December 13, 2006 by jimstogdill
Information Meritocracy – The Mythical-Man Paycheck
I’m not an economist or sociologist but I do hire the best people I can and then try to hold onto them when they’ve proven themselves.
This seems to be getting harder.
Fred Brooks’ 1975 seminal essay, The Mythical Man-Month, made the now widely accepted claim that a talented software developer might be as much as ten times more productive than an average developer working on the same tasks. It turns out that in software, like in many “Information Economy” roles, individual intelligence, experience, and education can have a tremendous impact on productivity and innovation.
This has always been true, but I don’t think as much as now. In the industrial age people with talent could get promoted faster etc., but certainly couldn’t produce ten times the product on a production line. In fact, the line’s speed was set to the slowest station.
Interestingly, in Fred Brook’s day, industrial-age pay approaches still applied to software workers despite the wide standard deviation in productivity. The desperate need for talent that stemmed from the combined dot com boom and Y2K seems to have broken that model and has ushered in an era of much wider standard deviations in pay (though still no where near as wide as the deviation in productivity that is its forcing function).
There are a few things that work together to make retention difficult in a pay-for-merit world.
* Everyone knows someone who makes more money than them. In an era of wide pay distributions, it is isn’t difficult to play six degrees of separation and find a Google Gazillionaire.
* Not everyone is an Objectivist (thankfully), but everyone that has ever read Ayn Rand’s Atlas Shrugged identifies themselves as a top ten percenter. No one self-identifies as average.
* Salary’s won’t likely match productivity’s 10X distribution, but pay in the form of founder’s stock can fill in where salary’s leave off for the really talented as It is getting easier to start a company. Capital is easier to come by and the combination of OSS and readily available virtual hardware makes less of it necessary.
Countering these trends is difficult. Organizations are strained when the distribution of pay gets too wide as word gets out. More than ever retention depends on things other than money. Opportunities to develop and exercise new competencies, a sense of meaning in the work, working with smart and passionate energized people, openness, a good working environment and interesting problems all help.
I suspect there will be wider impact from these trends than just my difficulty with employee retention.
Will it become more difficult to sustain the middle class when egalitarian manufacturing jobs are displaced by meritocratic information-age jobs? Boomer-era middle class jobs were widely distributed across high-paying manufacturing industries. Is the talent, passion, and education for innovative information-age roles as broadly distributed?