Compensation Challenge: How To Retain Top Programmers

by David Creelman | Posted | Total Rewards

Compensation Challenge: How To Retain Top Programmers

It’s hard to attract and retain the best programmers, and compensation managers are bound to run into this unique argument:

Good programmers are worth at least 10x more than average ones.

There’s even research that supports this differentiation. However, even if you buy into the idea that the top programmers are 10x better, you probably don’t want to change your pay range of $70-90k to $70-900k.

This provides a nice, juicy topic for compensation professionals. Since our pay systems are not designed to reflect 10x performance variance, what should we do?

Defuse the 10x programmer compensation debate

Start by acknowledging that you don’t need to do something extreme. In most cases people will raise the 10x debate for one of the following reasons:

  • They feel unappreciated compared to their peers
  • They hope it will earn them a higher raise
  • They want to see how you’ll respond

If these are the reasons the issue comes up you can defuse the debate by listening to concerns, improving recognition, and considering that increase in compensation. None of these responses involves a significant change to the compensation system.

If better recognition solves the problem, it’s worth it to avoid getting dragged too deeply into the question of whether some people deserve 10x the average pay.

Test the validity of a 10x better claim

Things get more interesting when it looks like your star performer may leave or not take a position unless you pay well above the top of your pay range. In this type of situation it becomes a matter of understanding the strategic contribution of the individual. 

The work of Boris Groysberg serves as a caution; he showed that stars in investment banking rarely retain their star status when they move between firms—the implication being that their high performance reflects the team and circumstance, not an inherent quality of the individual. We are right to be skeptical of anyone who is painted as superstar.

It doesn’t really matter if a person is 10x better than average, all that matters is if they will add 10x as much value to your organization.

It’s also possible that you may need some unique reward solution to attract a star, but it won’t be as extreme as paying 10x as much. Investigate what total reward solution it will take to retain or attract this person, and don’t be too narrowly focused on pay.

Develop a creative solution for high performers

What happens when we reach the conclusion that the strategic impact of an individual easily justifies paying them 10x the average? In this case, a compensation professional should step up and say “Yes, we need to make this happen, and quickly!”

How do you do that? Well, not by making any changes to the compensation system. The most obvious solution is to set this person up as some kind of free agent rather than an employee. The specifics will vary, but there are many ways you can cut a deal once you are clear about what you need and what the individual wants.

Do you really need a superstar?

Humans have an inherent love for heroic tales. In times of stress people want to believe that if they brought in a hero everything would be fine. Managers who claim they need a superstar may be revealing that they don’t how to cope and are betting on a miracle. Don’t dismiss the possibility that they are right and this hero really will turn everything around. However, it’s important to be sure they aren’t chasing a dream.

Lessons learned about high performers and compensation

There a two important lessons to be learned:

  1. We need to protect the sanctity of the normal compensation system unless it’s required.
  2. Complaints about compensation may be more about factors that can be resolved without making big increases in pay.

Regular performance conversations are important because they help facilitate bringing up issues before they transform into demands for higher pay. These conversations are also a place to set performance expectations with employees and clarify how the pay system works.

Finally, it is true that some people are worth 10x as much as the average pay for their area of expertise. We need to be willing to recognize when that is the case and craft unique solutions to retain these high performers.



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