Sorry for the tangent, but really curious to ask:

When you say that companies maintain internal calculations of the benefits, would you say that it’s (extremely roughly) something like: $10M benefit, need 5 core engineers + benefits + PM + testing lab etc etc -> we can spend up to $500k per eng give or take.

Or is the $10M one number (that would be held somewhat secretly internally at the company) and the salaries mostly represents where the market is? Does the (salary) market take into account the down-the-line $10M value?

Basically, could those engs negotiate to be paid more, or are they already sort of paid close to exactly what the group they’re part of generates in terms of revenue?

Thanks!

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I see that you said $10M per person, not for the “network optimization group”. Hmm. So it would be fair to say that the engs are definitely not paid according to the value they generate..? I wouldn’t be surprised by that but just to confirm.

If you are an employee there is little to no relationship between your output and your compensation. Employer employee relationships are based on the cost to the employer to secure equivalent or better output.

Secondly, yes $10M per employee of revenue or cash flow is pretty reasonable for similar companies. The prioritization is NOT “how many employees per $MM.” The allocation is “what opportunity is the highest $MM return per available employee.”

Relatively few companies have the scale or the efficiency for it to be profitable to hire engineers at Silicon Valley wages.

Sure. Lots of companies and employees are located elsewhere. And software + services is a heck of a financial drug. I dont think that changes the underlying message of how to think about employee comp or business opportunities.

Compensation is negotiated up and down marginally by the cost of hiring someone else, but bounded above by profitability. You could be the best price:performance employee in the world for a small business, there's just not all that much they could pay you. A huge mega-profitable tech company can pay whatever it takes for top talent and also get away with sometimes inefficiently overpaying rest-and-vesters.

Not OP, but 1 engineer -> 10M of benefit sounds right for my company.

In terms of negotiation, it really depends on how differentiated your skills are. Short answer is that if you can convince management that it would be difficult to find other engineers who could deliver the optimizations you're delivering, yes, you have leverage.

This is exactly right about negotiation and your skillset. I have seen performance engineers in the right place at the right time get 10-20% of their benefit to the company (I have seen both $1 million/year compensation for line workers and $10+ million/year for very senior folks).

Very highly skilled engineers in specific niches can basically price themselves like monopolists, because the company can easily figure out how much money they are leaving on the table by not hiring them. This is not like "feature work" engineers, whose value is very nebulous and unknown.

The simple fact is that you are not paid for the value you create. You are paid based on the salary you can demand. For performance engineers, $10 million/year/person opportunities are kind of rare, meaning that you can't demand close to that. Your alternatives to big tech are things like wall street, which pay very well, so you can demand a higher salary (and/or higher level) than a normal engineer of your skill would get. However, this is nowhere near the value of the work.