Ask HN: Is your company considering inflation in this year's comp review cycle?

[jurassic]

My current company (not FAANG but a household name) just handed me a sub-inflation raise (5.5%) in spite of my "exceeds expectations" performance rating. New hires are getting 50% more equity than the total value of my unvested equity. The official line is that inflation is not a factor in assessing annual comp adjustments.

Does this match up to your experience elsewhere? I'm certain I could make more by switching jobs, but I wonder if I'm being screwed by more than the usual amount by staying.

I'm really effective in my current role. Past a certain level of seniority it's a big ordeal to change jobs, rebuild your network within a new company, rebuild reputation and social capital, etc. These network effects are a big part of your effectiveness as a staff+ engineer. I'd rather not move, but it seems I have to given the hundreds of thousands being left on the table.

[jh00ker]

I'm a new manager, having been an SWE IC for 15 yrs. I just did comp planning for the first time. I was given such a small budget for my team, it's not even funny! The system is designed so that most of the staffing budget goes to new hires, not to reward existing employees. Even promotions are fairly small, compared to what you could get by leaving. It's a game of chicken between you and your company: how long are you willing to tolerate small annual raises while more money goes to new hires before you decide to become a new hire at a new company, yourself?

Now that I see it from the manager perspective, I pledge to stay sharp and become a job hopper ... as soon as I find the time to start interviewing. :^)

[shaggyfrog]

> The system is designed so that most of the staffing budget goes to new hires, not to reward existing employees.

Organizations undervalue their employees, encouraging brain drain, and then wonder why retention is such a hard problem. It's almost comical.

It also doesn't help that salary sharing is still so taboo (in the US/Canada at least). Stinginess is hard to do when people know what they're worth and know what you're paying everyone else.

> Now that I see it from the manager perspective, I pledge to stay sharp and become a job hopper ... as soon as I find the time to start interviewing. :^)

It's true that interviewing takes up a lot of time, but you can accomplish a lot just by doing low-stakes networking. Connecting with someone new over coffee at a cafe (and/or virtually) is a 15-30 minutes, every once-and-a-while kind of thing. Even better if you interact with them before/after on social media.

[rubicon33]

Fascinating! How do you plan to stay sharp if I may ask?

[mehrdada]

Not to be dismissive, but why would a company specifically care about some arbitrary number called "inflation" vs overall pressure from the labor market, which presumably must have some encoding of that, considering they seem to clearly paying a person enough not to justify leaving?

P.S. It is especially amusing considering lots of "only if I were to leetcode I could increase by X" coexist with many posts that diss on leetcode and whine that it filtered them out and it is not "relevant to the work they are doing". Perhaps the system is working then?

[PragmaticPulp]

> Not to be dismissive, but why would a company specifically care about some arbitrary number called "inflation" vs overall pressure from the labor market, which presumably must have some encoding of that, considering they seem to clearly paying a person enough not to justify leaving?

You hit the nail on the head.

Everything related to compensation becomes much less confusing once you accept that hiring is a market. Like any market, supply and demand drives the prices. Nothing else matters much.

Big companies have entire teams dedicated to compensation which are separate from HR and hiring managers. They carefully track these details and will fine tune their rates up and down depending on how often their offers are accepted or rejected. If every candidate is accepting the offers, they're probably too high and can be adjusted downward. If the company can't close any good candidates because they're going to other companies, it's time to raise the rates.

Of course, not every company plays this game correctly or intelligently. If the OP's company has guessed wrong and gave too low of a raise, they risk losing too many people. On the other hand, if most of the employees shrug it off then maybe they made the right call for the business.

[astrange]

The larger problem is that giving everyone inflation-linked raises causes inflation in the first place; that's called a wage-price spiral. That's one reason raising interest rates stops the inflation, it gets enough people laid off that the rest of the raises are absorbed. Unfortunate really.

[serial_dev]

> some arbitrary number called "inflation" vs overall pressure from the labor market

They should in the end only care about market pressure, but there is connection between the two. The way I see it, if you are a new hire, companies pay you more to get you, so they stay ahead of the inflation and keep up with market rates.

If you want to stay, a company's reluctance to keep up with inflation (and the market) will make it a very hard decision, even if you like the job, the people and the company.

[softwarebeware]

Why do you think inflation is an “arbitrary number?” I can’t imagine what gave you that idea.

[kaczordon]

Inflation is also psychosocial. If people think inflation is happening they will want to be paid more. That’s what can cause a wage-price spiral, partially.

[phantomathkg]

Inflation is not arbitrary. To some extent this should be like the minimum a company should offer. If not, it means the money you bring home might not be able to cover all your expense + saving.

[jurassic]

I somewhat agree. Tech comp seems to be up a lot more than inflation and I’m sure it’s going to lead to a lot of churn.

[xupybd]

They wouldn't but they should be aware that inflation will put pressure on the labor market. People will leave if they are underpaid.

[saberworks]

Really dissatisfied with pay increase this year in February. CEO talked up how everyone was going to be really happy with big bumps to make us more competitive (they have been struggling with high turnover after a couple of acquisitions). I get "exceeds expectations" multiple years in a row and did everything my manager suggested last year to try to get a bigger bump this year. I got 2% base salary increase and 5% bonus target increase. Chances of seeing the full bonus targets this year? Not high.

I'll be looking for a new job this year for sure.

[throwawaysleep]

I have to wonder why anyone bothers to ever exceed expectations except for intrinsic reasons.

I assume from the day I start that I will be gone in less than 18 months.

[devmunchies]

I think the equity/stock performance in the current tech markets is a bigger problem than inflation. Many who received stock grants in the last couple years have had their value cut in half (with some exceptions like GOOG).

Companies were giving equity grants based on inflated, sloshy market values. Why stay at a company where your $1MM (hypothetical) stock grant is now worth $400k when you can go to a new company and get a new $1MM grant at the current cheap market value?

[malandrew]

I’ve been thinking the exact same. Changing companies is effectively “buying the dip” because equity grants are always normalized in dollar quanta terms. I’m wondering if the market has bottomed out or not since that’s the best time to switch companies.

[jurassic]

This is a huge part of the dilemma for me. My equity has, on average, traded sideways. Equivalent offers or even worse offers from companies with better stock performance could end up being worth materially more.

[iends]

Staff level. Got 3.8%. Seriously considering leaving. There has been super high turnover of other senior leaders and friends.

Could literally double my total comp if I spent some time doing leetcode. Probably 20% raise without leetcode.

Have some silver (bronze?) handcuffs or would probably be gone already.

[zamalek]

> leetcode

Please just don't. You're better than that. Here's a list of companies who don't participate in this bullshit: https://github.com/poteto/hiring-without-whiteboards

At my current gig I was hired at staff level in Nov. 190k (please, let's normalize sharing salaries) . I could do better, but I am passionate about my job for the first time in 10 years. How much do you value happiness?

You're not an imposter. Especially as an HN reader (you're actually interested in your job).

[kevinventullo]

No reason you can’t trade up silver handcuffs to platinum handcuffs :)

[kfrzcode]

Which negotiation tactics did you try?

[wkirby]

I’ll chime in as a business owner. We peg our raises to the SSA cost of living adjustments. This means our bump for employees at the end of 2021 was just under 6%. If current trends continue, likely a similar number at the end of this year.

There are a few reasons I encourage other employers to peg annual raises to the same number:

- It’s usually a very fair number; never egregious for increasing costs. - Someone else gets to do the math, and you have a very easy number to tell prospects in interviews for what to expect. - It helps keep social security solvent.

We also use this number as a guideline for increasing our billable rate during contract negotiations. It has most of the same benefits.

[gameshot911]

Forgive me if I'm misunderstanding, but doesn't this mean that you don't give your employees any raise in terms of real dollars?

Even in the same role YoY, don't they become more knowledgable, experienced, capable? Take on new responsibilities? Don't they deserve to share in that added value to the company?

[dahdum]

> New hires are getting 50% more equity than the total value of my unvested equity. The official line is that inflation is not a factor in assessing annual comp adjustments.

Leave. They either only want you at a discount or you will get a counter offer to consider.

[throw_infla_22]

Yes. I (director) normally get (total salary * 3%) to hand out for annual cost of living adjustments, this year it is (total salary * 7%). This is at a ~2000 person US software company you've probably never heard of with so-so pay.

Throwaway for obvious reasons.

[throw_infla_22]

And I'll add a thought in response to OP: if you're going to quit because of money, you should be doing it because your salary is too low, not because your raise was too small. Some of the places handing out big raises this year stiffed people last year, and vice-versa.

[janesvilleseo]

Exceeded - 0.0%

Yep

I knew that going in. I helped to secure 10 million in business in 2021. They disbanded our team. To “grow” it. I applied for the “new” role.

They offered less and said it would include 2022 annual raise.

Told by my managers manager they would make me right at the end of 2022 through a bonus. Asked for it in writing, never heard back.

This decrease in total comp plus inflation has seen my real world earned drop by 20% for 2022.

[zamalek]

> in writing

Good shit. Make that threat real ASAP.

[DavidPeiffer]

Circa 2015, Micron have a cost of living adjustment separate from merit increases. That always struck me as a very honest way of handling things. I'm assuming they have continued the practice, which would have been helpful considering how rapidly the real estate market shot up since then.

[Ithrowthisaway]

Last year got raise 3%, this year just got raise 5%, but my TC currently ($190k base + $30k bonus) is still lower than people I know. 2 years ago when I joined, my peers got $250k base already and I was getting $180k base.

Exceeded expectations on both 2 years.

Raise for inflation doesn't even take into adjustments knowledge and experience gained.

Looking at TeamBlind astronomical TCs, I feel I'm not valued enough. Especially not when my peers are making $70k more than me.

The company: we sell terminal.

I am interviewing hard these days. Leetcoding again. It sucks to interview again, because I like my teammates, my manager. And instead of working with my best effort for my employer, now I have to juggle interviews and Leetcode/system design/behavioral preparation.

And I will not stop interviewing until I get a better job, even if it takes me 365 days or more.

[barbazoo]

Why is it so important though to earn as much as or more money than your peers?

[lr4444lr]

I think you've answered your own question: your discomfort in moving jobs is not worth to you the bump in salary you'd get.

It's already been well established by many even in non inflationary times that dev salary is maximized by switching job every 2-5 years or so, subspecialty dependent.

[travisjungroth]

> The official line is that inflation is not a factor in assessing annual comp adjustments.

Then what is?

Engineer comp has exploded the last few years, well past inflation. So if they're not matching inflation, and they're not matching the market (which would be even higher) then it sounds like they just pay you whatever they feel like and hope you stick around.

[thatwasunusual]

In Norway we have employers' organisations[0] and unions[1] that takes care of the overall wage adjustment negotiations, and it usually ends up higher or equal to inflation.

Personally, I'm running a tiny IT-consultant company together with six close friends. Because the market is so volatile for us, everyone is paid based on the company's result, with a definite minimum of $120,000/year (2021. This is then adjusted for inflation every year. Everything else is bonus, except a lot goes into running expenses (of course) and a "war chest" for worse times.

[0] https://en.wikipedia.org/wiki/Category:Employers%27_organisa...

[1] https://en.wikipedia.org/wiki/Category:Norwegian_Confederati...

[phendrenad2]

Don't count on it. First of all, "exceeds expectations" really means "meets expectations". It's pass/fail, and you passed. Programmers are interchangeable cogs, if you stand out it doesn't matter because your excess potential will go to waste. In fact, it can be red flag to management because you're trying too hard, you could start feeling too important or better than the rest of your team, and could leave as a result. (That said, many of us can't help but stand out). Secondly, I think it's well-established that developers will leave after 1.5 years or whatever the average is, and to keep someone you really need to throw a lot of money at them. Smart companies (like MANGA) structure their entire culture and process around this. The best people will move on after a few years. The truly great will get pulled aside and get extra sweeteners added. But that's like 1%.

[amha]

Elite private high school in SFBay (not tech, but all of our families are tech/VC). Everyone is getting raises of max(8%, $6700), working out to an average per-employee raise of 8.6%. Inflation is the main stated reason.

(FWIW this means that my salary, teaching undergrad-level math classes to high schoolers, is going from $74K to $81K.)

[christophilus]

Hijacking this with a related question: I’m an independent contractor, and have not yet renegotiated my prices. I just hate those kinds of conversations, but at some point, it is irresponsible to procrastinate. I’d be interested in hearing from other contractors: how have you approached this?

[bretpiatt]

Law firms and accounting firms solved this long ago, they all send out new rate cards effective January 1, [YEAR] during Q4 every year. I would not be ashamed to do the same.

[a-dub]

what's the state of agencies these days? back in the day they charged 100% overhead and paid by w-2.

is there a more lightweight model where for say 10-20% they'll handle searching, billing, rate negotiations, late payments and disputes?

i'm not sure if i'd go into contracting again without something like that. it takes far too much energy to be the asshole that is necessary to not get screwed in business (for yourself) and it detracts from the actual work and life satisfaction in general.

[whiddershins]

As dispassionately as possible.

Be matter of fact about new prices, and try to explain as little as possible.

(But always give some reason. Any reason beats no reason, but a simple even vague reason beats too many reasons.)

[serial_dev]

I was also thinking about the same. I work in Germany, non FAANG, so the salaries are lower. I started one year ago.

With the very high inflation numbers, I can't stop thinking that I learned a lot of things, I'm more effective, yet, I get paid less and less. Due to churn and team growth, I also count as one of the people who have been here "long enough" to have context of different things.

My salary today, adjusted for inflation, is significantly lower than when I started.

The company is okay, I work from home most of the time, I go to the office maybe one a month? The main reason I plan to stay until the end of the year is that I got a 50 day holiday (that I'm not sure I could get anywhere else, most places in Germany offer in the range of 25-30). We also have a 10% time for self improvement (learn anything you want).

Lots of people ask about inflation and salary, and they want a raise. The company is delaying discussions about compensations, but I assume we won't get even inflation rate increase.

This forces me to re-evaluate whether I can afford to stay any longer, as other companies offer a better salary.

My current plan is to use some part of the holidays, and the company's self improvement time this year to upskill and leave at the end of the year if I can't get my salary back to market rate.

[optymizer]

Not sure if it helps, but here are my stats as a FAANG senior IC. I received an "exceeds" perf rating, a 6% salary increase and one salary worth of RSUs (vests over 4 years). Others I've asked got a 3% raise (with a worse rating).

[whiddershins]

An entire year’s salary in RSUs? Is this common or a reaction to the times.

[boopboopbadoop]

What time horizon on the RSUs?

[yuppie_scum]

My C-Suite (SMB) thinks they’re the smartest guys in the room. They’re giving us 3% and telling us “it’s a bad idea to peg to inflation because we just had a long stretch of low inflation and we wouldn’t have been able to give you a raise.” I’m gonna go on cruise control for a few months and take as much advantage of PTO as I can then GTFO.