What are the wage increase strategies?

Question

Fintech

Hello!
The question is not about programming, but about programmers.
Disclaimer: I'm an ordinary developer, I sit in the corner, write code, periodically go for a pay rise.
I have a question: how do managers treat the problem of salary increase? I am not a leader, and I do not know the exact answer. But hypothetically, I can suggest the following strategies:

• the manager is trying to get the maximum performance, so he is looking for the best developer and does not spare money for his salary;
  
• the leader is trying to curry favor, so he saves on wages, and kicks the developers away (so that the cow is better milked and fed less ...).
  

What does the "generosity" of the leadership depend on? Are there any reasons that can force the "middle" managers to save money intensively? What are the goals usually pursued by leaders?
(Yes, we are talking about commercial IT organizations, a la Google / Yandex / Mail / Rambler / Kaspersky (have you forgotten any of the big ones?)).

Answer 1

The central indicator for business, and therefore for managers, as people representing the interests of this very business, is the return on investment (ROI) ratio. Accordingly, the employee must bring the company more money than it consumes. Naturally, the higher the gap between costs and profits, the better, so the manager must keep the wage fund at the minimum level that guarantees the smooth operation of employees. One factor in this continuity is low turnover. You don't want to lose employees. And the more valuable an employee is for the company, the more professional he is and / or the more tied to him, the more expensive his loss is. Naturally in money. You will have to spend more than usual money to maintain work without him. You will have to spend money and time (the same money) on finding, hiring, introduction to work, possibly training a new employee. However, it may turn out to be completely inappropriate and the cycle will have to be repeated. Or it may simply turn out to be worse than the past and the efficiency of the department will decrease. Therefore, when an employee comes to ask for a raise, the manager evaluates whether this employee can leave or is just bluffing, how easy it will be to replace him, what damage to the company will be caused by his departure. Then the manager evaluates the cost of expanding the payroll - are there any reserves, what is the current ROI, will there be a larger ROI from reinvesting these funds in something else? If the employee's departure costs less than the payroll increase, the employee will be refused. Therefore, when an employee comes to ask for a raise, the manager evaluates whether this employee can leave or is just bluffing, how easy it will be to replace him, what damage to the company will be caused by his departure. Then the manager evaluates the cost of expanding the payroll - are there any reserves, what is the current ROI, will there be a larger ROI from reinvesting these funds in something else? If the employee's departure costs less than the payroll increase, the employee will be refused. Therefore, when an employee comes to ask for a raise, the manager evaluates whether this employee can leave or is just bluffing, how easy it will be to replace him, what damage to the company will be caused by his departure. Then the manager evaluates the cost of expanding the payroll - are there any reserves, what is the current ROI, will there be a larger ROI from reinvesting these funds in something else? If the employee's departure costs less than the payroll increase, the employee will be refused.
Naturally, everything described is true for the case when the leader is a professional manager. And then often in the place of the leader there is a person guided by emotions and muddy considerations read in dubious business literature.
From this conclusion, the strategy is simple - increase your own professional level so much that you can freely change the company as soon as something no longer suits you.

Answer 2

As long as you sit on your buttocks - and the salary will be ... even, without raises :) Why raise it for someone who works for the current one? Capitalism.
An increase in wages needs to be at least somehow justified, and "wife-children-mortgage" almost never works. Like your mortgage - you and fuck solve the problem. You can justify it by increasing the volume of work, inflation, a counter offer from competitors :) Sergey Gornostaev
explained how the manager approaches such a request. But there is also the danger of "overqualification" - not all managers like it when the office is based on one "megastar". Often, a star, realizing that here they are rushing about with it like with a written bag, begins to "star" ...

Answer 3

The leader's strategy is completely dependent on the leader and finances.
1. The manager is not always a sponsor, in many cases he is also an employee who has a budget for the project, agreed in advance from above, therefore he decides how to spend it. Hire programmers more expensive or cheaper, and report the saved money upstairs, spend it on bonuses, spend it on equipment, put it in your pocket, and so on.
2. It is clear that any adequate manager will try to pay less. But that doesn't always mean you have to pinch every penny.
3. In addition to the head - there is a company policy.
In one company, simple middle peasants are needed, and it is unprofitable to keep expensive seniors there - 1-2 people with a normal salary are enough, on which the architecture rests, and the growth of the rest of the company is unprofitable, since there is nowhere to raise their salaries. In such there will be either a turnover, or a small team of non-careerists who are satisfied with everything will work.
In another company, it is profitable to grow their specialists and sell them at a higher price. Growth and salary increases will be welcome there. But again, it depends on funding - there is where to transfer grown people - good. Nowhere - they will hold for some time, but they won’t just raise it.
In general, the possible salary growth of course depends on the company and how the company earns.

Answer 4

purely empirically - salary increases by changing jobs. You can read a lot on this topic on Habré in the "Career in the IT Industry" hub, the
rest is half measures. or even quarters.
yes, and more. people, even cool ones, but appointed to administrative posts (or business owners), even on the hub, are very modern and market-oriented when something concerns them, they like to mix a bunch of unnecessary emotions into a question, interesting projects, patriotism of their native plant, etc. . when the question arises of what money should be given to you.
and kick you out if necessary without emotion at all. if anything.

Answer 5

And here I will add to the excellent answer by Sergey Gornostaev .
1. First thing to know: ...

therefore, the manager must keep the wage fund at the minimum level that guarantees the uninterrupted work of employees

...where does this fund come from.
2.

What does the "generosity" of the leadership depend on? Are there any reasons that can force the "middle" managers to save money intensively? What are the goals usually pursued by leaders?

It depends: how much will it cost to replace you for the company with the same (or better) specialist and how long will it take?
That is, the bottom line is: how unique are you for the company at this point in time to give you the salary that you are asking for at the moment, and you always need to know competitors (and make contacts in advance) where you can go to a higher salary (in case it is not possible to agree on the current workplace).

Answer 6

Have you thought about where the money comes from? Your questions somehow bypass this moment.
There is a project budget that includes the amount of man-hours of development and the cost of an hour, and this is what they start from.

Answer 7

Generosity depends ONLY on personal qualities. With one boss, don’t tear your ass, it’s all to no avail, and the other can say a monetary thank you for any pleasant little thing. In any case, the return from the employee is considered, for some it will not be enough, for others it will be fine.

Answer 8

only one - it is difficult to replace you for the same money, and you have somewhere to go for a big bet (both conditions must be explicit at the same time)

Answer 9

In my practice, managers usually do not think about the long term.
If we consider a purely economic component, the manager may have a different payment system.
1. The head receives a fixed salary. In this case, he is neither cold nor hot. Those. he will not raise your salary himself, but he will not resist if you ask for more.
2. The manager works within the budget for the project Or receives a percentage of the net profit of the project .. In this case, your interests are in conflict, it is not beneficial for him to increase the salaries of employees.
3. The manager's salary is a percentage of the employee's salary. Not sure if this even happens. But in this case, he benefits from an increase in your salary.
But even with these payment systems, the manager may have a different motivation, because. There are other factors and they may outweigh.
1. Leader and subordinate are friends. They go to the bathhouse, etc.
2. The manager understands that he does not need cheap employees, but those who can do their job well and wants them to stay in the company for a long time.
3. The manager has recently been a programmer himself, and wants to be "fair".
4. Already this month, one or more employees left the department because they did not agree on a salary, the load on the remaining ones increased by 150% and the project deadlines are burning as usual. If there is another one, the project will be overwhelmed, and the manager will be left without money for the next couple of months.
5. The higher authorities announced a moratorium on salary increases.
6. The manager is not a programmer at all and believes that all programmers are stupid performers. One quits, we hire another, maybe even cheaper.
Many different factors, you need to find out the system of motivation of your leader.

Answer 10

the manager is trying to get the maximum performance, so he is looking for the best developer and does not spare money for his salary;
the manager is trying to curry favor, so he saves on wages, and kicks the developers away (so that the cow is better milked and fed less ...).

This is a story about business, and business is about making money. Therefore, the business strategy is simple - make money. How it will be implemented is another question.
Now ask yourself - why should you raise your salary? Are you making more money for your company?
It is quite normal to talk to your manager and find out how you can increase your salary, what you should do for this.

Answer 11

You wrote some nonsense in the context of these companies
. There is a market value of programmers of their level, salary dictates the market, some very special approaches to pricing are not used.
There is, as it were, a logical career growth with an increase in salary, plus once a year wages are indexed to the inflation rate.

Answer 12

There are only three strategies:
1) Career growth
2) Professional growth
3) Blackmail by leaving - until they sign a letter of resignation))