Improving Engineer Retention in Tech Companies
Why don’t tech companies pay engineers more to stay? - Ethena 🔗
Tech companies often struggle to retain talented engineers because their compensation structures are designed to minimize costs rather than reward long-term employees. While engineers gain valuable company-specific knowledge over time, they often receive better pay by switching companies, leading to high turnover rates. The author, who has experienced this firsthand, advocates for a transparent and impact-based compensation system at Ethena, aiming to pay engineers above market rates based on their unique contributions. This approach is believed to foster longer tenures and greater organizational success. Ethena plans to develop a clear and public compensation formula that factors in title, tenure, and performance, while also addressing the challenges of measuring impact fairly.
Why do tech companies struggle to retain engineers?
Tech companies often have compensation structures that prioritize cost savings over rewarding long-tenured employees, leading engineers to seek better pay elsewhere.
What is Ethena's strategy for compensating engineers?
Ethena plans to implement a transparent compensation formula that considers title, years of tenure, and performance to ensure that engineers are rewarded fairly for their impact.
How does the article suggest companies can improve their retention of engineers?
By paying engineers above market rates and creating clear career paths, companies can encourage longer tenures and enhance overall organizational success.