| A bit of a cynical take (on Hacker News no less) but after being in the industry for a while, my view is that the best definition of “level” is self-referential: it corresponds to the ability of a person to convince others that they are at that level. I also have a definition of what I think level should ideally represent: the marginal contribution of a person’s influence on the outcome of a company, relative to the counterfactual situation where that person never worked there, adjusted for a specific threshold of risk tolerance. In other words, you can consider two hypothetical futures for a company: one with a specific person and one without that person. You then have a probability distribution defined over the difference in outcomes. For someone at a very high level, the absolute area under this curve is large—they have a big impact on the company (whether positive or negative). For someone at a lower level, their impact is small. Someone who is good at their job should hopefully lead to positive impact, but you can certainly adjust this for risk. Perhaps you bring in a CEO who has a 90% chance of tripling the company’s revenue/growth and a 10% chance of leading the company to failure. That might be acceptable for a hypergrowth startup. For a larger and more mature company, you might have a different risk profile. |
I agree on paper that this is a great heuristic, but an employer would be more than happy to pay you a junior or mid compensation while extract senior level contributions from you. I see your point, though, and I agree for the most part.
> In other words, you can consider two hypothetical futures for a company: one with a specific person and one without that person.
This another tricky one - I agree on principal but I have seen this not work out in practice. For example, I have seen very senior people leave suddenly (like no notice period) and the business does not even skip a beat. In some cases, things get more efficient. My point being - employee level and comp sometimes do not map to contribution + business value.
That being said, I observed the above at big companies, where inefficiencies can hide in multiple levels of hierarchy and bureaucratic red tape. Its also why I hate working at big companies.