Ask HN: Are any of you salaried under pay-for-performance?
A potential employer just sent me an offer with a 20k reduction in base salary, but 20k added on in bonuses if I meet expectations. Anyone in CTO/programming/IT capacity work this way?
7 comments
I'm not sure why anyone would take such a deal, it's not uncommon for developers to have bonuses tied to performance but I would expect that to be on-top of a competitive base salary and not in-lieu of it.
That's exactly what I was thinking as well.
In context of CTO-level work, pay-for-performance would also seem to encourage meeting reward goals at the expense of a thousand other unmeasured tasks.
In context of CTO-level work, pay-for-performance would also seem to encourage meeting reward goals at the expense of a thousand other unmeasured tasks.
Most CTOs (and generally all senior staff) have incentivized bonuses.
I've never heard of that and unless you are happy with the worst-case base salary I would renegotiate. Having been a part of many bonus systems, I never plan on the bonus money to actually hit my bank account.
Good advice, thank you. I told the employer that since this is a reduction rather than addition, it's more like a punitive system.
I believe if I were to take this offer, the risk/reward would have to be higher, in addition to knowing about partial bonuses and how pass/fail/partial allocation is figured(discretionary vs calculated). So in this example to take a 20K salary hit, the bonus would have to be at least 40K. If you hit it only ever other year, it evens out.
All else being equal, I would say No deal. reduction in base salary is a huge thing. Let me tell you why. Lets say you do take that new job with the salary reduction, best case you get that 20K bonus. Now, if you want to switch jobs, most employers will consider your base salary first and bonus second because bonus is not guaranteed. Your leverage or power to negotiate goes down with a lesser base salary. Worst case, you don't even get the bonus (oh we had a bad year u know) and there u r. 20K reduced base with 0 bonus. Your next potential employer wont care less why u took a reduction. They see reduction, period.
I know i m sounding harsh here but thats the reality of salaries these days. I understand that startups might have a little more flexibility but as a professional with 10 years of work experience, I would never ever suggest to take a salary reduction. You just don't know where you will end up next.
I know i m sounding harsh here but thats the reality of salaries these days. I understand that startups might have a little more flexibility but as a professional with 10 years of work experience, I would never ever suggest to take a salary reduction. You just don't know where you will end up next.
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What about benefits? My current employer values benefits at 22% of one's gross salary. I'm a contractor so they figure if I am going to be an employee that I should work for X - 22% + a non-guaranteed performance bonus of 7-15%.
Benefits are all buy in at group rates, no equity options, so that may be moot in this case. Good point though.
It depends upon the company. If it's a young company that's growing then they might like to give you the salary but can't afford it. By giving you part of the salary as a bonus, it allows them backload the cost.
You won't get it unless it's up front. Common sense should prevail here, why structure it like this except they don't want to pay you?
I think it's a bit of systemic mistrust rather than any underhanded plan. The owner is worried about what he sees as a high salary and wants to bake in some accountability.