You asked for numbers. I probably shouldn't do this under my real name but... who gives a fuck.
US, 29 years old, 6.5 years in the industry. Salary growth has been about 12-14% per year, and I've made a lot of career mistakes, hence fairly average results. I'd probably have done 18-20% if I had (a) not made those mistakes, while (b) switching employers strategically. Most of the growth, as others have noted, occurs when you switch.
Obviously you can't continue getting 20% improvements every year for 40 years, but if you work hard, you should be able to get 10-15% per year for a while, and then you get to a point where it's easier and more fruitful to push for more time and autonomy than salary increases.
What are called "performance" bonuses actually have a lot to do with macroeconomic conditions. One year, at one job, I got a 60% bonus. I was good, but nowhere near the strongest on the team. Equity allotments have a lot to do with what the board will allow. One of the reasons Facebook has been able to get so many good engineers is that the board doesn't set caps on engineer stock allotments, which is the case for many startups. Consequently, Facebook was free to offer 6- and 7-figure options packages (at valuation; not packages that eventually became worth that much) to engineers and get some really credible people, while many startups can't.
When you get into the game has an effect on what you'll make and what your trajectory will be. If I'd entered the market in 2002, I'd have entered in a time when $50k was a good salary for an entry-level software engineer. (No, I'm not kidding.) In 2006, when I did enter, it was in the $80k range. At peak in early 2012, it was about $105k.
Getting an increase usually involves changing companies unless you're in the top 10% for political success and can have a real career there and keep getting promotions. Why is it this way? Well, there are two things to keep in mind. The first is that salaries are low because the company is taking a risk. A good software engineer is worth $500k easily, but the salary is going to be lower because there's a risk that any specific person is not going to be any good. So what happens after someone has a chance to prove him- or herself? Well, that's the second problem. Now you've worked for cheap for a year, and if you ask for a raise, you're asking your boss to pay more for the same work. If you ask for a promotion or better work, then you're a demanding subordinate and that hurts you as well.
Most companies have a "real player" track that involves a promotion (and a ~20% raise, with more potential for bonuses) every 2 years, and an "everyone else" track where a promotion might happen every 6-8. If you end up on the latter track, you need to change jobs and build your own real-player track. I think the optimal leaving point (if you're on the loser track) is around 2 years of employment, because at 2 years you are likely to get a real promotion in your next job (you have to create the impression, though, that you're about to get promoted where you are, even if it's not true) whereas bolting after 6 months will just get you a lateral move and too much of that is damaging.
Salary reporting sites tend to be accurate regarding base salaries, but data on performance-based bonuses and equity grants seem to be dodgy. There's also a hell of a lot of false signaling that goes on there, especially in finance where employers ask about bonus history and everyone claims to have had top bonus.
Don't mean to undermine your point but where in US is 12-14% raise average ? From what I know, most full time employers go for the usual inflation crap of 3-4%. Unless you change jobs or are in contracting, 12-14% seems high to me in the US.
>"Sure, that's average, but why stay at an average company?"
How many years are you talking about being employed? Because doubling your salary every 3-5 years is completely unsustainable. If this occupation is so leveraged that 10% annual salary gains are "average", and 20% are "expected", there is going to be some heartache at some point. That isn't happening anywhere else on the planet.
If this occupation is so leveraged that 10% annual salary gains are "average", and 20% are "expected", there is going to be some heartache at some point.
I don't think "leveraged" is the word you want.
Obviously, it stops at some point. I think most people get to a point where they care more about autonomy and control over their own time than they do about money. Once you can afford to buy a house, raise a family, and take vacations, how much more do you need? I think most people focus on doing more interesting and meaningful work at that point, not pushing up their salary.
But as long as I am going to be following orders and putting my time into others' ideas, I want either (a) a 20%-increase track or (b) enough autonomy to get the skills that will help me along that curve.
If you're just out of school, I think that kind of average is possible in certain parts of the country.
For note, I graduated in 2005, and have averaged about 8% increase per year since then. First 6 years with a Fortune 500 then changed employers, but the average applies even before my employer change.
At the Fortune 500, yearly inflation raises were averaging 2 to 3% but when you're fresh from school you get promoted on a 1 or 2 year cadence for the first few years and each promotion comes with a 5% raise. Promotions don't have to mean your job changes, just your paid grade goes up.
It's quite spot on for the past few years wherein we saw the stratospheric growth of software salaries. Remember, 2002 was right after the dot com bust and 2012 is at the peak of "angel" investing. Supply/demand can really change things.
12-14% sustainable raises for the same position aren't likely - but after x years of experience you should be holding a different, more complicated, and much higher paid position.
12-14% is better than average. I was using it as a euphemism for "mediocre", which it is for a person who lives in a high-COL city (one of the main reasons rents are so high is that career progress is faster out here) and in lucrative industries. When people not 1/10 as talented or capable as I am are, at the same age, making MD in investment banks, being acquired for millions, or making 500+ in private equity, I think it's fair to say that a 12-14% trajectory is pretty damn uninspiring. Money isn't an issue, but I'd be calling way more shots at my age if I hadn't taken so many bad risks (read: shitty startups).
I'm 0 for 2 in picking startups. The first just didn't have legs (our CEO had no idea what people actually wanted and would pay for) but my mistake was to spend almost 3 years trying to make it work. The second had unethical management who (a) tried to use my engineering credibility to justify dodgy personnel moves, attempting to force me to sign affidavits claiming my colleagues were incompetent (they weren't, but they had "too much" equity) and (b) after I resigned, did all sorts of disgusting stuff to try to fuck with my career.
You're right that if you don't change employer or get a promotion, you're unlikely to get a substantial raise. I assume that anyone who isn't promoted after 2 years is, unless they have essentially full autonomy to direct their work, going to start looking elsewhere. You'd be insane not to. Your future is your real boss, because the future is what actually pays us.
I am at a non-US profitable startup where the founders know exactly what people actually want and would pay for, but I wouldn't say the technical side of the start up is good enough to even call mediocre. The "technical" co-founder is more like a sales guy who takes a brief look at the technical side of things one day a week. They've been hiring fresh graduates without any experience. The code is getting difficult to maintain and performance is sluggish, resulting in excessively high server costs. The founders were fresh graduates when they started this company and I don't think they got funded by any venture capital. They have a knack for figuring out what people want and selling to them but I feel they lack technical experience.
I've been interning here for a few months, and they've already asked me to stay when I graduate, so that I can lead the IT team (around 4) on two products, handling software architecture, development process, performance optimisation, etc, etc and basically replacing him and hinted at offering a more than average graduate salary. They were apparently very impressed at my software engineering abilities. (I had done some freelancing work before) I've asked them why don't they consider hiring someone experienced in their 30's instead and they said that's what they're going to do if I reject their offer.
I know how to do what they want me to do more because of what I've studied at university than from my experience, and I feel nervous being given such a large responsibility. I want to work with people who write good code, with projects that already have a good architecture in place. Is that possible or are most companies in similar shape? I also feel that it won't be easy to advance this fast at another company and I could be missing a great opportunity. My friends who recently graduated and are working at large companies tell me they're lucky to write >10 lines a day and that they are always stuck in meetings. There are other startups here but I don't think I'll get offered a salary that's any good.
The fact that they're good at figuring out what people want is not to be understated. That's not common, and most startups fail because they don't produce something people want and will pay for. All the technical muscle in the world can't overcome that. I've worked in two startups (one failed, one was too sleazy to even discuss) and did excellent technical work at both, but that didn't matter in the end because of executive problems. If your "business guys" are good at finding customers, figuring out what they want, and delivering it, that's a major asset.
Here's what you need. Get a VP-level title so you can hire people better than you and not push yourself down, because that's what will happen if you don't have a title. At this stage of the company, titles mean nothing, but at 40 employees, they will.
Now find at least one technical person who's better than you and try to recruit him. He'll be your mentor. He'll possibly want a title once he learns that you have one. That's fine. Make sure the founders are willing to make him VP as well, so you're equals. (You don't want to be the boss of someone better than you, so mandate that the people you hire answer directly to founders/the board).
They only call themselves Directors (who are supposed to answer to VP's), so what title should I ask for? They suggested "product manager", but that is BS because product managers are responsible for the features of a product, while I'll be involved in its development. I've also been told they don't plan to hire another technical person after me for two years. They made hiring decisions before by having votes between the founders. So even if they give me a vote I won't be able to hire/fire anyone I want. I suppose I can convince them later on...
Thanks for the advice, I have a clearer idea of what I want to do now. :)
US, 29 years old, 6.5 years in the industry. Salary growth has been about 12-14% per year, and I've made a lot of career mistakes, hence fairly average results. I'd probably have done 18-20% if I had (a) not made those mistakes, while (b) switching employers strategically. Most of the growth, as others have noted, occurs when you switch.
Obviously you can't continue getting 20% improvements every year for 40 years, but if you work hard, you should be able to get 10-15% per year for a while, and then you get to a point where it's easier and more fruitful to push for more time and autonomy than salary increases.
What are called "performance" bonuses actually have a lot to do with macroeconomic conditions. One year, at one job, I got a 60% bonus. I was good, but nowhere near the strongest on the team. Equity allotments have a lot to do with what the board will allow. One of the reasons Facebook has been able to get so many good engineers is that the board doesn't set caps on engineer stock allotments, which is the case for many startups. Consequently, Facebook was free to offer 6- and 7-figure options packages (at valuation; not packages that eventually became worth that much) to engineers and get some really credible people, while many startups can't.
When you get into the game has an effect on what you'll make and what your trajectory will be. If I'd entered the market in 2002, I'd have entered in a time when $50k was a good salary for an entry-level software engineer. (No, I'm not kidding.) In 2006, when I did enter, it was in the $80k range. At peak in early 2012, it was about $105k.
Getting an increase usually involves changing companies unless you're in the top 10% for political success and can have a real career there and keep getting promotions. Why is it this way? Well, there are two things to keep in mind. The first is that salaries are low because the company is taking a risk. A good software engineer is worth $500k easily, but the salary is going to be lower because there's a risk that any specific person is not going to be any good. So what happens after someone has a chance to prove him- or herself? Well, that's the second problem. Now you've worked for cheap for a year, and if you ask for a raise, you're asking your boss to pay more for the same work. If you ask for a promotion or better work, then you're a demanding subordinate and that hurts you as well.
Most companies have a "real player" track that involves a promotion (and a ~20% raise, with more potential for bonuses) every 2 years, and an "everyone else" track where a promotion might happen every 6-8. If you end up on the latter track, you need to change jobs and build your own real-player track. I think the optimal leaving point (if you're on the loser track) is around 2 years of employment, because at 2 years you are likely to get a real promotion in your next job (you have to create the impression, though, that you're about to get promoted where you are, even if it's not true) whereas bolting after 6 months will just get you a lateral move and too much of that is damaging.
Salary reporting sites tend to be accurate regarding base salaries, but data on performance-based bonuses and equity grants seem to be dodgy. There's also a hell of a lot of false signaling that goes on there, especially in finance where employers ask about bonus history and everyone claims to have had top bonus.