10x Productivity Myths: Where’s the 10x Difference in Compensation? - Steve McConnell
research support for 10x productivity differences among programmers, address
programmer compensation does not vary accordingly.
the question embodied several assumptions that were naïve or just plain wrong from a business perspective.
- Myth 1. The guy next to me is getting paid what he’s worth. average company has something like 20% of its programmers that aren’t contributing anything meaningful to the business and whose compensation should really be zero. “If I’m a 10x programmer, I should be making 10x the average compensation.” But the 10x ratio is not 10x from best to average; it’s 10x from best to worst. and the worst programmers should be making nothing, be careful what you wish for!
- Myth 2. “Programming productivity” = “value to the business.” Some mediocre programmers might be better at interacting with customers. Some might have better potential to move into management. Some might have less personal output but a wonderfully positive influence on overall team output. There are lots of other factors that influence “value to the business” besides raw programming output.
- Myth 3. High output should be rewarded with high salary. When a business sets a salary (as opposed to a bonus – i.e., “fixed comp” vs. “variable comp”), the business is recognizing a person’s current contribution to the business, and it’s also making a calculated bet about the person’s contribution to the business in the future and over time. no guarantee that I’ll be 5x as productive again next year.
- Myth 4. Businesses try to pay people based on what they’re worth to the business. businesses don’t make any attempt whatsoever to figure out on a person-by-person basis how much each person contributes to the bottom line. At best, a business might go through an exercise of defining how much each job is worth (not each person) – but those exercises don’t account for whether the person in each job is a 1x performer or a 10x performer. Since businesses almost never know what a specific person doing a specific job is worth, businesses generally pay people based on their market value, not on any calculation of their monetary contribution to the business.
- Myth 5. If a business wanted to pay based on productivity, it could measure individual productivity meaningfully enough to support its compensation decisions. Measuring productivity of specific individuals in a live production environment, on an ongoing basis, is totally different challenge. The research measurement is possible and practical and has been done several times. If you can’t meaningfully measure differences in performance, we’re left with more subjective assessments of programmers’ contributions to the business, which actually is how most businesses operate.
- Myth 6. Companies don’t adjust pay for difference in productivity. Good companies do try.
The only practical way I can think of truly tie pay to performance would be to move all employees to a contractor model and then pay them for well/defined pieces of work on a contract basis, with defined acceptance criteria and so on.