It may mean paying less to the best negotiators, but not the best performers.

These very much tend to strongly correlate. You're definitely more confident in negotiating and counter-offering if you have 10x skill as your leverage.

That’s not at all the case. Five of us recently moved internally via a remapping and they gave us pay rises. I negotiated 15% more than the initial offer, everyone else took the initial offer. Roughly same ability.

Indeed the only reason I could do this was because the new salary ranges were shown thanks to pay transparency.

"Tend to correlate" is a strictly probabilistic statement.

And you have studies to back your claims up?

It's just sound reasoning. You're confident if you're not desperate.

So no evidence, just claims that fly in the face of real experience.

> You're definitely more confident in negotiating and counter-offering if you have 10x skill

Not if high performers underrate their skill, and under-performers overestimate their skill, both of which studies suggest is true.

I would speculate that 10x devs' underestimation primarily concerns their percentile ranking relative to peers, not necessarily their absolute skill. Comparing yourself to the likes of Carmack and Wozniak is what pushes you to become cracked in the first place.

What matters is how they rate their skills relative to their colleagues, and how well they rate their value to the company.

people who claim to be 10x devs tend to be 0.5x devs with fancier keyboards

Just because you may have leverage does not mean that you're wise enough in negotiation skills to use that leverage effectively.

This is the lump of labour fallacy, right? Companies don't actually have to have fixed labour budgets; indeed ideally firms should be always willing to hire/retain a worker at a salary less than that workers marginal revenue product, as this is profit maximising.

Companies have bureaucracies and bureaucracies are very much budget-constrained.

Companies can decide to do it however they want. They don't have to conform to a platonic ideal of a bureaucracy. A company expecting to grow its market share will give it's managers more leeway than one that's under financial difficulties.

What can happen, which is why you may have seen budget constraints prevent profit-maximising hiring, is that the finance dept is operating off older information than the managers in business units (or just is crosswise with them for any reason at all). You can definitely get a situation in which managers can't get approval to do profit maximising hires, but this isn't inevitable.

I can imagine that this is the dynamic which for actual x10 developers makes flexible YC-style startups more appealing than rigid FAANG-level companies.

Apart from the general difficulty of organising like this and actually evaluating the marginal revenue from an additional employee (it's hard enough to attribute to your existing employees!), this marginal revenue is likely to have diminishing returns as the company grows and from a risk management point of view you will want to have some margin so that you don't flip into losing money as soon as business slows a little.

How well correlated are the highest paid employees to the best employees, though? My guess would be that salary correlates strongly with self-belief, charisma, and negotiation skills

Yeah, its all about sales at the top level. How can I sell myself or anything else as the best.

> A company has a fixed amount of money it can spend on wages

Absolutely not. It has a maximum, sure, and a minimum it can get away with, but there's always a range in between them.

> Reducing wage inequality means paying less to the best employees

Bold assumption that the best are paid the most.

That theory rests on the assumption that your salary is based on how good you are at your job. But if that were the case then corporate life wouldn't be full of people complaining "my boss is an idiot and yet (s)he makes ten times what I do".

I'll argue that money goes to those who are best at internal politics, with perhaps a moderate correlation with work performance.

> perhaps a moderate correlation with work performance

The only time I have seen a correlation greater than 0 is where bonuses where directly linked to earnings or sales ... even then the correlation was not 1

> The only time I have seen a correlation greater than 0 is where bonuses where directly linked to earnings or sales

Maybe I've been lucky to work for moderately reasonable companies, but I've never seen that.

For example in my current company, yearly raises are directly tied to performance rating. And while there is subjectivity in the rating, it is basically impossible to squeeze in a high performer rating for someone who doesn't do anything even if I wanted to (which I don't). It is also impossible to give a very low rating to someone that all peers see doing great work.

The correlation will never be a perfect 1.0, but it is closer to 1 than to 0. Low performers end up getting low to nothing in raises, and the high performers get a multiplier that increases their raises.

> It is also impossible to give a very low rating to someone that all peers see doing great work.

I work at a smaller company now, with a lot of very good people, so I've been happy enough with my rating and bumps.

When I was at "bigcorp", I was still as good at my job, but I didn't play the game very well. I presume I was not visible enough to be rated highly by my peers (peers aren't those in your team, but outside your team) and so I didn't see the rate of progression I think I merited, and eventually left.

That was a very good decision.

> so I didn't see the rate of progression I think I merited

Well yes, that's common. But I was responding to the idea that there is literally 0 correlation between performance and raises.

I'm pro salary transparency, but both things are true and OP should not be downvoted:

- Some employee salary discrepancies are inefficiencies due to humans sucking at rationally evaluating other people

- Some employee salary discrepancies are legitimate outcomes of value produced relative to other employees

The problem is the more we create policy assuming the first one is true, we eliminate everyone in the second category (however small or large that category), making the economy less efficient. I would argue pay transparency isn't one of those policies however, and in fact would lead to more efficiencies.

All interventions have consequences, and less growth and higher inefficiency from cutting tall poppies is indeed a risk. As someone in Europe, our total lack of productivity growth is leading to collapsing governments and social welfare systems. These are serious issues that should be discussed and not dismissed outright with downvotes.

The second is completely solved ... its called a bonus.

Now you've permanently handed power to employers to claim every year is "a tough year" and pay people less, while tricking people into taking jobs under the pretense of "the salary is low but you usually get a crazy big bonus!"

> Let me guess, your next rebuttal

My actual response "But then we will have to deal with biases, discretion and management collecting their 10mil bonus by giving the juniors a pittance"

The flip side of course is people who actually work in bonus heavy revenue generating roles tend to leave if they are not valued appropriately - and take their clients with them.

The only policy that's needed is unions everywhere with industry wide bargaining like they do in Denmark. Or even better employee ownership.

The thing about employee ownership is that, almost by definition, employees don't have much capital (that's why they live by selling their labour) and businesses need capital to survive. That capital has a cost, either interest on loans or profits going to outside shareholders.

Imagining this problem is just a sign that your company can't do pay grades or job titles properly. Or work out the concept called a "bonus".

The thing is, if you're rewarding performance through _process_ it ends up being more public and you have to have a written justification for it. Not just favouritism.

> A company has a fixed amount of money it can spend on wages.

When they hire and amazing 100x employee they have higher sales, revenues and profits with which to pay employees.