For the past 12 months, leadership has been pushing exceptionally hard to become profitable. To accomplish this, they've been reducing unnecessary expenses as much as possible (travel, events, etc). Last promotion cycle (January 2023), most developers did not receive a raise. Their explanation? To reduce spending as much as possible.
Our latest earnings report shows that we are indeed profitable now. Our stock price has shot up, and is almost at a record high. That's great.
Nevertheless, leadership just announced that our Summer promotion cycle will be canceled, and all raises/promotions will be postponed until next year. Their explanation? Same as before: reduce spending for profitability's sake.
On one hand, I appreciate that we’re profitable. A lot of companies aren’t profitable and never will be. I also understand that we’re a public company, and that stock price matters most.
On the other hand, it seems a bit shortsighted. Imagine that I wanted to cut back on my own spending. Should I starve myself? That’ll save money, for sure. But is it sustainable? Similarly, is minimizing employee compensation and career growth a sustainable way to become profitable?
I forgot to mention that they’re spending hundreds of thousands of dollars to take the product organization (200-300 people) on an epic retreat this summer. Awesome, and much appreciated. But it doesn't quite jive with the stuff above.
What am I missing here? How should I interpret this situation?
Their calculus is just “how low can we keep wages without too much attrition”. Knowing that they have the backdrop of what feels like “always imminent recession”, it gives them a lot more confidence in holding wages down. Similar to how some (but by no means all) inflation was caused by companies knowing that since other companies were raising prices, they could also raise prices because consumers were already primed to think it was inflations fault and necessary.
Is this your company's effort to avoid layoffs? If so I might appreciate that they have thought for themselves and are being proactive to avoid layoffs. This could be a sign of good leadership.
And I prefer to keep my colleagues instead of earning a couple more bucks, but that's just me. (Besides, it would likely me more work for me, too!)
For you, you'll have to decide if the company's future is worth it for your pocket book. You may indeed find more pay somewhere else. When a pay cut and freeze happened to me during the pandemic, the payoff was indeed worth it later because the leadership looked out for us. This isn't especially common though.
Should you take an inflation adjusted pay cut to help the company improve their share price and delay your career growth by up to a year? No, that's a company problem.
Likely if the negative impact of these measures are seen as a net positive (attrition is 'acceptable' and stock goes up), they'll see that these measures are beneficial and continue them.
Your pay is based on the market, when measures like this are introduced, it's a good time to survey the market for your true worth.
There is no sense stressing about factors you can't control. And you're at a _public company_, not a startup, where this kind of worrying would be far more relevant. You have comparatively very little to worry about, but if you are worried, then you should find your next lily pad and get ready to jump to it.
Did management also forego raises alongside devs?
Whether or not the company is behaving rationally is the wrong question to ask I think, all you can change is how you manage yourself.
There's an implied contract at play, companies exist to make money and I work for them to get paid (what I'm worth). If either of these proves false, either party is free to terminate the implied contract at any time. It sounds like they're reneging on their end to pay you what you're worth, so I'd start looking for new work buddy!
whether you are being underpaid at the moment probably depends on your specific skills.
the market is, at the end of the day, a market, and it's up to you to negotiate what you get paid, and to try and make sure that the amount is adequate to your worth.
other than that, I wouldn't take it too personally
Have you considered sharing your specific concerns with your manager? If not, why? Seems like they should be the most knowledgeable with regards to the rationale behind the decision.
If you put up with it this time, you are telling them they can do it again next promotion cycle.
Shop around ... NOW!