A company wants to develop a software system. Architects split the design to three parts, and assign each part to a different team. All three teams are given four months to complete their part. One team actually completes their part in a month. It doesn’t make a difference, because it still takes the company four months to complete the product. When the product is completed, it turns out that there was a mistake in the analysis, so they send two more months changing the product. Customers complain because one of the three parts was coded by incompetent developers, and occasionally corrupts the data.
I think this supports the idea that companies can’t tell who’s productive. If they could pay all of these engineers twice as much and complete the product in a month (all teams doing their part at the same speed as the best team), that would totally be worth it, but given that they can’t do that and they’re slowed down by the slowest team, there’s no point.
strategic decision to make it impossible for the 1000x developers to negotiate for even 10x salary
I don’t think companies need to do anything strategic to prevent developers from negotiating for 10x salary. I work at a company where it’s pretty common for individual engineers to increase the company’s profits by $10M/yr or more, but almost no one gets $10M/yr bonuses. Part of this is presumably that the one engineer saving tons of money is supported by a bunch of other people, but I don’t think it’s the case that there’s 100 support staff for every engineer doing this[1]. I think the bigger part is something something rent-seeking[2], where the company owns the IP and the users, and high-performing engineers can’t create the necessary conditions to save this kind of money, and the company has plenty of options for high-performing engineers, so shareholders capture most of the profits.
This is probably the most-negative way of phrasing this and another way of saying it is that the company’s founders did the hardest part of the job (getting customers) and it really is worth 99% of the profits. If people disagree they can always start their own startup. I think the truth is somewhere in the middle.
I think this supports the idea that companies can’t tell who’s productive. If they could pay all of these engineers twice as much and complete the product in a month (all teams doing their part at the same speed as the best team), that would totally be worth it, but given that they can’t do that and they’re slowed down by the slowest team, there’s no point.
I don’t think companies need to do anything strategic to prevent developers from negotiating for 10x salary. I work at a company where it’s pretty common for individual engineers to increase the company’s profits by $10M/yr or more, but almost no one gets $10M/yr bonuses. Part of this is presumably that the one engineer saving tons of money is supported by a bunch of other people, but I don’t think it’s the case that there’s 100 support staff for every engineer doing this[1]. I think the bigger part is something something rent-seeking[2], where the company owns the IP and the users, and high-performing engineers can’t create the necessary conditions to save this kind of money, and the company has plenty of options for high-performing engineers, so shareholders capture most of the profits.
Although honestly they should hire a lot more assistants.
This is probably the most-negative way of phrasing this and another way of saying it is that the company’s founders did the hardest part of the job (getting customers) and it really is worth 99% of the profits. If people disagree they can always start their own startup. I think the truth is somewhere in the middle.