Stephen Bosch

Stephen Bosch

Compensation is correlated with the level of abstraction

06 Sep 2021- Stephen Bosch
4 min read

I grew up in a family that placed a high value on professional qualifications. My mother was a teacher, my father an engineer, and after many years of resistance I eventually trained as an engineer myself.

Dad started out as an journeyman electrician and eventually went to university and became an engineer. For someone climbing out of poverty this was undoubtedly progress. This strategy had been wildly successful for him and so it should not have been surprising that he advocated it for his children.

Engineering training is famously hard. (A physician acquaintance once remarked to me that an engineering career was out of the question for him, owing to its heavy reliance on math.) The personal sunk cost is enormous. I made considerable sacrifices to achieve this qualification, so it seems a waste to not apply it.

And yet, I make the following observation again and again: the best compensated people in a business or business unit are not those doing technical work.

I had believed in the idea that because the business could not exist without the technical core function, that this core function was perceived as most valuable.

Working out the how vs. asking “what and why?”

What we value is socially constructed. It has people at its centre. To the extent that technical work is valued, it is because it is serving an idea of value, an idea that enough people hold in their heads to make it possible to build a business around it.

There are managers (who often lack technical training themselves) who do not appreciate the difficulty of doing things in the real world. They treat the business like a machine, thinking that all they have to do is turn the dials on the inputs to make it produce more. Perhaps you find it as hard to respect such people as I do. They are memorable because they disrespect the engineering profession, are terrible leaders and give the practice of management a bad name.

But there are other kinds of managers, leaders who understand the challenge of scientific and engineering work. Who understand that people are not interchangeable parts. Who see their role as one of sensing trouble early, listening and observing, quietly moving the mental and physical furniture when necessary to make everybody’s work just a little easier. Who provide a vision so clear and credible that contributing to its achievement feels like the most natural thing in the world.

These managers exist. But they are rare. And so those never fortunate enough to work with such a good manager are left with a model of technical leadership that they associate with mediocrity. With mental dullness. And they think, hell no, I don’t ever want to be one of those, never realising that if doing technical work is hard, then managing people is twice as hard, and managing people doing complex technical work is three times as hard. And it is different hard. Because human beings are complex, moody, sensitive and often unpredictable creatures and the work of making complex things is delicate and time-consuming.

The three-layer model and compensation

Consider the following three-layer model:

  1. At layer 1, you do the work of solving the problem.

  2. At layer 2, you decide how the problem should be solved.

  3. At layer 3, you decide whether you have a problem at all.

Work at different layers of abstraction is compensated differently Technical work lives at layers 1 and 2. The people earning the most are almost always at layer 3.

Value is created on the workbench, but leverage is created through integration. Consider 10 individual technicians each creating 1 unit of value. If one good manager raises overall productivity by 30 % by helping the entire team function better, then that manager is worth the equivalent of 3 technicians to their employer.

In general, the higher the level of abstraction (that is, the further away from technical detail work one is) the better the compensation, provided of course that one brings special insight to the job. That insight can be acquired doing technical work. And to be an effective leader, you do need to understand how technical work is done.

So technical skills are the table stakes.

We need both

Businesses need both technicians and managers.

Still, more and more technical detail work is being taken over by machines, and this trend is not slowing. Wherever machines become prevalent, incomes drop. Ironically, even the work engineers do is increasingly threatened by automation.

But one thing machines cannot yet do and aren’t likely to be able to do in the medium term is to synthesize ideas. To think intelligently not just about the how, but the what, the where, the when and the why.

So if you want to increase your professional income, switch the layer of abstraction.

P.S: I still believe that people doing technical work are not getting their fair share of the value they create, and that should change.