How should Hyper Performers be Judged and Compensated? (How to Make the Case for a Raise)
I'm often asked questions about compensation by both employers and candidates, such as:
- What is a fair salary for this position?
- Why can't I find a higher salary?
- Why can't I find and attract top talent?
- What skills pay the most?
- How can I get a raise?
There are a number of factors, as described in The Myth of the Bell Curve, but that only explains part of the discrepancy. Even if we agreed that a programmer is 3x as productive, are we willing to pay 3x more? Should we be willing to pay 5x more once you take into account the fixed overhead, such as health insurance, and indirect savings through making others more efficient?
I find that the missing piece is a shared understanding of how to measure the minimum skills required for the job. Because I think the question that dictates programmer salaries is, "Who is the least qualified programmer I can get to do the job?" In another post, I'll try to cover how low-rate programmers cost companies more, but the focus of this post is the hyper performer.
How Much is LeBron James worth as a Programmer?
The average NBA player's salary is about $5,000,000.
The lowest-paid NBA players, like poor Mario West, make about $25,000.
Kobe Bryant makes about $30,000,000 but his salary is an outlier; the top 10 players average about $20,000,000.
LeBron James, widely considered the best player in the world, makes a little less than $20,000,000. He could make more, but he agreed to a lower salary in order to keep the Miami Heat under the salary cap while attracting top teammates. Not to worry, his endorsements raise his total haul to around $60,000,000 per year.
I've been using all the zeroes in the preceding numbers, instead of abbreviations such as $25K or $20M, so you could appreciate the orders-of-magnitude difference in compensation.
- The highest-paid players make about 1000x the salary of the lowest-paid players.
- The top 10 players (top 1.7% of 565 players) each make about 4x the average player and 800x the lowest-paid players.
- Even the lowest-paid players are all incredible athletes who have made the NBA. They are undoubtedly better than the vast majority of college and undrafted players who are not in the NBA, and perhaps better than players in other leagues throughout the world.
How much am I worth as a Basketball Player?
Instead of trying to evaluate my worth as a basketball player, in the aggregate sense, let's narrow it down to some specific metrics by which a basketball player can be evaluated, such as free-throw shooting.
How much am I worth as a Free-Throw Shooter?
Let's suppose that LeBron James and I are having a free-throw shooting contest (foul shots).
His career free-throw percentage is about 75%. Let's assume mine is about 25% (I can dream).
So, is LeBron worth only 3x me as a free-throw shooter? Perhaps.
Now, let's change it to a game situation, in which LeBron James earns 7.6 free throw attempts per game, because if they don't foul him, he is going to score anyway.
If I was in the NBA, and I played as many minutes and took as many shots as LeBron, I'd average zero free throw attempts per game, because no one would ever both fouling me ("He's open for a reason.") Let's be generous and assume I make 1 free-throw per game.
So, as a free-throw shooter, LeBron is worth at least 7.6x as me.
How much am I worth as a Three-Point Shooter or Slam Dunker?
Now let's imagine I have to make some three-point shots (about 23 feet away from the basket). With no defender, I might make 1 shot in 10 from the three-point line. LeBron makes about 36.5% of his three-point attempts in a game situation, which is only 80th in the league!
Maybe I'm worth more than I thought.
Now, instead, let's imagine we are in a slam dunk contest. Granted, this isn't required in a game, but let's pretend it is a job requirement.
How many times, out of 100 attempts, will LeBron successfully slam dunk the basketball? I'd guess about 95% of the time, even when doing trick dunks, judging from this video.
I have never dunked a basketball on a 10-foot rim without using a trampoline. I will never be able to dunk a basketball, even if I get my knee repaired.
So, if dunking a basketball is part of the job requirement, LeBron James isn't just 100x or 1,000x more valuable. He is infinitely more valuable, because I simply can't do the job.
How Much is LeBron James worth as a Programmer?
Now, let's imagine we're in my house. LeBron won't stand a chance.
- Write a Jenkins script?
- Configure SVN and train the team on best practices?
- Create a re-usable component?
How Much is a Great Programmer Worth?
So what are the factors that typically determine the low and high end of a programmer's salary?
The following are examples of things that cause downward pressure in your value as a programmer:
- Low level of skill required (basic HTML, or template work)
- Lots of repeat work required but not highly original (i.e., programming banner ads)
- High number of qualified applicants relative to job openings
- Easily outsourced or off-shored to lower wage markets
- Low-paying industry, because people think it is glamorous (fashion, sports, etc.)
- Low-paying because industry is not profitable (non-profits, dying businesses)
- Low-paying due to lack of capital (start-ups, mom & pop shops)
- Low paying due to poor stock market, IPO, or VC interest
- Cyclical or boom-bust downturn (2000 Tech crash, 2008 Recession)
- Dying technology with glut of existing programmers competing for declining number of roles.
- The geographical market pays little (college towns, etc.) due to low cost of living, etc.
The following are examples of things that cause upward pressure in your value as a programmer:
- High level of specialized skill required (quant, enterprise architecture, big data)
- Highly original or creative work (award-winning advertising or game design)
- Low number of qualified applicants relative to job openings
- Harder to outsource or off-shore due to time constraints, security restrictions, or high degree of communication required
- Historically high-paying industry (finance, etc.)
- High-paying because industry is highly profitable (pharma, energy)
- High-paying due to stock options (Facebook, Google, etc.)
- New technology with shortage of existing programmers (iOS, Objective C, HTML5)
- Booming market due to IPO and VC interest
- The geographical market pays more (such as NYC) but business and living expenses tend to be much higher.
Are you Worth 10x Other Programmers?
The definition of "what you are worth" in a financial transaction is, "How much is a willing employer offering to pay you?"
You are highly unlikely to command 10x the salary of a "good enough" programmer, almost regardless of your skill.
Here are some things you can point out to your employer to help make your case that you are worth 2x or 3x what they are paying other programmers, but you'll be lucky to be paid 25% more.
If you are 10x as productive as other programmers, you'll probably be paid no more than 2x their salary.
For each 100% improvement in productivity over other programmers, you are paid only 10% more in salary. LeBron James earns 4x the average NBA player's salary, and you are not LeBron James.
May these Odds be Ever in Your Favor:
- You can perform some critical programming in time for a deadline that others can't meet
- You have a unique skill that other programmers simply don't have
- You can fix and debug things 10x faster due to your superior architecture skills, reusable components, and debugging skills
- You raise the level of all the developers, and make the team more productive
- You shorten time to market
- You shorten the QA cycle and let them hire fewer QA staff
- You wear multiple hats, so they don't have to hire other programmers to do those roles
All of the above pale in comparison to the one reason that give you the most leverage:
- You have another job offer and are willing to walk away
There's an old saying, "You don't get what you're worth, you get what you negotiate." I'll cover some of the non-salary points for negotiation in another post.
When negotiating, remember:
- If job satisfaction is important to you, don't make it all about the money
- Software development is a team sport. LeBron James didn't win any championships by himself
- Work to improve yourself every day
- Make your teammates better
- Learn what your employer values
Best of luck in all your career pursuits.
Be sure to comment, like, share, or follow this blog, and check out the other posts on the right-hand side.