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0 pointsmichaelochurch15y ago0 comments

Even if it causes a "race to the top", is that such a bad thing? Shouldn't most of the fruits of labor go to the people doing the work?

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5 comments · 2 top-level

gyardley15y ago· 3 in thread

Will they be paid a fraction of their salary if the company performs poorly?

The biggest rewards go to the biggest risk-takers.

michaelochurchOP15y ago

I can see the point you're trying to make, but humanistically and morally speaking, this isn't true.

A person with $10 million who puts $3 million into a business isn't taking that much of a risk. There's some risk there and, yes, it should be rewarded. But a person with no net worth is taking a huge risk every time he takes a new job: career risk.

This dynamic exists in startups as well. The people who are taking the real risks are the founders, not the venture capitalists.

gyardley15y ago

Career risk in startups?

There's job risk in startups, yes, but not career risk. Working for startups serves you very well.

danenania15y ago

This sort of misses the point. Maybe it's true that the employee is taking relatively more risk based on his life situation, but that doesn't matter. What matters is the business needs $3 million. The only way it can get that is by promising a sufficient return to whoever is willing to risk that much. What the amount means to the investor personally is irrelevant. The reality is there are a lot more people willing to risk their time (take a job) than $3 million, therefore the $3 million has a higher price attached. From the perspective of someone investing $3 million, seeking the best possible return the market will provide is no different than a programmer seeking the best possible wage the market will provide.

angusgr15y ago

I think the "race to the top" people are talking about is the psychological tendency of most people to think they are better than average.

So, if you know the average salary is $X and the top salary is $2X, and you're making $1.1X then you ask for a payrise to $1.6X because "you know you're better than most of the people here". Then everyone does. And so on.

I think the way around that is to match transparent salaries with a transparent ladder of responsibilities/expectations/experience, like you were talking about with Fog Creek.

Then there's a clear standard for people to evaluate what they are worth to the company.

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