Prestige of Engineers

BassDad
Wed, 23 Jan 2008 02:08:27 +0000

After reviewing my last couple of entries, I do not feel that I organized what I was trying to say very effectively. Allow me to try again:

From an employee’s viewpoint, it would certainly be nice to get not only an above-average salary but potentially valuable stock options as well. This combination is sometimes offered by particularly well-funded startups and companies that recently were startups and are still in explosive growth mode. The more usual case is that startups can offer stock options that may or may not ever be worth much, but they usually cannot offer a great salary for very long. Somewhat more mature companies may offer much better than average salaries but cannot afford to continue to dilute their stock by handing out options to employees as though they were a startup. Companies that have been around for a while have no desire to start an arms race. They are usually content to make do without the very best talent because they can get most of what they need from talent at the next level down far cheaper and can bring in consultants for as long or short as needed when things really heat up. Because they have more to lose, established engineering companies do not wish to gamble by adopting strategies that they consider to have high risk (as demonstrated by the rate at which startups and consulting companies come and go) even though the potential rewards are also high. They take a more conservative approach to preserving stockholder value while generating a reasonable return on investment.

The notion of paying a premium price for premium productivity is based on the assumptions that it is possible to define what is meant by premium productivity and that it is possible to determine which individuals are producing it and which are not. In sales, this is done by setting quotas based on past history and then keeping track of each individual’s sales relative to their quota. In engineering, the criteria for success is rarely as simple as comparing two readily-obtained scalar numbers. It is prohibitively expensive to monitor and evaluate all aspects of a complex product or project, yet some level of performance evaluation and quality control is needed. Because engineering projects differ greatly in scale and purpose, because creativity and innovation are highly prized but devilishly hard to boil down to a one-dimensional number, and because global optimization is much harder to achieve than local optimization, the tasks of defining and measuring productivity are rarely straightforward in an engineering setting. Opportunities abound for highly intelligent but unscrupulous individuals to subvert performance monitoring for their own good at others’ expense. The consequences of implementing a strict pay-for-performance regime can be disastrous if the wrong people are rewarded and the wrong people are let go. One common corporate response to this problem is to reward success and failure at the team level, compress salary ranges and only fire the obviously incompetent. Again, a conservative approach that is willing to limit gains in order to prevent large losses. Startups that have little to lose and companies who are still in the midst of an unsustainable but nonetheless very enjoyable growth spurt play by a different set of rules.

I think the rest of what I was trying to say was reasonably clear from my prior posts, so I will turn in for the night.