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High Tech Wages - Salary or Hourly?
cremes asks: "I'm a technology manager (not a PHB) at a Financial Services firm, and I've recently bumped my head against another dreaded management issue. Most of my employees are salaried with a rather weak "overtime" compensation package. I've asked them if they want to go hourly, but there is resistance. I promised them I would Ask Slashdot what the country & world are doing about high tech wages and the feelings about flat salary versus hourly (+ time and a half). So, how are most of you paid? Salary or by the hour?" We've discussed the amount that you think is fair compensation for this industry, so it's only fitting we talk about how that amount should be earned.
From your short description, it sounds like the weak overtime is not really a problem for your co-workers - if it were, they'd probably jump at your suggestion. Is it a problem that they are not eager enough to put in extra hours to get the job done? Is that your problem? Because if it is, you need to look at working conditions other than pay - find a way to make folks care about the project, care enough to be proud when a milestone is reached, and when you've reached that state they'll be more than happy to discuss perks like the amount of overtime pay. If the work is uninteresting, the amount of overtime pay is irrelevant, folks will leave at five no matter what.
:-)
Of course, I'm over-simplyfying, but you really didn't give me much background to work with
-John
While it has a few drawbacks, I like being salary. If anybody asked me to punch a clock, or fill in a timesheet, I'd quit that job immediately. I'm salaried with NO bonus for overtime except for the fact that I'm very well compensated to begin with, given my workload and such.
I like getting the same amount in my paycheck. I like the comfortable feeling knowing that 'if i work 30 hours for 2 weeks after putting in 4 70 hour weeks, it won't hurt my paycheck.'
Honestly, if you put me on hourly, I'd put my resume out to a recruiter, even if it were equivalent. Hourly pay feels very temporary.
Tech people prefer two things in a job.
RULE #1. It's fun
RULE #2. It pays well
Now how does this apply to hourly/salry wages?
From RULE #1 we know that timecards are bad because we don't like to fill them out. It is a nucience and why should our employer care if I took a two hour break to play Quake3 Test?
From Rule #2 we know that people on salary who don't get overtime pay get really razzed.
Solution:
if salary
then hourly
if hourly
then salary
or
Just give them a salary, and a bonus if they are clearly working hours above and beyond 40hrs a week. Duh.
bash-2.04$
bash-2.04$yes "Don't you hate dialup connections?"| write USERNAME
Although it's perhaps not unexpected that permanent employees see money as the principal advantage of working freelance, that really misses the point entirely.
Contractor rates are higher only as a side effect of the main advantage, which is that you are independent and you negociate as a peer with customers and with agencies. This does translate into higher rates of earning, yes, but it has a much more important effect than just that. You're free, free of the corporate politics, free of the need to take crap just to stay on the career ladder, free to speak your mind as an independent computer professional rather than being just a cog in a machine. If you're good then technical management appreciates you regardless of whether you're permanent or contractor of course, but that's not true of PHBs and top management; they don't appreciate techies at all, so don't feel any qualms in making them pay decent market rates for their lack of appreciation that it's technology that underpins their business. Quite possibly they'll appreciate you more when you stand out on their spreadsheet.
I'd recommend it to anyone that knows his or her stuff. Far from lacking in job security as permanent staff would have you believe, it is an extraordinarily secure form of employment in the current burgeoning Internet environment where skills are the main bottleneck to corporate expansion online, as long as you site yourself within commuting distance of one of the corridors of activity. You'll never look back.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
The thing that can make salary a pain is when management starts to view your marginal cost as zero. In other words, they can heap as much work on you as they like, and it costs nothing extra. This is an obstacle to efficient management. Too often, they'll have you work on some old hardware that could be cheaply replaced, but to their eyes, you can fix it for free. You end up maintaining things that aren't worth maintaining. In the short run, they save some cash, but it inevitably means that something else gets dropped or delayed, and it's lousy for marale. But many PHB's think they're smart because it looks like they're getting something for nothing.
Hourly with a guaranteed minimum has always provided the proper incentives and delivered the best results, both for me and for the employers.
I don't recall exactly where I read this information, but IIRC:
...unless you work in data processing/information systems.
- Professionals are defined as people like lawyers and doctors. They aren't supposed to be paid overtime.
- Everyone else *IS* supposed to be paid overtime...
-
Some lobbying group got the US Congress to set up the laws to allow salaried IS/DP people to work overtime but not require them to be compensated for that work.
In any case, most employers don't want to pay overtime anyway.
In my own life, I just came out of a firm where I was working 50-60 hour weeks for the first three months of the job. "Comp time" wasn't intended to be used more than a week or two past the original overtime, and there was no way that I was going to be getting paid extra. I managed to salvage the project but there was no recognition of that fact, nor was there any increase in pay or compensation. This convinced me that if you're salaried, you have less incentive to actually do the work after a point--I'd get paid the same amount when I came in at 10am and left at 3:30pm as when I was coming in at 7am and leaving at 6pm.
I'm glad that I chose consulting and contracting. The firm I work for pays my W2, they let me bill hourly, and I get vacation. I also am compensated well enough that I could get by with less hours worked, but I get incentives for billing over 40. And the benefits are better than most of the traditional salaried positions would offer.
All in all, I think it's more fair to the employees and clients to only bill for hours worked. A salaried position is like a fixed price contract where you know how much money is coming, and if you work more or less hours, it doesn't make any difference. That's not a good contract for myself or my clients. I would much rather be fair to them and myself by billing for work done and only billing for doing nothing when I'm on the client's premisis, waiting for things to blow up or looking for things to fix.
Chris
I work as a "contractor" according to UK practice. Hourly paid freelance, but hired out on 3 month+ terms for fairly static contracts. If I wourk 41 hours, I typically bill it as the agreed 40, because there's management pressure not to have worked the extra hour in the first place. If I work 50-60 hours for weeks at a time, I bill it and get rich and exhausted.
Do I care between salary and hourly ? Not a bit of it -- I care far more about the other issues; the staff management culture, the project management culture, the nerd interest in the work and the quality of the office coffee. I often have great difficulty in finding my next contract; it's easy enough to find "a contract" and it's pretty easy to find the best paid contract (because that's all that the agencies see as significant). It's much, much harder to find a contract I'll be happy with; one that has a good atmosphere and interesting technical aspects.
As for security, salaries aren't secure anyway (these days). My security comes from a month's living expenses in the bank and a skillset that I keep up to date. I've worked in plenty of offices where the employed staff expressed horror at my "insecurity", then have found themselves downsized a month later.
As a contractor in the same company:
And the list goes on...
For me the choice between being a contractor vs. a salaried employee is a no brainer. I think anyone that does a good job would find that choice easy.
I know that the question was salaried vs hourly, and that hourly is not neccessarily being a contractor. But contractors ALWAYS are hourly, so I think the comparison might illustrate what an employe might gain if they go hourly instead of salaried.