Tech salaries have changed significantly over the last year and many companies are growing so quickly that building a comprehensive compensation, rewards and career development program is often an afterthought. This can be an expensive mistake, as losing key talent during any phase of your company's growth is costly. In fact, studies have shown that employees have higher levels of engagement when they understand the purpose and philosophy driving their company’s compensation and rewards programs.
According to The Conference Board of Canada’s latest report, Seeking Support: The Future of Employee Health, it states, "Beyond salary, benefits are the second-most important factor when employees consider different job offers. When asked about their top considerations for accepting a job, 68% of employees said compensation and 57% said benefits and perks, such as flex work and tuition reimbursement."
Teamit’s President & Co-Founder, Alistair Shepherd-Cross joined Annika Reinhardt, Co-Founder of Talent Collective, and Certified Compensation, Global Remuneration and Sales Compensation Professional to discuss compensation practices and attracting and retaining tech talent in today’s competitive and hot market. We dive into five key takeaways from the session.
Learning #1: Develop a proper compensation strategy and career development framework.
Whether you’re a small or large organization, having a compensation and career development strategy is crucial. Annika noted that a compensation strategy is no different than having marketing, business and sales strategies.
“What we are focusing on is trying to identify how we value and reward employees based on your organizational goals and what is important to your current and future employees,” said Reinhardt. It also includes how you are positioning yourself in the market. “It’s really a roadmap for an organization to prioritize how to compensate talent in order to achieve its goals.”
There’s also the compensation and rewards philosophy. This is an employee-facing document that is your communications tool. “I call it the Swiss Army knife of compensation because quite frankly it is a tool that can be used for retention, recruitment and anything that has to do with communicating to your employees around how you value and reward them,” added Annika.
Hand in hand with your compensation strategy is career development. One of the top reasons people leave for another opportunity is due to the lack of progression or career development.
“The basics are having a proper career development framework with proper levelling and competencies,” said Reinhardt. “This includes planning out where people are moving laterally within their jobs and how they can move up.”
Annika also shared that companies are assessing what skills they need and how they can develop the employees they already have to step into these opportunities. When it comes to preparing for the future of work, Paul McDonald’s article in Forbes shares how research from the World Economic Forum (WEF) “finds that half of all employees around the world need to upskill or reskill by 2025 to embrace new responsibilities driven by automation and new technologies.”
Whether you're creating programs to upskill or reskill your employees, this is something leaders need to be planning for now.
Learning #2: Customize your benefits package by asking your employees what they care about.
Benefits packages are trending towards personalization and customization. “Employers don't know what employees or candidates want. And candidates don't know what could be offered and it creates a communication gap,” said Reinhardt.
Annika’s recommendation is to communicate and do a pulse check with your employees by asking them how satisfied they are with your organization’s offerings and what’s of value to them "rather than chasing after the next hottest perk.”
“Find out what your employees care about, where they are in the stage of their life, all these kinds of things that make them feel special, and make them feel that there's a value to them in the benefits package itself,” said Shepherd-Cross. “Yes, it all takes more time and effort. But that's what you have to do these days to be competitive and to be in that 70 percentile plus, you have to put the time and effort in.”
Some of the notable perks Annika is seeing include more flexibility, not just remote work, but other work options such as four days, shortened work weeks, part-time, job sharing, etc.
Alistair also noted that instead of “Trying to keep up with the competition all the time, although it’s important to know what's going on out there, you need to remember who you are as an organization. That's going to be your secret sauce.”
Learning #3: Secure and take care of the people already in your organization.
Regardless of the size of your company, you need to be proactive in this market.
“When people talk about compensation, often it's how do we attract talent. The first thing you have to do is make sure you secure the talent you already have and take care of the people that are within your organization,” emphasized Shepherd-Cross.
In the tech industry specifically, salaries are at all-time highs. When you’re hiring new talent, these new people are coming in and getting paid at these high compensation levels. Alistair noted how this can create a sense of bitterness among previous employees which is why it’s crucial to have regular check-ins.
“The market’s moving too quickly, you need to be checking in, if not every six months, certainly quarterly. You have to be much more intentional and closer to your teams and employees than you’ve ever been,” said Shepherd-Cross.
Learning #4: Choose a pay strategy and create an equitable compensation package.
With the transition to remote work, candidates and employees now have more choices than ever before and they are no longer limited by geographical barriers. What do you need to consider as a distributed organization when it comes to your compensation practices?
Annika said, “It doesn't matter what the pay difference is, you need to pick your strategy. Where are you anchoring your market? What is your market scope? Who are you comparing yourselves to, truthfully? Where are those companies located?”
One area that Annika said causes tension and friction is when things are not equal. "If you're starting to hire in the U.S. and you are offering a retirement savings plan in Canada and you're not offering a 401k plan in the U.S., there will be friction between employees,” said Reinhardt. Although you don’t have to be offering the exact same thing, you must offer equitable pieces. “You can’t create a two-class society,” added Reinhardt.
You also need to decide if you’re paying according to the cost of living, your location, the cost of labour based on certain locations, etc. “It doesn't matter what you choose, you just need to make a stand and communicate that to your employees,” said Reinhardt.
In a hot market like this, there are going to be companies offering ridiculous salaries. Alistair's advice is, "You have to be able to look at that as an employee and employer and go well, that's just ridiculous and we're not going to get caught up in that race."
“You have to remember that you're going to lose people as well, attrition is just part of life. And it's probably more of an issue right now. So, companies also have to get comfortable, as comfortable as you can, because there's nothing worse than losing good people,” added Shepherd-Cross.
Learning #5: Establish what makes your organization unique and create a great candidate experience.
It’s a very competitive market right now and for smaller startups, it can be more difficult to compete for talent. So, how do you attract talent when other companies are offering big bonuses and high salaries?
“Establish what it is that makes you special as an organization and be really great at selling it,” said Shepherd-Cross. “Being authentic carries a lot of weight and it really resonates with individuals when you can do that.”
Another important element when it comes to securing talent and creating a great candidate experience is communication, transparency and an efficient interview process.
“It's so key that you have an efficient interview process. You may think you're special as an organization that you need to interview someone six times and have 12 hours of technical tests but no one's going to wait around that long,” said Shepherd-Cross. “Streamline your processes and identify core skills and what you’re looking for.”
When it comes to compensation, instead of asking candidates for their salary expectations, share with them the journey of the company and their place in that journey. “Don’t play the cat and mouse game anymore,” said Reinhardt. Annika’s advice is to show candidates how you position yourself in the marketplace, how you reward employees for growth, which organizations you compare yourself to, where salaries begin and how they get reviewed.
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You can also check out our hiring and salary guide for businesses working with or developing remote teams in IT:
