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Ask HN: Why do managers get paid more than individual contributors?

by rishirishi on 6/24/18, 2:09 AM with 78 comments

• by pbiggar on 6/24/18, 3:09 AM

  In good companies there are two career paths:

  - a management track

  - an IC (individual contributor) track

  There are different levels on the different tracks, and each is paid for that level. A super experienced IC will be paid more than a junior manager, and vice versa. So it doesn't have to be true that a manager earns more than an IC, and for example many ICs at Google are paid millions of $$, much much more than the average manager (or average IC, of course).

  But when managers are paid more, why is that? Sometimes, the experience needed to be a manager is higher. For example, an engineering manager that wasn't previously an engineer may struggle to manage their team. As such, an engineering manager might have 10 years of engineering behind them before making the leap over to other track, and we don't just start them at the bottom given their relevant experience.

  Another reason is that managers are multipliers. A good manager can take a team of good ICs and turn them into amazing ICs working together as a team. A bad manager might multiply the team by 0.5, or 0.1, but no-one hires a manager expecting them to suck, so you pay them as if their multiplier is 2x (and hopefully fire them if they suck).

  Of course, managers and ICs are different roles in the employment market. ICs often don't like management (which is a challenging, and often very different job from ICing). So they different have supply/demand curves.

  If the above doesn't apply to your workplace, then the obvious thing is true: they pay managers more because they value managers more. Whether that is the right thing to do is clearly in the eye of the beholder.

• by scarejunba on 6/24/18, 3:47 AM

  This doesn't always happen but when it does, assuming economic efficiency and perfect information, there are some good reasons:

  * Managers' actions take effect across the entire team, and therefore having a 1x manager vs a 1.1x manager on a 10 person team is like if any individual (assuming evenness in the team) goes from 1x to 2x.

  * It is harder to find someone who can effectively manage human beings than someone who can effectively solve technical problems. Mildly supportive evidence is the percentage of people who complain about their managers vs. the percentage of people who complain about how hard the problems they have to solve are. Your maximum attainable compensation is the minimum of the value you provide and the cost to replace you, and good managers are rare.

  * In practice, few people are pure managers - they also solve technical problems. Often, they will participate in architecture questions, but not implementation. If they do so, their technical contributions are also on a lever.

  However, there are secondary factors too:

  * Managers tend to have more experience. More experience, until a point, leads to higher compensation because successful experienced people are rarer

  * The depth to which humans perceive contribution to success is limited. A CEO will see whether his engineering division is effectively delivering value and reward or punish its organizational leader. Likewise all the way down the chain. This is leverage in terms of responsibility and risk.

  But the short form of my theory is that where it's true, it's often because they deliver comparatively higher value to the organization.

  If it's true, a consequence would be that the organizations that have a culture of self-organization and alignment will have managers that command smaller multipliers solely on their management skills while those whose members require substantial management (for mediation, communication, or prioritization) will place a premium on managers.

• by iandanforth on 6/24/18, 3:06 AM

  Well let's start by noting that there are exceptions to this rule. A principal engineer in a couple companies I've worked for was in a higher bracket than almost all the managerial levels.

  Next let's explore the ideal case. An engineer is very good at using tools to accomplish work. A good manager should be very good at using/making/helping humans accomplish work. Totally different skill set, but not easy, and potentially very profitable for the company. I think that there is a belief that if you assume responsibility for a team that you are now the primary locus of work getting done or not and thus your risk/reward levels are increased.

  The reality is more along the lines of, "persuasive people end up in control of capital and then pay people like themselves more." Really effective leaders, through myriad strategies both good and bad, manage to take the potential work output of a group of individuals and focus it on their goals preferentially. This is super powerful. They see this as their particular talent and power and, noting how powerful it is, want to compensate others who are doing something similar. This is an admittedly jaded and machiavellian take on management.

• by obelix_ on 6/24/18, 3:08 AM

  Cause handling people and their issues is about 5000 times harder than handling code. Your code doesn't get cancer, run away with a coworker, go bankrupt, have opinions, lie, steal, needs to be told how to use a restroom, needs protection when it's layoff season etc etc etc

• by phamilton on 6/24/18, 3:06 AM

  They often don't.

  But when they do, it's because of leveraged impact. If I'm a 10x engineer, then that's a huge individual contribution. However, if I'm a 2x manager with 12 reports, then my impact is greater than a 10x engineer. That is to say, if I can make my 12 reports twice as productive, then that's a huge benefit to the org. If I'm a 2x director with 4 managers reporting to me, then that 2x compounds through each level of the org.

  Now, a 2x manager might seem far fetched, but so is a 10x engineer if we're being honest. Think about your productivity under your best boss vs your worst boss.

  What is a bit of nonsense is bad managers. But that's a whole different issue, with tomes of academic research (see The Peter Principle) trying to figure out why incompetence is so pervasive in management.

• by apatters on 6/24/18, 3:59 AM

  To answer this question accurately you have to look at it from the perspective of the person who has the authority to make the hires (e.g., C-level, VP, people with financial control).

  Aside from the multiplier effect of a good manager which is mentioned in a few other comments, a manager is someone to whom the employer can delegate responsibility. This is usually the most valued skill set an employee can possess -- if as the owner/CEO/VP/General Manager you can just take a certain area of the business, give it to that person, and sleep easy at night knowing that it's taken care of, that peace of mind is worth any price because you're now able to focus your energy on other areas of the business.

  The same cannot generally be said about any IC (even though in come cases great ICs can have a remarkable impact on the business).

  As you go deeper down a corporate hierarchy motivations may become distorted, but fundamentally this is how it works at the top.

• by notacoward on 6/24/18, 12:30 PM

  Like others, I'll start by questioning the assumption behind the question. I know I've made more than some of my managers, starting at least ten years ago. Many people get this idea very early in their careers, when it's true because they're just starting out and (obviously) their managers are not, but after only a few years of big raises and easy level advancements it needs to be re-evaluated.

  When it is true that managers make more, there's no single reason. On the good side, the effect of a good manager compared to a bad one can be bigger than for an IC. On the bad side, managers get to whisper more in the ears of those who control the money. In between, and most often, let me ask you one simple question.

  * Would you want to be a manager?

  For me the answer is HELL NO. I got close to it once, and didn't care for it. Many other ICs feel the same way. You'd have to pay us extra to give up what we do now for management work ... and so that's exactly what often happens. Supply and demand, pure and simple.

• by pkaye on 6/24/18, 4:00 AM

  Most engineering managers I've worked with were engineers with strong technical background who have good people or project management skills. I had managers who wrote or knew every line in the code base. When someone left they could take over on a pinch and cleanup the mess. These days I think it is more common in startups to promote engineers to management too early before they develop these skills.

• by Osmose on 6/24/18, 3:15 AM

  First, this is not strictly true; many senior ICs get paid more than managers, and the comparison between manager-track job levels and IC-track job levels varies at different companies.

  Part of it is that good managers act as an umbrella for their reports and keep unnecessarily distracting or stressful issues from taking up their time. But that means the manager is dealing with that stress instead.

  Part of it is that managers often have a broader scope of responsibility. Senior managers and higher often have multiple projects under their belt and are held responsible for their continued success.

  Part of it is that the success state of a manager's work depends on the success of other employees, which makes it more difficult for them to control whether they do well by their own effort. A really good manager could be paired up with a really bad employee who eventually has to be fired; did that manager do a bad job since their report got fired, or did they do a good job identifying that they needed to be fired? It's situational, and that ambiguity increases the risk of being fairly rewarded. Higher risk demands higher compensation.

  Part of it is that demand for good managers is high enough that the market prices their salaries higher. Anecdotally, I can say that a bad manager hire has a much worse impact than a bad IC hire, so the stakes are higher, which raises prices.

• by scarface74 on 6/24/18, 5:59 PM

  I left a company where I was the Dev Team lead for a company where I am “just” a Senior Developer. I happen to be getting paid slightly more:

  My experience is that I was much more effective as a team lead than an individual contributor. I was able to do and guide research, do proof of concepts that other people productized and had far more accomplishments guiding a team of junior to mid level developers.

  Now, trying to implement the same kind of changes as an individual contributor is taking far longer. I have more say so over the architectural direction of my team now just based on my expertise and relationships and no red tape (here I’m an AWS admin, at my prior company I had to go through multiple approvals to get anything done), but since I actually have to do the work instead of directing a team, my accomplishments are a lot slower.

  I can see first hand the effectiveness of my manager and his ability to be a force multiplier over my ability to get things done as an individual contributor.

  I’m not complaining, when I had a choice when I was looking for a job I could have been hired as an architect/Dev lead making slightly more than I make now using technology I was intimately familiar with but I wouldn’t be able to grow my technical skills and I like development.

  But the truth is, I could accomplish a lot more with a team of people reporting to me but I purposefully stay in my lane even though my manager and his manager are both pushing me to take a leadership position. I took this job to learn and improve technically, not to manage.

• by marcus_holmes on 6/24/18, 2:59 AM

  Tradition mostly, I think. The old idea that a boss should be paid more than the people they manage, because they won't be respected if they earn less.

• by bsvalley on 6/24/18, 5:32 AM

  From experience, most managers suck, period. There are amazing managers but it’s pretty rare. I won’t get into too much details here as the OP asked for a specific question. But it comes from the fact that a 1st line manager’s job is very close to babysitting, which is not the most rewarding job.

  With that being said, why do managers get paid more? Think of it as parents versus kids. Who has the most responsibilities? Parents... who has collected the most data? Parents... who gets blammed when things go wrong? Parents... who pay the price when things go wrong? Parents.

  That is why manager have a higher salary braket in general. Plus, they usually come from an IC path with a big hands-on experience. They’ve already nailed the IC salary range.

• by crb002 on 6/24/18, 3:00 AM

  Supply and demand. They spend all day in meetings gathering requirements, fighting to fund their staff, keeping their staff from being dragged off onto other projects. Few can do it well.

• by navinsylvester on 6/24/18, 3:42 AM

  Lets break it down a bit.

  # Ideally you don't want managers to write code since that would set them on a path where they can get preoccupied with stuff which is not the big picture.

  # Managers tend to see the big picture and direct the team on its course with good people management skills. This is one of the most significant role in the organization.

  # Measuring the importance of an individual to an organization based on his/her pay package is not the right median.

  # Most software engineers are pampered a lot unlike other profession so they tend to have an inflated ego to assume they are worth more than almost everyone. Just having an ability to hard labor a building construction never meant the person is the most significant!. Not an ideal comparison but hope it drives home the point.

  In most cases people envisioning bigger picture can get paid more but that is in no way an unfair thing.

• by smilesnd on 6/24/18, 3:59 AM

  Because it is the only incentive to make a IC want to change into a manager role. Most of my engineering friends that went from doing interesting things to being manager always reference the need for more money. Specially if they were getting gray hairs or getting their kids ready for college.

• by bowlich on 6/24/18, 5:02 AM

  I would expect anyone in a professional position to be receiving whatever the going market rate is.. which will likely not correlate to a chain of progressively higher pay as you go up the local hierarchy.

  This, at least has been the case for each of the SMBs that I've worked in which managers are purely non-technical and hired for their ability to manage people and projects (can't afford to not have Engineers doing engineering).

  At one place, my direct sup was expected to wear both the manager and Engineer hat (being technical). The next two layers up were middle managers who only managed. Neither layer made more than anyone in engineering.

• by tossaway44 on 6/24/18, 10:37 AM

  It depends greatly on which part of a company you’re at.

  At Microsoft, senior ICs (IC4 and above) make more than managers (typically M3s) in engineering teams but often the tables are reversed in services and sales teams, because managers in customer-facing teams have business targets with direct bearing on their unit/sub revenue.

  I’ve been in both kinds of teams, and there is zero correlation between actual management skills and where HR rates them at, so YMMV.

• by cjf4 on 6/24/18, 3:08 AM

  >does not directly contribute to the work.

  This is, in my experience, generally not the case.

  Setting aside all the implicit indirect contributions (support, development, coaching, personality management, etcetera), managers generally shape work by deciding what work is going to be done, how to mobilize resources, communicating the results outside the team's domain, and being accountable for it. Those are direct, tangible contributions.

• by fizixer on 6/24/18, 3:54 AM

  I've never heard of the term 'individual contributor.'

  Can anyone clarify?

  As I understand teams are built from managerial roles and "worker" or technical or engineering roles. If it has to be a three tier system instead of two, it (typically) consists of a manager, then one or more tech/team lead(s), then engineer(s). I'm not sure which one of these are individual contributors. (or aren't they all?)

• by cel1ne on 6/24/18, 4:11 AM

  The following is simplified.

  Managers are people who enjoy being around groups of people more than they enjoy being around “things”.

  ICs tend to reserve more time thinking and working alone and enjoy talks with individuals more than navigating group-dynamics.

  Enjoyment in groups leads to experience in group dynamics. Experience in group dynamics and having many relationships gets you more chances to climb up the salary ladder.

• by fouc on 6/24/18, 2:59 AM

  That's not always true.

• by badpun on 6/24/18, 8:01 AM

  In Europe, it's often not the case. Here, ICs are often hired as contractors and thus exempt from the pay grades introduced by HR (while managers are almost often employees). Plus, in many countries contractors pay less taxes than employees, so their take-home pay is higher.

• by blizkreeg on 6/24/18, 4:04 AM

  Here's a simple rule for you to know. As you rise in your career and the ladder, you get paid (more) for results, not actions or efforts.

  Managers and leaders get paid more for that singular reason. Shepherding a team to achieve a desired result is harder than it seems.

  Of course there are bad managers...

• by PetahNZ on 6/24/18, 3:01 AM

  Responsibility, managers are expected to keep the project on track and held accountable it its not

• by 6t6t6t6 on 6/25/18, 1:12 AM

  Take a good developer, someone who is motivated and enjoys their job and who has charisma and inter-personal skills.

  Now tell them that they will not be able to code anymore and, intead, that they will have to deal with other developers' problems.

  You need to offer a good raise for that.

• by amriksohata on 6/24/18, 6:55 AM

  In terms of skillset I agree they shouldn't be paid, but what you are paying them for is risk and responsibilities on their head. They are the first to go if something goes wrong as they made the decisions so you paid them for that risk.

• by namank on 6/24/18, 3:26 AM

  Manager jobs are significantly more stressful and harder to train for than individual contributors. And my personal opinion is that good managers are much rarer than individual contributors.

• by bdcravens on 6/24/18, 4:03 AM

  Not in every case, but if a manager previously did the work their direct reports now do, and this is a needed role, higher pay is how you incentivize someone to make that move.

• by ilkan on 6/24/18, 6:45 AM

  Why do waiters make more than cooks? There's your answer

• by aptenodyte on 6/24/18, 4:49 AM

  Two reasons:

  1) they know how much everybody gets paid 2) they can keep secrets

• by RickJWagner on 6/25/18, 1:51 AM

  One of the great secrets that should not be:

  Top-notch technicians (programmers) often get paid more than their managers.

  True story.

• by anoncoward111 on 6/24/18, 4:01 AM

  Nepotism.