That seems a bit reductionist to me. Basically I think there are a lot of spots where a software developer provides say 500k a year of value to the company, and the company is looking to hire a person for about 150k a year in total comp. But if they hire somebody for 200k a year, it is not as if they are going to get rid of the person, it is still +EV for the company. And while the company might not be quite as delighted with the latter's value proposition, the employee is far better off negotiating aggressively and trying to "win". And as to why the company would not just try and wait and find a person for 150k, it is generally because good software developers are hard to find, and it is easier and lower risk to "overpay" a bit rather than lose out on a good hire.
Sure reality is often very complicated. However there is one thing in my experience that I want to contribute, which to me was non-obvious when I realized it. Which is that in large companies often times once you are hired your manager effectively cares very little about what you are paid. Their expectations are more or less the same whether you are paid 150k or 200k. Because often HR is in charge of negotiations, and then the manager just comments on performance, and not performance relative to pay. And also in my experience extra pay can improve performance. In my current job I negotiated my pay 65k higher than the initial offer, and thus did not feel bad at all about paying for a 4k apartment which is a 10 minute walk from work. As a result of my commute being negligible I perform much better at work and am far more rested than some of my colleagues who commute to save money. And my manager does not care why my performance is good, all he knows is that it is, and that is reflected in my evaluations.
This is so true. And I don't see a solution for it unless there is a closer collaboration between HR and the manager. This is often very hard, since the 2 are usually in different orgs with different goals and priorities.
Ultimately, it basically means that it is in the employees interest to negotiate very high at the beginning... since there are very few forces that will increase their salary once they do join a company.
