Have you ever thought: “Why do managers get paid more?”, especially when you have no idea what a manager does, except tell you what to do?
Before we dive in, let me clarify that individual contributors can earn more than managers, although it’s less common.
So if you aren’t interested in people management, don’t worry!
You can still earn more than people managers by mastering a specific set of highly sought-after skills. For example, job titles like “Distinguished Engineer” can make more than their managers.
Now, let’s dive in!
What Does a Manager Even Do?
As someone in the technology space, I thought, ‘The people doing the technical work—coding, testing, etc.—are the ones who truly matter. Surely, it’s much harder to learn how to code or sell than it is to learn how to manage.’
I mean, they are the ones actually doing the work, right?
I thought:
- The team does the work that creates the value.
- Managers don’t do the work themselves.
- So, managers no longer create value.
- So why do managers get paid more if they are not creating value?
Then I read High Output Management by Andrew S. Grove, the former CEO of Intel. After reflecting further, I understood why managers are paid more—and why they actually should be.
Managers are Value Multipliers
I didn’t understand what the job of a manager is. Only after reading High Output Management did I learn that managers are value multipliers.
The key to understanding why managers get paid more lies in value multiplication through collaboration.
Yes, manager are no longer coding on a keyboard. In fact, that would be an anti-pattern if the manager is consistently jumping in to help the team.
Rather a manager builds the system that enables the team to effectively collaborate and solve the hard problems.
Think of management as an accelerant.
However, an accelerant doesn’t guarantee good results; it can start a bonfire or a forest fire. This is where management goes wrong.g.
Good vs Bad Managers
Consider the impact of good and bad management on a team’s productivity.
A good manager significantly multiplies a team’s productivity through pragmatic systemization that enhances collaboration. Team members feel the freedom to talk to each other, be honest, and feel empowered to solve problems.
Management is problematic when systems prioritize control over collaboration, especially in the technology space.
The difference lies in the manager’s disposition and skill.
A good manager empowers the team to solve problems by setting up systems that foster collaboration. This approach involves stepping back from details and trusting the team to make progress while staying informed enough to know when the team deviates.
The best part is that a team members often escalates issues before the manager discovers them.
In contrast, a not-so-good manager might establish systems that keep them informed of everything but at the cost of the team’s autonomy and efficiency.
One sign of this is when team members constantly check in with the manager to context, problem, impact, and solution—when they could be solving the problem themselves.
This situation often occurs when a manager thinks their job is to solve technical problems or want control, rather than to address the organizational challenges that help the team solve those problems.
Another bad example is a manager who lacks essential domain knowledge to effectively organize the team. This problem occurs when someone is hired for their people skills but doesn’t have the technical expertise required to lead successfully.
Both types of poor managers may say they want collaboration—who wouldn’t? However, focus on their actions, because ‘Actions speak louder than words.’ More importantly, evaluate their results, since ‘Results speak louder than actions.’
Conclusion
A good manager boosts productivity, while a poor manager creates confusion and bureaucracy. To truly grasp why managers get paid more, consider the stark differences in the outcomes of their management styles.
Just like any role, some practitioners excel while others do not. A good manager delivers more value than any individual contributor, but a bad manager can cause far more damage than a bad individual contributor.
The main point is, managers earn more because they act as value accelerators, creating systems that promote collaboration—one of the most powerful leverage points for value creation.