A debatable issue: Fair compensation for long hours? - Embedded.com

A debatable issue: Fair compensation for long hours?

Employment opportunities have continued their upward surge since I last wrote. Engineers who were putting in 60-plus hours per week are now asking themselves, “Do I need to keep these kind of hours? If so, how could I be better compensated for that?” Thus, several analog engineers I know have raised an interesting question which could be open for debate: “Should engineers be paid on an hourly basis (which would entitle them to overtime)?” “OR should they be paid on a flat salary basis (which has been the standard within our industry)?” And if it's a flat salary base, should that be higher in order to compensate for the consistently long hours?

Employment wise, engineers are more in the driver's seat these days. Employers are now making counter offers to keep their best engineers from seeking employment elsewhere, and the bargaining position of engineers has consequently improved. Billable hours become part of the total compensation picture.

In the last several years, many engineers (if not most) have put in long hours for salaries considered by many to be average at best, with hopes that their stock options would have a value that would compensate them for the long hours. As most would agree, the economic times have had a negative impact on our financial gains. The industry is certainly doing much better now, and this trend should continue for the next couple of years. The hiring trend is still exploding off its lows of the last couple years. The overwhelming majority of both “Start-ups” and larger companies have a culture that encourages their engineers work in excess of fifty hours routinely – especially as tape out on a new IC approaches.

In the years prior to 1990 it was common – especially in the Defense industry – that engineers would be paid on an hourly basis with time and a half for hours worked in excess of forty. Of course at that time there were no stock options issued to employees at the engineering levels of the organization. The sentiment of the individuals I have heard from recently suggests that there is a growing frustration from the lack of financial rewards from the stock incentives. This suggests that an hourly compensation – anything reflecting the skill set and time involved on a project, in fact – would be a more equitable approach (than stock options which don't pay off). If the Government does change the laws regarding “Expensing of Options” (making them less tax-deductible for corporation), this would likely reduce the number of shares given to employees at engineering levels.

If the industry were to convert to an hourly-compensation scheme, it would certainly encounter some strong challenges financially. It would create a major financial strain on the “Start-Up” companies who typically expect engineers work sixty plus hour work weeks. They would be forced to hire fewer people or raise more money from investors to develop their products. This might impair the technological advancement and growth of an industry, historically fueled by garage shops and driven souls who thought that their personal efforts could make a difference! Would the investment community buy into this model, or would they see their return on investments jeopardized?

From the engineers perspective I can understand the frustration of working very long hours for lower salaries, against the promise of decent return on their stock option incentives (often waylaid as the result of an acquisition or flat out company failure). Many of the public companies in our industry anticipate that their engineers will work in excess of forty hour per week (a productivity issue that may or may not go to the bottom line) but established companies will often compensate their workers with competitive salaries, and substantial employee benefit programs. We have seen in the last several months that companies are having some difficulty recruiting engineers because their offers are deemed to be unacceptable to the selected candidates. Companies are again attempting to keep their key people by making solid counter offers and thus reducing the financial incentives for people to leave.

But the amount of hours engineers will need to put in, and the means by which they are compensated for them will play a major role in whether an engineer stays at his current job, or whether he decides to go elsewhere – and, certainly, where he winds up. I would certainly encourage debate on this subject, from both engineers and management. You can start by participating in the QuickPoll on the lower right of PlanetAnalog's home page. Or, pulse me direct at gary@analogsolutions.com.

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