"Graduate"
"Manager"
"Executive"
All of these terms (graduate is rapidly changing, so is slightly different) are ones that can effectively put you into a certain strata regardless of actual skill. It's something I've seen when I looked at jobs. The market that you're talking about is one that is artificially constrained to act irrationally. If it was acting rationally, a lot of graduate schemes would not exist because they're paying a premium for people who may have the same skills as someone who is cheaper because they didn't get as good a degree in a field unrelated to the job five years ago.
There's also (in my experience, no doubt for you it'll never have happened) a strong disinclination in companies to avoid people whose salary isn't in the right band. When someone applied for roles at my previous job that they were a good fit for skills-wise but paid a lot less than their current role, they were rejected because of that. Similarly, when I applied for jobs that were around £6k more than my current job, I was told not to because of the salary difference, even though I had all the right skills. The company would have SAVED money by hiring me, but they expected to hire someone commanding a higher salary, even though I fit the job advert exactly. This is a very artificial market.
Also, for very high level staff, they are supposedly being attracted because they are "the best." If I do my job badly enough, it'll reflect on my manager. If she does hers really badly, it'll reflect on her boss and so on. If you hire Bob to be your Dude In Charge of Important Stuff because he was amazing at NerdCo in charge of their Srs Bsns division, you're really hiring him and paying him because his division did well.
This is why I am generally in favour of low salaries but good (long term) performance related bonuses. Someone's past performance in a previous job means, for many jobs and a lot of the kind we're discussing here, very little as regards future performance. If Bob Smith is an exec at Bank of Scotland and his division does well, so he gets headhunted by HSBC, how the hell are HSBC able to unpick what Bob himself did from what his direct reports did, and from what the BoS Group as a whole's strategy did? The higher level someone is, the more chance there is that what you see as their successes are someone else's. Maybe they encouraged and "facilitated" them, but unless they bring that person/those people... you might miss out.
Fundamentally though, based on things you've said previously, I don't think I can explain about motivation to you because we see it, and people, utterly differently.
(no subject)
On motivation
Re: On motivation
Re: On motivation
Re: On motivation
no subject
I define "generating value" as "increasing the value of the company". Whether by bringing in more cash directly, making the company more efficient, or otherwise contributing to one of the above.
I've seen executives throw away hundreds of millions of pounds on silly ideas or by leaving areas in chaos, and others make the place far more efficient, or pushing the company in directions which made us a fortune.
And it's not about whether they would hate the job - it's about the competition in the job market. If company X is paying twice what company Y is offering then the chances are that they will get their pick of the execs, and thus get better ones.
no subject
At the the company I used to work for, there was a suggestion forum. Someone made a suggestion that saved the company huge amounts of money. He got an ipod, as I recall. He wasn't, of course, a director.
Also, are you suggesting that people at that level are primarily motivated by money? Because to me, that would suggest it's not a case of attracting the right people to company, it says pretty clearly to me that you are attracting exactly the wrong people unless you want to perpetuate that system.
Every time I've been given guidance on how to prepare for a job interview, they don't tell you to say "you're offering lots of money, woowowooo", you're meant to say things like "I want to work at this company" or "this job sounds really interesting." In effect, you're meant to give the impression that it's NOT just the money.
From some things you've said on other, but similar topics, I think we have fundamentally different views of motivation though.
no subject
But given two jobs which look like they'll provide roughly comparable levels of achievement, I'll go for the one which offers the most cash. Because I like stuff, and cash provides that.
I do think that people should be rewarded well for things that save the company money - but markets also depend on what the buyer can get for what investment. If the company can get things that save them money for iPods then great. If they'd get _more_ of them by offering larger rewards then they should so so. Proving to them that they would is, of course, tricky.
(no subject)
(no subject)
(no subject)
(no subject)
(no subject)
(no subject)
(no subject)
(no subject)
(no subject)
no subject