Re:Compensation as a Reflection of Values
by robocat on Thursday March 04, 2021 @07:12PM
(#26350453)
This is pure capitalism: they believe that the various benefits accruing to the organisation due to the flat compensation outweighs the various costs.
This thesis could easily be correct in a VC funded company that relies upon the minds on the team, and aims to be a unicorn. It couldn’t work in a low-margin business that relies on employee body count.
It is intriguing to look at high-margin software businesses and look at revenue per employee (or profit per employee when they become mature businesses). Employee costs are often the biggest expense in tech companies (and tech startups: oxide = 23 employees at $180250 with 20MM VC invested).
Marginal profit growth of tech companies often requires little marginal increase in employee headcount/costs. The economic consequences of this are often under appreciated by many people.
This thesis could easily be correct in a VC funded company that relies upon the minds on the team, and aims to be a unicorn. It couldn’t work in a low-margin business that relies on employee body count.
It is intriguing to look at high-margin software businesses and look at revenue per employee (or profit per employee when they become mature businesses). Employee costs are often the biggest expense in tech companies (and tech startups: oxide = 23 employees at $180250 with 20MM VC invested).
Marginal profit growth of tech companies often requires little marginal increase in employee headcount/costs. The economic consequences of this are often under appreciated by many people.