Startups Finding the Best Employees Are Actually Employed

http://www.nytimes.com/2015/06/25/technology/personaltech/start-ups-finding-the-best-employees-are-actually-employed.html

by adamsi • 11 years ago

89 64 11 years ago

nytimes.com

walshemj2• 11 years ago

Not to go all Michael Gove here does the NYT not have subs to correct grammar /meaning it should be "Are Actually Employees"

Title as written implies something totally different - ie the its hard to recruit

zem2• 11 years ago

i first read it as "hard to recruit" too, but it's grammatically correct, just ambiguous. i wonder if the ambiguity was actually deliberate on the headline writer's part.

SilasX5• 11 years ago

It's not just ambiguous, but wrong. For all X, the best X is is an X.

To convey the meaning they want, the title should be "the best (workers|peformers) have employee status."

As it stands, it reads like a statement of the fizzbuzz phenomenon: "the best employees are are already employed somewhere else [and not still looking]".

eli• 11 years ago

It's not a great title but changing it to "the best employees are actually employees" is worse

netcan• 11 years ago

Having a good PR company can be a massive advantage.

This is a whole NYT article spun out of "company hires employees instead of contractors." A long one, and it sounds like they're doing something revolutionary and trend changing.

davidgerard• 11 years ago

If not nickel-and-diming your workers counts as good PR, then good.

pjc503• 11 years ago

This is bizarre, especially alongside the "We need to rethink employee compensation" article. On the one hand you have the Uber-style workers who are being treated as much like interchangeable, disposable parts as possible; and on the other you have the development staff who are hard to recruit or replace but are increasingly dissatisfied with being paid partly in lottery tickets.

Maybe "move fast and break things" has reached the point where we're regretting what's been broken.

itgoon• 11 years ago

Less "move fast and break things", and more "maximized maximization" overkill.

You see it all through these threads: any turnover costs money, a sub-optimal employee costs too much, everything comes down to cost.

Okay, I get it. IT is a cost center. A good company should minimize those costs. There's a point of diminishing returns for everything, and I think we've long since passed it in compensation.

I think things would work better if various managers and leaders could accept that they just aren't that smart. Rather than try to squeeze every last bit, accept that they can't, and build it into their businesses.

That would mean scheduling time and money to handle turnover. Which would mean running a little "fat" all the time. Since the only metric that matters is "cost", then that doesn't happen.

So, an employee leaves, everyone else falls behind trying to not only make up their work, but make time to hire and train someone else. Schedules and budgets are blown. Everyone says "we have to do something", to justify being called "leaders".

We've reached a point where everybody is out of ideas. There may some tweak here and there that can be made, but this is it. This is as cheap as things are going to get.

The sooner employers figure it out, the sooner things will get better.

a3n2• 11 years ago

Since the only metric that matters is "cost", then that doesn't happen.

That cost is short term cost, which as you point out is just accepted instead of long term cost.

We've probably reached the point where MBAs and the like have very few olives left to remove from the employee salad.

pjc503• 11 years ago

(Replying to self as outside edit window)

I've just remembered that the definitive treatment of "why are companies structured the way they are, instead of a cloud of contractors?" is Coase's Theory of the Firm from 1937: http://www3.nccu.edu.tw/~jsfeng/CPEC11.pdf

rrss1122• 11 years ago

"Move fast and break things" worked when valuations were sky-high and stock options could have been worth something. With interest rates going up and valuations coming down as a result, we are definitely going to start regretting what's been broken.

DanielBMarkham• 11 years ago

I thought this was going to be a story about finding new workers, but instead it's a story about the latest media topic: subcontracting versus hiring employees. The author looks to be coming down fairly heavily on the side of hiring people instead of using subcontractors. In the article's defense, it does present some of the other side of the argument -- later on in the piece.

I think this is all going to shake out over the next five years or so, with these markets bifurcating into a more expensive model using employees, and a less expensive model using contractors. Each will have benefits and drawbacks.

I couldn't help but think of a recent interview with one of the LinkedIn founders I read recently. As you know, LinkedIn facilitates a lot of recruiting -- and poaching -- across many industries. The writer asked the founder how, since he saw the massive churn in IT, did he go about hiring people?

His response was golden: as part of their hiring and employee management process, it's made clear that any full-time job is probably temporary. So there are clear goals that both the company and employee have for growth in order to reach their next level. The employee might want to work in several new technologies and gather up some skills they are missing. The company may want to enter a high-risk, high-stress market to see if there's a business model there. Everybody gets something they want and the relationship is understood to both be temporary and mutually-beneficial.

I like this. This is the model I use when assembling and managing technology teams, and it's the model I've seen work over and over again. Quite frankly it's the only model I can see working in a rapidly-changing economy. The real question is how you apply this model to more mundane service-oriented industries like Uber.

toddan• 11 years ago

I dont get it. Why do they not invest in hiring less experienced developers and make them the best employees.

It may cost more in the short run, but if you invest early in a developer with little to no experience you get the opportunity to shape that developer into your tech stack and company.

pjc503• 11 years ago

Conventional answers to that question:

- hard to select based on "potential", especially in a nondiscriminatory way

- devs are hard to teach; risk it may not work out, which is additional risk startups do not want

- process is time- and energy-consuming at the best of times; detracts from growing the product and business

- if you train people, they will expect to be paid more

All three of these are somewhat true. Really it's the giant employers (Google, Microsoft, Facebook, Apple, IBM, Oracle) that should be training graduates, rather than startups with tiny funding. But employees don't appear on the balance sheet as an asset, just a liability.

brlewis• 11 years ago

I don't know which part of the article you're referring to, but in general it's best to have a variety of experience levels together, and that's how you help less experienced developers grow. Hiring only one or the other isn't a good option.

yummyfajitas2• 11 years ago

Some people do that. A friend of mine took such a job - her first developer job ever. I told her to take the job, learn from the training and earn 2x-3x her previous salary as a secretary. Then I told her that a year from now she should start looking for an employer who will pay market rate and won't spy on her reddit account.

If you do invest in less experienced devs, make sure you can recognize the ones that are too naive to realize when their value has gone up. Maybe also use psychological tricks to give them impostor syndrome.

chralieboy• 11 years ago

And that's why companies don't provide a lot of training. Turnover is incredibly high in SV. Most people stay at jobs for 2 years, so if it takes a year to get them to the equivalent level you're making a large investment for little return.

To answer the question of "why not just pay them more to keep them?", it isn't always that simple. Two years is a long time in startup land, meaning the equity component offered by a much smaller company can be really compelling and unreasonable for the parent company to match.

It may make sense for the employee to take that job, but it also therefore makes sense for the employer to not train them if they think they're going to leave.

anbotero4• 11 years ago

To be honest, yeah, you stated EXACTLY one of the reasons they would never want to invest in training you: because the first thing you are thinking when you join what seems to be a nice company is leaving.

Of course they can simply make a calculation on how much time is required to get that training costs out of you, and I believe companies which offer the real absurd perks already have so much money that they just need to flush it out and maybe save taxes on the way of people leaving.

unimportant• 11 years ago

Of course, creating “good jobs” entails costs. Managed by Q’s workers get an “above market” wage, plus full medical benefits. “They are the same benefits that our programmers and engineers get,” Mr. Rahmanian said, because “we didn’t want to create a company that had a divide between people that worked in headquarters and the others.”

That's just common sense. If you pay the same salary that some outsourcer pays you're looking at a high turnover that will be more of a headache and cost factor than 3-4k extra a year above the average wage for someone in customer support for example (which is a tiny amount compared to engineer salaries anyway).

Munchery, a dinner delivery service, pays drivers a base wage that exceeds the minimum wage, plus their driving expenses, plus tips. Taken together, it comes out to about $23 an hour in San Francisco, far higher than most other delivery jobs. Those who work more than 30 hours a week also get health and retirement benefits.

I don't know about Munchery and will give them the benefit of a doubt, but usually companies that offer full benefits for 30+ hours (don't they legally have to do this anyway in SF?), they just cut anyone off at 29 hours.

Also the "taken together" "wage" is highly misleading if it includes costs of gas and all the other expenses that one has to pay for a car, in a city where one doesn't even necessarily have to own one.

Basically the whole story is about common sense, as min wage or slightly above contractors obviously don't tend to be very loyal or excited about their work beyond lip service, as pretty much anyone doesn't see this as a long term situation and will just switch to the next best thing whenever possible.

Employment contracts on the other hand come with notice periods, non compete etc. that will make switching jobs a lot more of a hassle and make anyone think twice if they really want to do it.

sveme2• 11 years ago

Has anyone ever seen a non-compete clause on service jobs like delivery car driver or cleaners? Just curious, that would take the thing to a whole other level.

protonfish• 11 years ago

Jimmy John's http://www.huffingtonpost.com/2015/04/10/jimmy-johns-noncomp...

walshemj2• 11 years ago

mm a whole 2 weeks notice in the USA and actually non competes are hard to enforce even where they are legal.

bad_user2• 11 years ago

If you’ve ever wondered why there are such vast differences in quality between Uber rides you’ve taken, this is why: Beyond customer ratings and warnings, Uber can’t tell drivers what to do.

The author is implying that if Uber drivers were employees, then they'd behave better and the experience would be more consistent.

That's just bullshit. There's nothing special about the employee status, the only difference being that the employment law applies. But there's always a contract in place when hiring contractors and if anything Uber can demand much more from contractors than they can from employees. And if you want proof to the contrary, you only need to look at taxi drivers, many of which are employees of bigger taxi companies.

Then there's also the issue that the article is comparing cab drivers with highly skilled professionals, the kind that end up working in startups.

pmorici• 11 years ago

I think you are mistaken. Most taxi drivers are not employees they rent the taxi from the company on a per shift basis.

bad_user2• 11 years ago

It depends on where you live. In my city many of them are employees, I know because I've got some acquaintances in the business. And we're still having the same poor service just like everywhere else.

NoMoreNicksLeft• 11 years ago

He's not necessarily implying that.

He's saying that the "set of employees" would behave better than the "set of contractors" that they'd have as an alternative.

It does not mean that these sets would be identical, people-wise. The first set would contain different people, possibly with little overlap.

That alone makes it possible to have a vastly different culture.

We could argue about why the two sets wouldn't be identical, but some mechanisms seem obvious enough that I don't see the point in that.

iamthepieman• 11 years ago

"Man surprised when alligator, bought to serve as lap-dog, bites off hand"

The real debate is not sharing economy vs entrenched service providers or contractor vs employee it's why companies (and the investors who give them money) think they can have their cake and eat it too with regards to employee loyalty and employee status.

You can only buy customer and employee hearts for so long with quirky parties and hip ads. Eventually you have to treat people right.

glesica• 11 years ago

My (least) favorite is job ads that list "working for a startup" as a "perk". Part of the problem is that startups have been romanticized so heavily that working for one has become its own reward in the eyes of many. As you pointed out, this kind of delusion only lasts so long.

thoman232• 11 years ago

Well, once you've whiled aways enough years under the fluorescent lights of your local MegaCorp, you can begin to see the comparative appeal of startup land.

noarchy• 11 years ago

According to the Internal Revenue Service, a business that hires an independent contractor is not entitled to dictate how or when the contractor performs a job.

Maybe things work differently in the US vs here in Canada, but here "independent contractors" are often treated like employees, particularly in IT. You'll often see such contractors, who are technically working under their own (solo) company rather than for the client - working alongside salaried employees, doing the same work, under almost identical circumstances.

jofer• 11 years ago

It's the same here in the US... The company I work for hires countless contractors that are required to work set hours and treated exactly like employees, except they're not given benefits, etc (in principle, they're paid more, though).

The biggest oddity is that I know of several "contractors" who have worked full-time for the same company for _multiple decades_ that are now being laid off with no severance and no warning.

Obviously, that's the advantage from the company's viewpoint, and you don't go into one of those roles without being aware that it could/will happen, but still... I've never understood how being a "contractor" somehow completely sidesteps employment laws.

_yy• 11 years ago

https://en.wikipedia.org/wiki/Misclassification_of_employees...

SilasX5• 11 years ago

I saw the same when I worked at a defense contractor. These workers did the exact same things as regular employees, and the only thing different about them was a company name on their badge and their names being in all-caps on the roster. (Or maybe if you spotted them making a photocopy of their custom time sheets.)

It's a reminder to me of how far the accepted practice diverges from the law as written, in which this exact arrangement isn't supposed to happen. (Just like racial/destination discrimination and underinsurance and abuse of contractor status aren't supposed to happen with regulated taxicabs.)

Wrt benefits though, I've worked in such a role myself (after moving to the Bay) and the contracting company covers them.

kyllo• 11 years ago

It doesn't sidestep the laws. Most likely these people are misclassified and the employer is breaking the law.

This is why Microsoft only allows contractors to work at Microsoft for 18 months at a time, with a mandatory 6 months in between contracts. They got busted for misclassifying employees as contractors.

logn2• 11 years ago

In the US I more often see "contractors" who are official employees of a consulting firm and work alongside and onsite with normal employees of the firm's client. If the client ends the contract, the firm will soon fire you if there's not other work. I tend to think this is the worst of both worlds for the actual worker.

stephengillie• 11 years ago

Working in an at-will employment state, I find the difference between this kind of contracting, and FTE, to be equivalent.

  * You can quit/terminate your contract at any point (though some have penalties)
  * Your employer can fire/terminate your contract at any point for almost any reason. 
  * If there's no work, you're out of a job.
  * Salary and benefits packages - contracts tend to balance toward salary 
    and FTE toward benefits, but almost everyone provides *something*.
  * FTE coworkers and contractors intermingle - everyone's human, everyone eats lunch.

makeitsuckless2• 11 years ago

The same happens in the Netherlands. However, that doesn't mean that it's legal. It's just that it's so convenient for both parties and IT contractors are so well paid that nobody challenges it.

I assume this is the same in most countries. IT contracting in it's current form is only viable because it's well paid and IT workers are rarely organised.

(And there's a major vested interest in keeping it this way, hence the rapid removal of this excellent article from the frontpage of HN yesterday: http://socialistworker.org/2015/06/24/class-capitalism-and-t... )

wsc981• 11 years ago

I work as a contractor in The Netherlands and currently wouldn't want it any other way. The payment is indeed good and there's plenty of work available for the (at least somewhat) capable developer, so in fact this puts the developer in a very powerful position.

Also, it seems we still have a shortage of qualified IT personnel in the coming decade(s), so there's little reason to stop doing contract work and become a permanent employee.

randomname2• 11 years ago

Regarding the removal of that article: it's not "vested interests" flagging that necessarily. Many users (including me) may have either found it offensive or overly political, and flagged it because it consisted of inflammatory political ranting where the political talking points distracted too much from any substance that article might have had.

bpyne• 11 years ago

When I was a contractor I had more control of my hours. Employers preferred 40 hours, but would accept less depending on their situation. Other than that, I worked alongside internal people and did the same work.

exelius• 11 years ago

This happens a lot in the US too; it's unfortunately a side effect of the hiring policies at most companies. Many companies would prefer to pay $150,000 per year to a contractor than pay $100,000 per year plus benefits. The contractor route gives you more cost certainty, plus when you lay off a contractor by canceling or refusing to renew the contract, it doesn't count as a layoff. Using contractors this way allows companies to respond more quickly to negative economic conditions, and at a lower cost (you often have to pay severance to employees).

josefresco• 11 years ago

No offense, but these startups by nature have NO IDEA if their employees-over-subs strategy will work. There's one quote in the article from a VC who says the following:

"When you look at the level of churn amongst the employee base and the customers, the high reviews from workers, the high customer-satisfaction rating — they were proving it from hard-core business metrics.”"

No mention of revenue of course, just user-survey style measurement. Also, a quote from a VC who invests money into the subject of the article is not exactly unbiased.

What about data from long established businesses, who have moved from subs to part-time and full-time employees?

"Full stack startup" reads more like a marketing strategy then one created for long term financial success.

brockers• 11 years ago

I thought this was an Onion headline at first.

Startups Finding the Best Employees Are Actually Employed

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