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I work in a small company of less than 50 people. We are currently not measuring any developer's performance in terms of quality or schedule, but there are few clear underperformers who are on good pay. Also, there are few who are doing really well.

As an employee, I find it really difficult to negotiate my pay with my manager. My manager says:

  • He is not able to convince the CEO to give a good pay raise because he just doesn't want to.

What I think is wrong:

  • Because the manager is not measuring anyone's performance, he can't provide it to the CEO when discussing pay raises, hence he fails to negotiate on my behalf.

What I am considering suggesting:

  • Measure performance; cut pay or stop giving pay raises to underperformers, and give such raises only to those who perform well.

Note

Please keep in mind that I was hired on a lower rate than they usually hire. I have been working really hard for 7 years and have not reached average market rates.

Very important note

I can see a lot of potential to get a good pay raise based on hundreds of factors. For example, the way the CEO doesn't care about how much we pay for an employee's training (such as £5000). At the same time he won't give £500 extra in a pay raise.

Am I presenting myself as greedy by proposing pay cuts to underperformers?

Update for comments

@Magisch for your answer

Because no clear objectives are set, there is no way to measure performance, and I can't ask for more responsibilities to get more pay.

154

The main problem here is how your attitude toward your co-workers appears. Wanting to be paid a fair rate for your work is reasonable; proposing a system in which (you hope) other workers will be paid less so that you get more makes you look disloyal, not a team player, and just plain not nice.

Your co-workers will not like this if they discover that you are proposing it, and this will also reflect negatively on your character with management.

A secondary problem is you are telling management that you know how to do their job better than they do. This never comes across well.

There is nothing wrong with performance-based pay in the abstract; the problem is that the proposal is coming from you as a way of hoping to get a raise. Also, pay cuts are very rare. They are a big negative for employees and usually only happen in exceptional circumstances (such as the company is about to go under).

What should you do? Decide how important this is to you. Are you willing to keep working at the current pay-rate, or is higher pay essential? What raise would you require to stay at this company?

If you are not willing to work at your current rate:

  • Look for a better job.
  • Negotiate for a better salary (and be willing to leave if you don't get it).
  • 59
    I think you nailed it. The chief problem seems to be attitude. There is nothing wrong in pursuing better wages. There IS a problem with trying to do it by cutting the throats of your coworkers. – Richard Says Reinstate Monica Apr 29 '16 at 12:47
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    If there is currently no way to determine someone is an underachiever then I fail to see how the OP can make a case against it. There's nothing wrong with being frustrated that people you believe are underperformers are getting equal deals when you feel you worked harder. In such case it's far better to simply quit and find a new job rather than trying to convince your employer that you need better and they need to punish others. – Dan Apr 29 '16 at 13:25
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    I was thinking of posting something, but saw this one and can simply +1 here. Taking a pay cut approach provides positive incentive to no one. One of the things you have to remember: you are ALREADY upset that you don't meet industry average as you perceive it. How much harder will it be to get good help when you pay even less? They paid low, they got mediocrity. Put your energy into helping them see the reward of paying you and others more for well-measured and incentivized work. – ThatGuy Apr 29 '16 at 14:41
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    @JeffO, the boss might tell someone else about the idea? Even if the boss only tells another boss maybe eventually someone tells a colleague? These things happen, especially at a small company where things may be informal. – user45590 Apr 29 '16 at 14:58
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    I'd take issue with your point that "there's nothing wrong with performance related pay in the abstract". My experience, of working somewhere where everyone at the same level was paid the same, which then changed to a performance-related bonus structure, was that the majority of people who lost out were disgruntled and de-motivated by a larger amount than the 'winners' were motivated. . . – peterG May 1 '16 at 23:48
56

It has been my experience that if you start out underpaid, you will never catch up to market rates at that place. This employer has demonstrated to you repeatedly that employee pay is not a priority for them. If you want a large pay raise, move on.

Now on to the other problem. First there is no good way to measure performance for developers. Any metric you propose is going to be flawed and people will game the system to get better scores.

Anytime I have seen a company try to make performance metric based, the mediocre workers ended up with the best ratings because the great performers didn't fit the metric very well and were not willing to game the system. For instance, the best performers are often given the hardest tasks. It is is lot easier to get bug free performance when you are doing the same simple task over and over than when you are being given the problem to solve that no one else is capable of even taking on.

From a metric standpoint, this means the guy who is simply creating web pages with simple inserts is likely to show up better than the guy who is designing something from scratch using a technology nobody knows because the current methodology won't do what is needed. So a metric based way of determining underperformers is out.

Using peer-reviews is equally flawed; they turn into popularity-contests.

Management doing the reviews based on subjective criteria is flawed as well but at least a good manager actually knows who is producing the best work. Sadly, not all managers are good managers and many will be fooled by people who are not the best performers.

Next, no two people will evaluate the performance of another person exactly the same way. Those you consider underperformers may not be considered that way by others and especially not by senior management. Underperformers to someone else in the same rank are often the ones who are very good at office politics and so to management, they are the stars. It doesn't seem fair, but most of the time the people who are good at office politics are the ones who will get the highest raises. That is just the way the world works and if you want to get more money you have to accept that and learn to play the game.

This is where most people fail because they have a ridiculous prejudice about playing office politics that lets the snakes who claim credit for other people's work win the game. If you don't play, you can't win. It is as simple as that. The underperformer who is good at office politics will beat out the high performer who is not, but can't ever beat the high performer who also takes the time to learn how to play the office politics game.

Suggesting pay cuts to underperformers is something that is bound to cause your co-workers to hate you and to make sure that they do everything in their power to make sure you fail and are the one to get the pay cut. This is a very bad idea and has a strong possibility of backfiring on you. It is not in your own best interest to make such a suggestion.

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    +1 Very thorough. The running joke in IT for the past few decades was that anything useful out there, if it were turned in for a grade would get an "F", including the internet itself. Excellent points. It is VERY hard to determine performance by any sort of arbitrary standards. I had to fix a very structured, very well laid out, textbook perfect piece of code that didn't work. The fix was a bit ugly, but it works. Who wins? – Richard Says Reinstate Monica Apr 29 '16 at 14:06
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    @ThatGuy, the worst performance rating system I ever saw came from peer ratings. People will rate down the best people to improve their own standing. Just because Microsoft does something doesn't make it a good idea.. I am with Deming, performance ratings should be abolished altogether - they are harmful to organizations. – HLGEM Apr 29 '16 at 14:50
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    Or you can give the points to your friends. – HLGEM Apr 29 '16 at 15:14
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    I once got hired to reduce the size of a bloated code base. My productivity was measured in lines of code produced. – Simon Richter Apr 29 '16 at 16:31
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    @SimonRichter Did they at least let you stick absolute value bars around the number? – user38933 Apr 29 '16 at 21:34
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Three points to this:

  1. It's my experience that the single best way you can increase your rate of pay at a company is to find a job at another one. Go through the interview process, get that other job that pays more, and then present that to your current employer. The added trick here is that you have to be willing to actually take that other position, because a lot of the time they still aren't going to say yes, and on top of that if you're just doing it as a thing then a lot of CEO types can smell that from a mile away.

  2. In second, and frankly a distant second at that, is to do research and demonstrate that you're being underpaid compared to your level of experience or whatever. Glassdoor.com, for example, lists average salaries for positions. That's a start. It's always possible that your employer doesn't know that they're underpaying you and they'll get you that raise (not by magnanimity, though, by fear of losing you).

  3. What really doesn't ever work, though, from an employers' standpoint, are pay cuts. Time and time again it's been demonstrated that when you cut an employee's pay, the good ones get dissatisfied and find other positions and you're left with only the bad ones, who are probably also dissatisfied and are probably not going to be giving their all any time soon. One of the reasons why inflation is generally seen by economicists as a good thing is because it means that year after year people who don't get a pay raise get a de facto pay cut but the mechanics of it are obscure enough that most don't realize this. In short, if you "offer" the notion of lowering your co-workers' pay, what that really means is you want your mediocre co-workers to quit.

Yeah, this is a bad idea from top to bottom. Even if Monday morning quarterbacking your boss was a good idea, and it rarely is, this is just not a good idea from the standpoint of the company.

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    That's worth a +1: My employment experiences suggest that employers almost never give 'hefty' pay rises to someone already in post, but will for those in danger of leaving, and will for new hires. If they don't have a decent pay policy in the first place, they never will. – Sobrique May 1 '16 at 8:21
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Measure performance, cut pay or stop giving pay rises to under performant, and give only ones who perform well.

Thats a great way to become a target for the frustration of underperforming coworkers and to come off to your boss as wanting more for yourself at the expense of others. Depending on the character of your boss, this could be a devastatingly bad move. If you proceed with this, you should frame it differently, like:

"Hey Boss, I noticed you can't convince your boss to give us salary increases, maybe you could tell me how I improve my performance or become more visible to make this easier for you?"

That sounds way less bad, in my opinion.

  • Please see my update – Mathematics Apr 29 '16 at 12:22
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    My answer still applies. If he sets you guidelines for improvement, that implicitly means that he has to start measuring them. – mag Apr 29 '16 at 12:22
  • How can someone tell me to improve when they don't clearly know my abilities as they are not measuring it, your suggestion has been tried and unfortunately it didn't helped me at all – Mathematics Apr 29 '16 at 12:23
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    @Mathematics The idea is to inch your boss towards doing so, without directly calling into question his management style or being confrontative about it. – mag Apr 29 '16 at 12:25
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    @Mathematics His point still applies – Richard Says Reinstate Monica Apr 29 '16 at 12:32
5

You have quite a few issues with your idea.

First, you make the assumption that a "good" coder is more valuable then a "bad" coder. This just isn't the case. I would put the good coder more towards complex code issue and have the bad coder handle the simple issue and more of the "people" issues (like organizing meetings or handling support staff). Now, which one is more valuable? It's not as easy to answer as who is the better coder.

Second, your assuming that a pay cut can/will happen. Taking something away from someone is not as easy as giving it to them. In fact, as an employer my self, I can tell your it's much easier to fire someone then it is to take back a $0.10 raise. There are HUGE concerns with cutting people's pay. Without a really good reason, it's just not going to happen.

Third, you don't know why the owner doesn't want to give a pay raise. Maybe your just not that valuable to him (in his eyes). A lot of times people think that their skill are work $100 so they should get $100, but the fact is that if I have hire 3 people for $30 each, and get the same work, heck I just saved $10. There for your only worth $30 to me, regardless of your skill.

Fourth, Once your hired, you've shown that your fine getting $30, so why should I give you $40. If I have to give everyone $40 now I'm at a place where I should "work you till you quit" and go hire a new $30 guy.

Fifth, You don't know that clear metrics are not defined. I routinely set metrics that I don't share. Sharing a metric is a good way to have it exploited or gamed. That doesn't mean that all metrics should be a secret, but some very well may be.

Sixth, $5000 for training is cheaper then a $500 a year pay raise. I can write off training as a expense. I can "make it back" with new development. A raise is just wages. There is generally no way to recoup the cost of wages. (They are a flat expense, rather you write awesome marketable code, or pick your nose).

Seventh, Maybe they don't need good code. I run into this a lot. A business needs the code it needs. A crappy developer, that's dirt cheap, might be exactly what they need. If I need a ford escort, and I get a mustang, that's awesome, but I'm still not going to buy a mustang. Heck I might even give it back so I don't have to buy the insurance or taxes.

All in all, this company is paying you what they think your worth. If you disagree, then find a new company. Proposing your plan only shows how much you don't know about that business.

Note:

I say "I" a lot in this answer, and while I do own a business and I do have employees, and most of the stuff here is correct, I want to make it clear that, some of it is bogus for the sake of making a point, and that issues of pay v.s. value v.s. skill are not as simple as it seems in this post.

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    Thats the problem. All things arent equal. Maye that bad coder is awesome at meetings. Maybe they are the king of spelling. When trying to figure out the valud of an employee, you have to look at many factors. – coteyr May 2 '16 at 2:11
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    @JoeStrazzere The thing is, people always imagine a coder's quality as a single value - that simply isn't true. Maybe he's fast-to-market. Maybe he's great at communicating with the customer. Maybe he's great at anticipating people's needs. Maybe he's a great team leader. Maybe he's the only one who can handle a horrible legacy system they've inherited. Heck, he might just be awesome for morale. All of those are qualities, and someone can have all of them and still be called "a bad coder". This isn't unique to software development, of course, but you do often wear a lot of hats. – Luaan May 2 '16 at 6:47
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    A huge margin, possibly. Lets pretend I am a great code writer. I can do some pretty amazing things. That said, I suck with people. I am at my best writing code in come dank room with poor lighting where no one can disturb me. However that doesn't play well with clients. So the company hires a developer with crappy writing skills that can do the important job of requirements gathering. The new guy, sucks at code writing. However, he has a lot of value, because he can interact with the client, and allows me to sit in my dank closest and write awesome and wonderful code. – coteyr May 2 '16 at 13:46
  • The fact that this bad coder can, on occasion, write a for loop without seg- faulting, means he can be assigned to some easy tasks. Both the good coder and bad coder have a large value to the company in that setup. – coteyr May 2 '16 at 13:49
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    There is also a huge assumption that the "under-performers" are unacceptable performers. Just because the OP thinks he is better than they are doesn't make it true and doesn't make it mean they are not valuable to the organization. If the company considers their performance to be acceptable, there is no reason to deny them raises or cut their pay. It is not the OPS call as to who is underperforming. Any employee that you don't fire is deserving of at least cost of living raises. – HLGEM May 2 '16 at 15:09
1

Even if it'd be a good idea for your company to cut your allegedly under-performing coworker's wages (and it probably isn't a good idea for the company, either, as pointed out in several of the other answers) suggesting to do so as an employee is a bad idea and bound to back-fire, due to the psychological, social and office-political reasons also already mentioned in the other answers.

So what could you do instead?

You can ask (or even demand) equal pay for equal work

If performance cannot be measured or estimated, people who are given the same type and difficulty of tasks and are expected to perform similarly on them (due to comparable level of education and experience) should be paid the same.

Whether that is achieved by raising your pay or decreasing others' pay (or a combination of both) is then the employer's problem, not yours. Of course, if they only decrease your coworkers pay, you don't gain anything. But because cutting wages is usually a bad idea for the employer, too, they'll be unlikely to do that. Much more likely is that you'll get a raise.

Now, what equal work (except for equal duration) and equal difficulty are, is of course very subjective. To demonstrate your skills, you can suggest to switch tasks with some of your better-paid coworkers, so that your managers can see whether you can do that coworker's tasks just as satisfactorily as that coworker. Suggesting this is only a good idea if you're talked to that coworker in advance and they have agreed to it. So talk to a better-paid coworker that you get along with well, and who is also renowned to perform well. Even better is, if you can get your coworker to suggest the temporary task switch to your manager.

More viable is to have your better-paid and also-well-performing coworkers vouch for you. They are (and your managers probably know that) the ones who can estimate your contribution and (unmeasured) performance best, especially if tasks are tackled in close cooperation, where individual performance cannot be measured by definition, as a team can work better or worse than the individuals in it would work alone. If these people tell your common boss "<Mathematics' real name> helped me a lot recently. And he/she is also doing great work on his/her own tasks. Don't you think he/she should be paid the same as me?", that will count for quite something.

A word about experience: It is important (and you might have to make that clear to your managers) that the current experience i.e. including your experience gained in your current employment is considered, not the experience from back when you joined the company.

You can ask that low-paid or underpaid employees are considered for raises before already well-paid employees ...

... completely independent of whether performance, experience, difficulty and type of tasks are measured or estimated. People with low wages have more need for a raise and also gain more happiness from a raise of the same total height, than an already well-paid person does. And happy employees are more productive than unhappy ones, so a company might want to spend raise money where it produces the most happiness.

This suggestion, too, will have stronger impact, if you make it together with other coworkers, especially if already well-paid ones are also amongst them.

Now why would the already well-paid employees agree to that at all, thereby diminishing their own chances of getting (more) raises? Well, if you aren't working with a bunch of psychopaths, many of your well-paid co-workers will feel (or even know) that they themselves would gain more happiness by working with happier co-workers than by getting another raise.

That doesn't mean they'd agree to a cut for themselves, to enable a raise for you. Pay cuts make unhappy, even if the affected employee still has more than enough money afterwards. Psychology isn't rational.

1

Not as greedy, as unprofessional. Don't make your managements problems your problems. They should provide you an appropriate pay, and you should do good work. In the same way in which it is not their task to write a function in C, it is not your task to think about economic realities for the company. If they can not afford you, bad for them. If they can afford to treas you badly, bad for you. If they wrongly think that they can treat you badly, and forget about it later, bad for both (sad, but i have seen it).

In my experience hinting at the possibility of leaving, or comparing your salary to a reasonable baseline works much better with management than proposing based on subjective justice. If your salary indeed is lower than your peers and your performance is better than your peers, your managers can (and will) make a risk vs. cost evaluation and possibly give you a rise. I never saw that a comparison to co-workers salary wise has ever done anything good.

The way in which salaries are made has a number of factors. Intelligence and knowing your business are not the only ones. I am exceeding my co-workers in many disciplines, however, I understand that I have a simple problem (salary-wise): I am not well controllable, and really hard to pressure to do sth if i believe that it is not right. In case of a project in politically complicated situations, I would not be on my own list of people to keep under all circumstances. Moreover i prefer not to be at the top limit of my salary class, since then i will also not be the first one to go in financially troubled times.

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