Sarah Mei
+ Your AuthorsArchive @sarahmei Software engineer & founder of @RailsBridge and @LivableCode. Currently stirring the pot at @SalesforceUX. She/her. ✨Twitter at the speed of parenting✨ Dec. 26, 2018 6 min read

Cosign. The entry level list is within the realm of possibility, though I think there’s a lot more variation at that end.

I was legit SHOCKED at the difference when I started thinking about a BigCo again, a few years ago, after spending 15 years at small companies.

I’m going to give more details on how this breaks down, because I think it’s important that folks know this stuff, and I had no idea before last year.

First, a Mighty Disclaimer: this is anecdotal, based on conversations I’ve had with other BigCo folks. My & my friends’ experiences are necessarily limited, so please consider it a single data point rather than data.

Ok. First off, that list is not giving salary numbers. It’s giving “total compensation” numbers, which at many BigCos are composed of three things: salary, bonus, and stock.

Generally, employees of BigCos get all three of those things, every year (we’ll discuss exceptions in a bit).

Let’s talk about salary first then dive into the other more complicated parts.

Base salary is the only part of total compensation that is similar(ish) to small companies. Twice a month you get paid (base salary)/24 with all the taxes, social security, etc. taken out. Same same.

Base salaries at BigCos do seem to be a bit higher than at SmallCos, but not ridiculously higher. Most of the difference is in the other parts of total compensation - bonus & stock.

Let’s talk about bonus programs. I never got a cash bonus bigger than a single paycheck at any small company.

BigCo bonus programs vary considerably, but at most of them, employees have “bonus targets” that are a percentage of their base salary.

The bonus target is lowest when you’re entry level (I’ve heard 10-15%, though I haven’t discussed with many folks in this bracket).

As you get promotions, your bonus target goes up, until by the time you’re an executive, it might be 50% or more.

(The differences between executives and non-executives is another whole topic that didn’t really come up at smaller companies, but we’ll have to do that one another day.)

Anyway, keep in mind that as you get promotions your target goes up AND your base salary goes up, so your target is a higher percentage of a higher number. This compounding is important to keep in mind looking at those lists.

Ok, so it’s just a bonus “target” - what does that mean? This seems to be where companies vary the most.

At some BigCos, your individual performance review score fully determines how much of that target you get. If you get a really positive review, you could even get MORE than your target. Think like even a whole years’ base salary or more.

At other BigCos, it’s the _company’s_ performance overall, or some combo of personal & company performance, that determines how much of the target is paid out.

Regardless of how it’s determined, bonuses are paid in lump sums, rather than spread over paychecks.

One thing I’d definitely ask about if interviewing at at a BigCo is how bonuses are determined. From what I can tell, it can have a pretty big impact on culture.

If bonuses are based on your personal performance, you have more direct control over your fate, but it can reduce the incentive to collaborate.

It can also be extra tricky for folks from underrepresented groups to navigate, because statistically, bias means lower review scores.

If the bonus is based on the company’s performance, that can encourage collaboration & drive organizational focus, but it also means when times are bad you can do excellent work but not feel rewarded for it.

Ok finally - stock. I never got actual stock from any small company.

At best I got stock options, which gave me the “opportunity” to purchase stock at a lower price than the shares were worth.

BigCos just literally give you stock. If the company is public, that’s actual money.

The trick is, you don’t get it all at once. You get typically a four-year grant worth X dollars.

Some companies “vest” yearly, meaning you get X/4 of the grant once a year like a bonus. Others vest monthly, so you essentially get a third paycheck for X/48 every month.

It is not unusual for X to be in the high five figures even at entry level. Well into six past that.

At many companies, you can expect a new 4-year grant every year, so this REALLY adds up as you get into 4 or 5 years’ tenure.

So as you’re looking at these total compensation numbers for BigCos, keep in mind that as you go up the experience ladder, the percentage attributable to salary diminishes. That’s why the curve looks so weird.

However, ALSO keep in mind that these numbers are based on a booming stock market, and will go down in a recession. The way most bonus programs & stock grants are written, your salary is the only 100% guaranteed part of that number.

Practically & historically speaking, you’ve been able to count on the other parts as well, which is why these total compensation numbers are thrown around at all.

But then again, once upon a time, you used to be guaranteed to have your house go up in value. ¯\_(ツ)_/¯

So let’s make it all real with an example. Let’s say you get an entry level offer for $120k, 15% bonus target, and $100k in stock.

Your total compensation is then $120k + $18k + $25k = $158k. That’s within spitting distance of the bottom of the  list.

If you get a similar stock grant the following year, even without a promotion, that’s another $25k and you’re suddenly right there on that list...with just a year of experience.

Of course, that’s a lot of “if”s. But you can see how it happens, at least, for folks that can play well in the system.

This structure, where everything compounds from your base salary, makes it really easy to see how pay gaps arise.

White women & people of color are statistically less successful at negotiating starting salary. That problem compounds over time, because bonus & stock grants (which make up more of TC over time) are calculated with that lower number.

If bonuses, promotions, and/or stock grants are based on performance review scores, the gap gets bigger - because then, the bias that created the depressed starting salaries also creates similar depressed review scores.

Google, by the way, is currently arguing with the federal government about whether it has a gender pay gap. Google says it does not, because everyone who gets the same review score gets the same raise.

The federal government disagrees, however, because it knows that gender bias contributes to women getting statistically lower review scores, which in turn leads to lower compensation.

For a company full of smart people, Google seems a bit dense when it comes to statistics.

One final note because so many people have commented on it: yes, these are Bay Area-specific numbers. What’s more interesting to me though is that even within the Bay Area, there is a huge disparity in compensation between BigCos and other companies.

What would be even _more_ interesting is to know whether this BigCo/SmallCo disparity exists outside the Bay Area as well, and whether it’s the same (percentage-wise) as it is here.

This disparity is real. The question is, is it independent of geography, or does it reflect something different about SF?

You can follow @sarahmei.


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