> I'm paid for the value I provided the company's bottom line
Nope. You're paid for your ability to negotiate. Big difference. It's very obvious in some companies where it's easy to find higher paid people who are mediocre compared to their colleagues. They get paid more not because they bring in more value, but because they negotiated better.
And, seriously: Except for a few cases (2 person business or something) no one has an accurate amount of how much you add to the bottom line. It's a safe bet you don't. So the notion that either party knows your value is just flawed.
This is pretty much the long and short of it entirely. And it’s why there shouldn’t be secrecy in salary. The idea that you’re paid your value to the company on-balance gets even more absurd the larger it is. You aren’t an exact quantified line item on revenue vs expense. That isn’t even the criteria except in the abstract or in a very, very small business.
I absolutely agree that people doing ostensibly the same role or with the same job title (but not necessarily responsibilities or time investment) can be deserving of a pretty wide gap in pay based on the particulars but that isn’t the purpose or the reality of trying to keep pay a secret.
Also even if you think you deserve whatever you negotiate, having more information instead of less is probably a good idea during your negotiations.
The only motivation for keeping them a secret at that point is so that your coworkers don’t realize you’re being grossly overpaid for what you do compared to the rest of them and honestly I’m okay with that. Additionally once you get high enough in a company the salary isn’t even what matters or where the money is really made.
> no one has an accurate amount of how much you add to the bottom line. It's a safe bet you don't.
+1. This is extra impossible at tech companies that "give away" products. How much do you add to the bottom line for improving google search algo? Its directly 0 because a better algo doesnt mean more money (it would at a hedge fund!) and indirectly it could be billions if it means more people use the product (or it could be zero if one thinks that google's 98% market share means the algo is irrelevant)
How much does an employee on Alexa add to amazon's bottom line? Its a huge project that is important to the company, but it makes almost $0 and is obviously not free to run... so should you lose money to be an alexa employee?
Also, it doesn’t take into account skilled/hard-to-hire roles that are effectively cost centers, like security. How much revenue am I responsible for as a security engineer? Probably none, especially since the consequences for a breach are usually negligible.
It is most definitely not impossible. How do you think companies decide on budgets? They're not just guessing; they're predicting how different projects will impact revenue. Alexa isn't important to Amazon because it's "cool" — it's important because they've put an actual dollar amount to its return on investment.
With great effort and generally mediocre results. Figuring out the contribution of an individual project is hard. An individual person even more so. And this isn't because we're not smart enough, it's because the idea of an individual contribution when the whole is greater than the sum of its parts is not coherent.
So how do you split the returns? Well, the entire field of cooperative game theory has something to say about that, and the answer is complicated but the gist is that it depends less on contribution and more on negotiating power.
Are you willing and able to just leave if you don't get what you want? Are you hard to replace? Can you do your stuff with a different company if you leave? All that is much more important than how much your presence benefits the common enterprise compared to the counterfactual where nobody did your job.
From what I've seen, by horse-trading, and fighting highly political, bitter, zero-sum turf wars that depend way too much on how charming department heads/directors are, and how well they relate to the CxO's and/or board. Its not uncommon for the CEO's pet-project to get a budget completely disconnected from the its value (current or future).
Companies - like anything collective that relies on human judgement - are terrible at digging deeper than first-order effects; which is why sales people tend to get paid much more than the engineers who developed the product: "I closed a $X million deal, so I get Y% of it". The engineers get paid a flat rate, because it's impossible to quantify how much value they added, and when. Baseline engineer salaries are broadly determined by how much other companies are paying, and more specifically by how good the individual engineers are able to negotiate.
I have never seen these things come from anything other than guesswork. It's educated guesses, but guesses nonetheless. It's why products get killed too early or too late. Measuring these things properly and causally is hard and sometimes infeasible.
I make planning software at a quantitatively sophisticated tech company, and it’s quite ironic to me that we don’t have a precise understanding of the expected impact of our software on the company. But that’s normal. We don’t build software that will barely break even. We build software that we expect can be massively successful, and the resource allocation is more about opportunity cost and uncorrelated bets than predicted outcomes.
Companies that make low margin highly competitive products, like paper mills, are the ones with a rigorous understanding of the costs and benefits of every activity.
> it's important because they've put an actual dollar amount to its return on investment.
The issue isn't whether you can put a dollar amount, but on the confidence in accuracy. I've seen how this is done in my company: Construct a narrative, assign numbers to that narrative (with some justification that doesn't always involve real world data), and come up with a total. They are incentivized to inflate the numbers as their goal is to increase their budget - not be accurate. If all departments did this, and you add the numbers they come up with, we'd easily end up with a number 10x our annual revenue, which is ridiculous.
Some folks who are not vested in this will aim for accuracy. And even then, they will have a large confidence interval - easily off by 2x.
How are you going to go from there and estimate an employee's value? Even if the project's value was 100% accurate, you still need to break that down to each employee. And since most employees don't work independently, you need to model the interaction effects (my work depends on your work - if you perform poorly, my contribution to the bottom line is reduced).
If the estimate of the value of the project is off by 2x, then you've already got a pathetic lower bound on the interval length of your confidence interval.
Alexa is actually an easier case to model. My job is to improve the internal communications infrastructure so that important messages get delivered (IT announcements, CEO communications, etc). How will you model my contribution to the bottom line?
I can assure everyone: At any decent sized company, no one is trying to come up with your value to the company.
They don't need to put a dollar amount on ROI of Alexa to develop it. Alexa is a loyalty-generating machine. Even if you never use it to make a purchase, it helps the brand, and it keeps you using Amazon products.
On top of that, it does also provide a sales channel that nobody else has. Practically nobody else has a voice-activated robot sitting in people's kitchens that buys paper towels and plays Spotify. It's the difference between all your competitors making sales via telegraph, and you introducing a home telephone just to make orders with your company. Funding it is a no-brainer.
Hate to break it to you, but any accountant with any data savvy can you give a more or less accurate ballpark figure with the right details. (This is also why you should be chummy with Tim in Accounting; you'll be amazed the things you can pick up shooting the shit with the finance department).
BI, in fact, is almost entirely the artform of synthesizing the answer to that very question for the purposes of executive decisionmaking.
Your negotiation, but also your perceived value. During my time as a manager I was shocked by the difference in salaries. I mean one person making 60k another 120k. I mean, same job, same experience.
Actually the 60k guy was the most talented on my 15 person team. The reason is simply when the 60k guy came on they asked him how much do you need, and he said 60k. He never asked for a raise, but they actually bumped him up anyway cause they thought he may be a flight risk if he ever checked out the marketplace.
I also found, people are much more likely to underestimate themselves than overestimate.
Only 10% of employees would consistently ask for more money every year. Everyone else almost never asked for a raise.
Now its not solely just negotiation cause if they were a star they probably got it. If they sucked it just made management like them less. When management doesn't like you, and comes time someone needs to be cut. That's who gets cut.
You're 100% right and they seem to know that but not realize that they know that. This quote before saying "I'm paid for the value I provide" spills the beans...
> I want to be able to negotiate my value to the company
You seem to be thinking these are contradictory things. In fact, they are complementary. The payment depends both on value (of course, that's subjective, market-driven, influenced by fashions and passions, insert all disclaimers here) and on negotiation skill. If you're a fresh intern knowing next to nothing, no negotiating skill would give you the position of a senior architect with accompanying salary. Bad negotiating skills though can harm you, even though extreme lowballing is dangerous for the employer too - people know what are general salary levels and if you lowball to the extreme, they'd get pissed off and leave for better pastures in exactly the worst moment. Because other employers have interest in high-value people too (or even in cheap moderate-value people).
Do you really think the average marketer at a company is poorer at negotiating than the average SWE, and what do you think their comparative salaries are?
Another way SWE's got into a better position is the environment not their own ability.
One way this could happen: Let's say that a lot of companies want SWEs and there aren't that many SWEs available. So, you go try and hire and any SWE has a bunch of potential offers. They don't negotiate much, but still have to say no to many people. Those people may then say, well, what if we offer you more? SWE says yes. Have that happen all over and constantly and all of a sudden SWEs are by standard paid more rather than purposefully negotiating higher because their negotiation happened for them in the past based on the environment they were in rather than negotiations.
Nope. You're paid for your ability to negotiate. Big difference. It's very obvious in some companies where it's easy to find higher paid people who are mediocre compared to their colleagues. They get paid more not because they bring in more value, but because they negotiated better.
And, seriously: Except for a few cases (2 person business or something) no one has an accurate amount of how much you add to the bottom line. It's a safe bet you don't. So the notion that either party knows your value is just flawed.