In investment banking, your bonus is based on the profit generated by (1) the company as a whole, (2) your team, and (3) yourself. In tech companies, all but the first one are usually 0.
Exactly. Bonuses based on profit generated a much easier to calculate when each employee (or groups of employees) have a direct link to the profit generated. In addition, the profit generated in banking comes in clearly delineated lumps, i.e. you work on a deal that has a start and an end with a short timeframe.
If you're a tech person, how do you determine how much of the profit was generated by that one person? Also, how do you pay based on profit generated when the profit is spread out over the life of the product?
so which engineer is going to do all that backend stuff? Database upgrade testing? Or sysadmin related tasks? Stuff that customers don't directly see? Coz that bonus calculation scheme is going to net them nothing.
Yeah it would run profitably for years if you gutted R&D.
How much profit per employee is not the right way to approach compensation. It should and often is based on what it will take to keep an employee happy.
