Why do managers get paid more (and what to do about it)
Because we’re dopamine-seeking creatures and we love making progress, your career has probably included some moment where you wanted to go into management. Not everyone feels this way, some people identify quickly (to their credit!) what is and is not for them — but for folks hanging off the rungs of the corporate ladder, the next rung up includes prestige, influence, autonomy, more money, and…management.
I’ve heard both of these things a lot:
“I really want to become a manager in the next 6 months.”
“Management shouldn’t be the only way to grow in your career; you need a way to reward individual contributors too.”
Lots of people want to be managers — sometimes because they love the work of management, sometimes because it’s the “next promotion.” A challenge of career pathing is rewarding top individual contributors.
I do think companies need to find ways to reward ICs (as I’ve written before). At the same time, managers tend to make more money than non-managers, and there are understandable reasons for this.
This is aggregate data from the Bureau of Labor Statistics, so you have to be careful applying it to specific industries. But, non-managers pretty consistently make ~15% less per week than the overall pool of employees (including both managers and non-managers).
Anecdotally I have been a manager for most of my career, so it’s pretty easy to compare what my salary has been compared to that of my direct reports. To be blunt, there’s a multiple. Outside of coders and hard tech (where individual subject matter expertise can beat out other factors), managers in the tech/software industry have much, much higher salary caps than ICs.
I’m arguing this happens for a good reason.
The premise of management is leverage (one person, focused on coordination, and multiply output)
“As I’ve said before, I’m not very interested in individual performance; I’m only interested in team performance. I can double a team’s productivity in a month, but an individual? That could take a year. And a whole bunch of individuals? A whole division? A whole company? That could take forever.” – Jeff Sutherland, Scrum
Scrum/Agile are annoying, but Jeff Sutherland has half of a good point. There’s a huge difference between a group of individuals working on similar tasks and a team coordinating to solve a problem.
Here’s a real example: a product management tool that you may have heard of (but I can’t share the name) is currently working to add a B2B arm to their business. This is a big deal because you can’t just sell your existing software to a business — they have different features, different concerns, different sales cycles, and different set-up needs.
Here are some of the things that need to happen for this change to be possible:
The tool needs features (that businesses need and consumers don’t). Sure, to-do lists and task management are useful for everyone, but if you’re going to roll this out to a business, you have to have calendar integrations, notifications, sharing settings/permissions, etc. etc.
Long-term, there will be a sales team. The business might be able to start self-serve, but big project management rollouts are big projects, and enterprise deals are going to need a sales touch. Along with this comes a new understanding of who in a business is buying this software (a specific team? A procurement process? etc.)
Marketing needs to bring in upmarket leads. Right now this business is heavily reliant on paid ads, and their paid is remarkably effective. Consumers convert within ~7 days — but there’s a big difference between an individual willing to spend $20 per month and a team buying $15 seats for 30 people.
Each of these represents a major change to the way things are done. And these are the types of changes that are rarely (to be fair, not never) addressed by individual contributors, especially as a company gets bigger.
In some cases, it might not be possible at all — a rogue developer is unlikely to go build an enterprise feature set, and rogue marketer is probably not going to drum up a bunch of enterprise leads if that’s not what the business is asking for, and if you don’t already have a B2B motion there probably isn’t a salesperson to go rogue in the first place. Even if they did, the features are useless without the leads and the leads are useless without the features.
When I said Jeff Sutherland has half of a good point, this is what I meant. Team output can go way up if you smooth out miscommunications and handoffs — but there are some types of problems that are hard for individuals to tackle at all. A group of individuals (not a team) will probably never switch a company from B2C to B2B, and that’s part of the value of great management.
But hang on, that’s kind of like an executive decision, right? Your typical middle manager isn’t saying “let’s change the whole direction of the company.”
True, and that’s why I would delineate three ways that managers can raise effectiveness:
By setting a direction that a group of individuals would never even attempt
By coordinating resources across departments where individuals are less likely to have relationships
By improving the performance of a team at a relatively narrow set of measurable tasks
The first is what we’ve been talking about. The second is related — managers often are the people coordinating between different departments. The third is probably most management.
Imagine, as a real example from another unnamed company, a support team in a growing business. The number of weekly tickets goes up and up and up, and the requests get more complicated as the software adds features. For a while the company keeps up just fine by continuing to add more support agents, but this eventually causes its own problems:
Support agents are starting to give different answers to the same question
There’s no training system for support. Early on this was fine because the handful of reps would be able to coordinate on questions and the software was simpler, but the quality of support now declines with scale.
Adding raw support agent headcount is a simple but also pretty expensive way to scale support
Maybe tickets get responded to, but CSAT goes down and it’s not clear that support is adequately mitigating churn.
Then a manager comes in and puts these changes in place:
Training tasks for new agents, so there is a standard method to get people up to speed on the platform
Weekly reviews of tricky questions in team meetings, which both highlights great responses from the team and continues to improve the team’s knowledge over time
A library of macros for common questions, with new macros added before new features launch. Greatly reduces the time spent on some of the most common questions.
Identification of the most common support question (which takes 10% of total support time), and a fast-tracked request to the development team to address the in-product UX that leads to these tickets
Migration to new help desk software
Implementation of a new chatbot with new support routing, so that customers who have questions easily answered by help documentation are deflected to that documentation (which is probably what the support person would send them anyway).
The person who puts these things in place is going to be a manager. When frontline support spends 80%+ of their time in the queue, it’s not likely they’re going to propose or implement this type of systemic change.
So this is the argument. As I’ve cited in many places, the most important lesson I ever learned about management comes from Andy Grove.
“A manager’s output = The output of his organization + The output of the neighboring organizations under his influence Why? Because business and education and even surgery represent work done by teams.” – Andy Grove, High Output Management
By virtue of connections across a company and not having to do as much heads down IC work, managers are in a position to improve the overall effectiveness of teams.
There are plenty of orgs with too many managers mucking up the works. There are also lots of bad managers. I don’t put management on a pedestal, but in ideal scenarios this is why managers get paid more — because a great manager can multiply impact.
What does this mean for your career?
“At the other end of the scale history reports that “the men who can manage men manage the men who can manage only things, and the men who can manage money manage all.” – Will and Ariel Durant, The Lessons of History.”
So do you want to be a manager or not?
Some people have a clear answer to this question, some people don’t. Before I got promoted to management, I thought I could go either way. I know plenty of folks who tried management and noped tf out back to IC work, and plenty of others who knew from the jump that they didn’t want to be responsible for (or give criticism to) other people.
If your answer is “no, I don’t want to manage,” great! Clarity is awesome. There are plenty of awesome careers as an IC. If continuously increasing your income is a goal, you may want to explore ways to do so outside of traditional employment (picking up highly valued skills, freelancing, info product sales, consulting, etc. etc.).
If you’re answer is “yes, I want to manage,” I have some follow up questions:
Do you want to manage because of the income increase that comes from management, or do you really love the manager skills?
Do you want to manage because of the prestige that comes from climbing a career ladder, or do you love the manager skills?
What part of management is most exciting to you?
For me, my interest in management was always the ability to scale impact past what I could do myself in 8 hours a day. Remember that people management is not (just) a promotion — it fundamentally changes the work you do every day.
My advice for you, if you have gone through those questions and still want to manage, is that it’s hard to be an effective manager if your goal as an IC is “get promoted to manager.”
Instead:
As I wrote in “what is your job, like really,” your role exists to get a result for the business. It will be so much easier to get promoted if you are getting that result.
As I wrote in “how to get promoted when you’re overworked,” you get promoted after you start to demonstrate the skill set required for your next position.
Diamond Pencils exists because soft skills are hard to learn and few people teach them — but it’s by excelling in your current role and beginning to stretch into manager skills that you set yourself up for promotion to management.