To your point, who deserved to capture the value here? Well there was an A/B test to clearly show what caused the boost, and a simple trail from my research (done on my own initiative) to the team's implementation to the revenue, so we at least knew that this group of people was collectively responsible. Nobody got raises, bonuses, or anything. If we had captured that value it would have had to multiply our comp many times over. So why should I have ever gone above and beyond in the first place? Meanwhile my manager repeatedly complained to me that I only worked 9-5.

This early experience was formative in my workplace opinions. Go figure.

Speaking more broadly, these kinds of misaligned incentives are probably doing massive damage to the economy, in terms of lost productivity and innovation.

A huge chunk of the people who should be productive and be innovating literally don't have an incentive to do anything above and beyond keeping their job. It's all adversarial and extractive instead of cooperative. On both sides. Employers won't pay workers for the value the workers provide, and in return workers surf HN and reddit all day.

Meanwhile, apparently there's some kind of epidemic of "bullshit jobs." Again, go figure.

This is often what a lot of people mean when they claim we've hit "late stage capitalism": it is possible the paperclip maximizers have already "eaten the world", turned everything to paperclips, and all that is left is "bullshit jobs". There's no reason to incentivize innovation because everything is already paperclips.

I now work 8 to 5 only and do much less.

Our call volume dropped noticeably. I told my manager why. He was pissed, and asked how we were going to justify headcount if our call volume was dropping.

Lesson learned. [edit: the ambiguous lesson is intentional. I stopped trying, but he kept everyone employed. So... lesson learned :)]

Coming in twice an hour late and being ridiculed about it is ridiculous. This is professional life, not some strict grade school.

I've had to work under many executives like this and it's pretty annoying. They can't be reasoned with.

Oh and the faster your people work - the worse it is for people who rely on headcount for their job. They can't justify a larger headcount if everyone is working efficiently...

However just because you increased revenue with you test in no way means you deserve to capture the value of it. You didn’t do it in isolation. At the very least the reason you were able to increase revenue by a third was because there was a revenue and a customer base to start with. You didn’t create that, that was given to you to leverage off of. I assume you had infrastructure and tooling support as well. So at the very least that increase revenue should be distributed amongst other employees that build the foundation in the first place.

Maybe the A/B test would show no change. Maybe it would show a slight loss. Do you still expect to be paid your salary for the work that went into that? If you do, you shouldn't expect to capture all the upside.

Imagine 5 teams set out to run $100K experiments; 4 teams fail and 1 team creates a $1M gross win. On net, $500K of value was created. The company can't weather the losses from the 4 teams and pay out 100% of the upside ($900K) of the 5th experiment to the 5th team.

I believe that they, via management, believe that the aggregate of what you and your colleagues do is contributing to the overall enterprise value, even if your individual contribution is much smaller than a penny per share.

The fact that some engineers can shirk and ride on the efforts of their peers does create a tragedy of the commons possibility, but the most appropriate solution there involves strong local leadership, rather than the conclusion that RSU grants are ineffective.

Whereas banks and sales teams have long given bonuses because it's tractable to assign value to individual contributions, I think bonuses are the generally preferred incentive when tractable. Making partner is roughly the VP-level equivalent of RSU grants where company performance starts being tied to individual performance.

Where this becomes a bit more evident is that RSU refreshes are almost always based on performance review, like bonuses.

I see RSUs as a cheaper/more flexible compensation for employers and a tax reduction strategy for employees (both worthwhile in their own right).

Many of these people eventually end up working at companies that _do_ have such systems. Anecdata: a friend of mine recently found a clever hack that increased ad revenue on a major product by some fraction of a percent for one of the world's largest internet companies. His bonus that year was equivalent to a down payment on a nice house.

My brother is an industrial engineer. His job is literally "make processes more efficient."

As in, "This month, I increased the yield efficiency by X percent, saving the company Y millions of dollars per year in perpetuity"

It'd be great for him if he got some sort of commission off those gains, but he is paid pretty well to do what he does, and he enjoys the work.

Increases in efficiency are great for profits, but they are also the reason prices of things come down over time.

For that specific example, it's because there was no risk on your end for developing the product. To capture it's value the IP would have needed to be developed outside the company and licensed to it. But that's way more risky.

> So why should I have ever gone above and beyond in the first place? Meanwhile my manager repeatedly complained to me that I only worked 9-5.

You shouldn't have, at least, not there. Clearly they had no clue how innovation happens and how to create an environment where the type of people who innovate ends up.

I suspect it works this way because to put it into software architecture terms, the trust is a microservice delivery model prerequisite, so people can loosely couple as needed to efficiently work on blockers. I find it ironic that many laypeople see the US military as a rigidly stratified, top-down command and control organization, but speaking to many military members, I find the amount of trust (once earned) placed in startlingly young and junior members far exceeds most commercial organizations. Despite all the military war stories of ineptitude and incompetence, I don't think it is a coincidence that compared to the average commercial organization, the military is still perceived by many to "get 'er done".

This is fantastically difficult to achieve because it requires a from-the-top commitment to developing human, empathic leadership on top of management (which is already a difficult to master skill set by itself). It takes enormous emotional guts and vulnerability to be in that kind of leadership; I know it would challenge my personal limits for sure, possibly even break them. This takes decades of continuous work without interruption through top leadership succession evolutions.

My point is that there are places where your contribution to the overall success is more directly related to what you are paid, however many people don't want to work at those places because it involves significantly more risk.

Let's say you have a nearly 100% chance of making $50k for the next 10 years for a total of $500k. Alternatively you can take a 10% chance at making $5 million total over the next 10 years. The reason that there is potential for a larger payout in the second job is because you are taking a greater risk. If you were working at a company where someone else was taking the risk, then the rewards likely flowed to those people.

For many young people, their first job gives them some data points about what they are actually capable of delivering so they can choose to work at places that trend toward rewarding contribution (startup, self-employed, etc.) or at places that don't (like your company) based on what type of performance they are capable of providing.

So companies are effectively driving their employees towards creating future competition, as that seems to be the only way left for inventors to capture the value they create.

Or future complimentary product/service. A company that runs call centers doesn't wanna make call center software but if they can buy call center SaaS (or whatever) that makes them more efficient they're happy and the guy they're buying from is happy.

It's unfortunate that the only way to capture the value of my innovation might have been "well, just be an owner instead of a worker."

[1] https://en.wikipedia.org/wiki/Stakhanovite_movement

Capital was the foundation for Marxism's development, not the final stage. It's more a case of critique of laisez-faire imperialist capitalism, than anything else.

Please remember that I was responding to a comment, not making an abstract statement that communists never give out awards. The grandparent had said that it would be good if communists and socialists were more generous with awards than capitalists, and I was making the case that it would be antithetical to the typical communist ideology.

In Soviet Russia you worked for people. At Amazon you work for the Machine.

Your offhand comment is pithy, but ridiculous on its face.

First, in most companies it's very hard to say who exactly managed to increase the profit. Is it you who came up with the idea? Is it your boss who picked this specific idea out of fifty other ideas you came up with last week? Is it the QA team who managed to catch the bug which would've erased all the profits? Is it HR who hired you among other candidates?

Second, no, the remaining is not $460k. In a Big Greedy Corporation I work an average annual cost of employee in "primary" location is around $200k (pre-covid). It includes office space, technology, infrastructure, salary, taxes, fees, insurances and so on.

Third, that's the premium the company gets for the risk. Intern will get his salary no matter what. The company makes a bet though. You want to own part of that risk? Build your own company.

Also, the company probably only has to pay those $40k to $200k in salary costs for a few years, but the benefits derived from the work might outlive it. There's nothing stopping anyone from firing an employee just because they previously made a massive contribution to the company's financial success. Why keep the cow if you can get the milk for free?

So it might even be the full $500k in pure profits after the 2nd year.

* Does it require a big capital investment? the company provides that.

* Is it risky? The company gets a risk premium.

* Does it need a bunch of specialized resources? the company needs to provide those.

* More subtly, is it net-new or incremental value? Providing a company with something that boosts what they already do isn't evaluated on the incremental increase because you can't realize them without the previous baseline.

There are countless factors measuring value-add, making it extremely hard to allocate back to a single cog in the machine - unless you're a startup with very few cogs, hence they're responsible for all value (or costs).

If you want to be evaluated based solely on your individual contribution, put yourself into a situation where this is possible, i.e. do it all yourself. Otherwise join the broader team and take the benefits and costs that comes with that.

What if the advancement is in the wrong direction in the market? Like Windows Mobile was. You could have built a great system that delivered a few hundred million in sales, but two years down the road it cost the company a few billion in costs. Do you get to pay back your share?

I'm not advocating here for the work to be uncompensated - it's just when you get a risk shield, you also lose the payout shield.

Maybe a better culture of coop's would be a better solution.

If someone who can consistently deliver great value to a company is let go, they can go elsewhere and provide their value as a consultant or employee. You seem to think the company has no competition and doesn't need to compete with other businesses in the marketplace. I think you are also overlooking the fact that most interns are hired to see if they will be good to bring on full time. Some of them turn out to not provide substantial value. If an internship is how you are demonstrating your value to an employer, then your contribution is being average across all the interns that don't contribute anything or much of anything.

It isn't that we need to decide exactly who contributed proportionally and how much of the profits we get. We're really just reaching for something that increases wages faster than raises.

And really it highlights the issue that not only is it hard to get fair profit-sharing, it's also hard to get market-competitive raises.

But of course a company is going to say it's hard to decide who gets how much, because they have an incentive to pay their employees as little as possible, regardless if it's through base wages, raises, or profit sharing. There always seems to be an excuse.

not sure if you misspoke or I don't get your point

>> fair profit-sharing

"Fair" is just a trigger that one side uses to put the other on the defensive. Companies by their very nature a designed to share profits with their owners, i.e. legal shareholders. If you want profit sharing guaranteed join an employee-owned cooperative or alternative structured org.

If I can't get raises that keep up with inflation or competitive market rates, I'm going to try and argue that I should seek other options for making more money. One of those options would be profit-sharing. Another option is job hopping, which tech enjoys as a luxury.

I was with you until your last line. You don't have to build your own company - you can simply go after a job at a company that understands how beneficial it is to align the incentives of its owners and employees.

There plenty of ways to give workers a piece of the pie: there are full-on co-ops (at one end of the spectrum), and there are more watered-down implementations like stock options, ESPP plans, etc., all of which allow the worker to take on some of the risk and share some of the gains.

Plenty of companies also distribute simple profit-sharing bonuses, which (arguably) don't require the employee to take on any risk at all.

They are too large to give new employees significant stock options, yet too small to pay FAANG-competititve rates. So you're starting with less salary and no stock. If you now have an egomaniac boss who thinks his own personal brilliance is always the cause for the company's got fate, then there's a good chance he will just take credit for your invention and your bonus is gone.

And in slightly larger companies, chances are someone in the management chain will take credit for it and get the bonus. There's a reason why in most companies, you can never talk directly to the upper management: Middle management has strong financial incentives to prevent that.

Because of the guidelines of this community:

"Be kind. Don't be snarky. Have curious conversation; don't cross-examine. Please don't fulminate. Please don't sneer, including at the rest of the community.

Comments should get more thoughtful and substantive, not less, as a topic gets more divisive.

When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3."

Plenty of risk for the employee though!

Not every job has the potential for such things. "Good work" is different than profitability. A factory line worker can be the hardest working and best worker on the planet, and not increase company profits more than a few dollars an hour. That's the point about how we now value work differently. We place value on work that has direct and immediate impact on the bottom line. We don't value the hard work that goes into just keeping the doors open from day to day.

I chose to argue the way I did, because it is much easier to start at that end of the spectrum. If highly skilled highly productive employees who contributed massively to the company's bottom line cannot extract a fair share of the value in exchange for their work, then it's easy to convince someone that less skilled labor has these problems, too.

What is the definition of fair share?

When you are shopping for something, how do you determine what the fair price is to pay?

If I buy a car that enables me to earn $500k per year, do I owe the seller of the car more than someone who buys the same car to earn $50k per year?

If a significant part of the population work more than one job, try actively to reach this sort of life, and hardly achieve it, then something is broken.

I don't which policy will make us closer to this sort of fairness, but that's the only bottom line that interests me.

It’s government policies that impact all businesses that get us closer to that fairness. Any single business that chooses to pay outsized amounts for their COGS, including labor, will get crushed in the larger market. There might be some like Costco and Apple that can afford to pay more, but they serve middle upper class customers and have a unique product.

For everyone else, people will choose to shop at the place that sells bread for 50 cents less.

    Two-thirds of people who file for bankruptcy cite medical issues as a key contributor to their financial downfall.
    While the high cost of health care has historically been a trigger for bankruptcy filings, the research shows that the implementation of the Affordable Care Act has not improved things.
    What most people do not realize, according to one researcher, is that their health insurance may not be enough to protect them.

People are paid what it costs to replace them, not the profit they generate. The less replaceable you are, the more of the profit you get.

Price (pay) is the intersection of supply and demand, and nothing else.

That is why factory workers in the US got outsourced. That is why when deciding what you are going to sell for the rest of your life, you should go for something that few others are able to sell.

And everyone does this, it’s not some evil business plan. No one pays $5 more for the same loaf of bread. Everyone I know pays the least amount they have to. Creating a floor for that is the government’s job, not an individual business (and it can’t anyway, since it has to compete).

Nothing makes the CEO happier to know that you believe it is the employee's fault their jobs got outsourced, and not the fault of the CEO who wanted to maximize profit at the cost of millions of good paying American union jobs that actually helped families, communities, and created the 'American Dream', all so they could afford the status that brings when they show their new multi million dollar sailboat at the regatta. The job that was outsourced still needed to be done, someone still had to do it.

American Dream cannot exist in a world with limited resources. It only existed in a rapidly expanding resource pool - taking lands from natives, creating new tech, freeing up resources by killing millions of people or digging up stuff from the ground.

As such - it's not CEOs job to maintain your job, specially when those CEOs are pushed by your own pension fund managers to move your job somewhere more efficient.

And finally - global poverty has dropped significantly because of that outsourcing. Ignoring that is literally being the "they toork R jerbs" South Park charachter.

Returns to owning land and housing (rents) have gone up. That has come at the expense of both returns to labor, and returns to all other kinds of capital (stock ownership, etc.). This is obvious. Stock market returns aren't what they used to be. Banks are making 4% on mortgages, versus 8% back in the day. The country is awash in 0% financing for cars, refrigerators, etc.

There is increasing inequality in how labor income is distributed. CEO salaries have gone up, programmer salaries have gone up, but secretary salaries have stagnated. But that's a separate issue than returns to capital ownership going up.

Also: https://wolfstreet.com/2015/11/04/corporate-profits-are-the-... Under "This is a new America" you can watch corporate profits grow and grow.

But both your source and my source are 5 years old already. A lot has changed since then.

You can't have your cake and eat it too; get all the reward without any of the risk.

But let’s assume we can attach a net dollar amount to each job and the company let’s go people that don’t contribute as much as they cost. Even in this case the company still loses out from the intern. That money still need to come from somewhere, most likely from profit derived from other employees.

The point is “the intern increased the company’s profit by 500k annually but only gets paid 40k” is not the problem it’s made out to be. That 500k wasn’t created out of thin air. There were other employees in supporting functions that made it possible. That extra 460k goes to pay for them too, as well as for the employees that aren’t as productive. Those are the risks the company takes on.

I think a really good example is a story from Google. An intern changed the compression of the Google logo on the search page and shaved off a few bytes. Since Google serves that page billions of times, that saved google a 10's of thousands of dollars a year, and was literally minutes of work. If the same intern did the same work anywhere else, it would have been almost worthless.

It's because of this that I try to work as little as possible, preferably remotely. I claim to the company that I work 8 hours, in reality I work between 4 to 6 hours, and if I'm really quick, simply 2 hours (happens rarely).

That's how I keep my "profit", and if I meet expectations it's good enough for me. I don't think they'd be happy once they find out.

The idea there's some large gap between value provided and value paid is unstable and completely unsustainable.

As for owning stocks, pretty much everyone can. Robinhood has $0 commissions and sells fractional shares. There's no reason why people can't buy stocks.

What about the people who don't or can't do good work, though?

Your comment is all about better compensation for what amount to elite software developers. And elite software developers are already well compensated. Maybe not as well as they should be by your calculus, but still "well" in comparison to the people the grandparent comment was talking about.