Company Culture

How to recruit technologists when you can’t compete on salary

Skyrocketing tech salaries are shocking even the experts. Here are four tips companies are using to stay competitive.

Compensation matters to prospective hires, but it's not the only factor.

(Photo by cottonbro from Pexels)

Written by Technically Media CEO Chris Wink, Technical.ly’s Culture Builder newsletter features tips on growing powerful teams and dynamic workplaces. Below is the latest edition we published. Sign up here to get the next one.


The experienced CTO couldn’t believe it.

His fast-growth tech startup with a modern tech stack, fast-moving interview process and vaulted tech team made a flattering offer for a senior mobile developer role with a $185K base salary. The candidate turned him down. Turns out the candidate had eight other offers.

In more than 20 years of tech hiring dating back to the dot com bubble, he had never seen anything like it. In truth, in nearly 15 years of reporting on tech hiring, I’ve never seen so many aghast looks from entrepreneurs, executives and HR pros either.

Earlier this year, to paraphrase economist Robert Solow, you heard about tech wage inflation everywhere except the data. Turns out average tech salaries have continued to cool, down 1.1% in 2021 — but not for the reason you might expect. Hiring tech talent right now is so tortured a prospect right now that companies have sped their rate of hiring more junior developers. Those relatively lower salaries have brought down the average. On the ground, though, the story is clear. The Great Resignation has been supercharged by an existing technical talent shortage and surging investment in private businesses with a preference for software-enabled companies.

Advertisement

As one engineering manager put it to me this week: “The data is fucked.”

I’m hearing two split strategies: Hire fewer more senior developers, or lavish attention on mid-level developers.

Pre-pandemic, Technical.ly found meaningful disparities in salaries by geography tied to differences in cost of living. That gap may be closing. I still find those hiring in the Bay Area, New York, Boston and DC are hiring a premium — which has historically proved true. But the eyes look blurrier in traditionally lower-cost markets like Baltimore, Philadelphia, Pittsburgh and others.

Exasperated, an early tech employee at a low-cost-city startup said they lost a QA lead to a FAANG company that offered more than double his base salary: $285K. “Yes, now I’m competing with them, too,” he said, echoing others. One tech lead told me he once hired mid-level front-end React developers around $100K. He’s seeing $130K as the start now. He and others I quizzed this week put the current premium on technical talent at 10% to 25% higher than what was already dear pricing. But this isn’t only a low-cost market story.

The CFO of a supply chain platform startup with 250 employees that hires in a high-cost market emailed me his own lamentation. Wage inflation is even higher at the engineering manager and principal technologist levels, he wrote: “We are all performing detailed comp analyses with planned right sizing to go into full effect Jan. 1.”

Broadly, I’m hearing two split strategies from the most experienced tech team builders I know: Hire fewer more senior developers, or lavish attention on mid-level developers. One variable between these companies is their financial position. Some are well-funded startups; many are rich and others are in weaker financial positions for a variety of reasons. Across them all, I continue to hear a trickle of stories of hiring managers who are sitting out bidding wars as they try to cool surging salaries.

From a dozen or more recent conversations, I’ve heard at least four ways that companies are adapting their hiring process.

Speed your hiring process

One CTO told me he recently hired a senior engineer with a base comp of $160K that might sound fanciful today. How? He promised and delivered on a painless single-day, two-hour hiring process. The developer just wanted to get to work and ignore today’s madness.

Sell your company’s mission

The founder of a bootstrapped, mission-focused startup has a respectable developer earning $80K. Another has a contract web developer that makes meaningful contributions at $50 an hour. How is that possible? Both companies are mission-first, culture-rich and upfront with their technical talent about their financial limitations relative to a broader marketplace. They’ve found engineering talent who are not optimizing for their highest earnings but do have other priorities.

Develop your employer brand

A company pays with its employees with reputation. Tell a compelling story about what you stand for, why you’re different and who you are, and you’ll contribute to your competitive advantage. (We at Technical.ly help with that.)

Offer your employees mentorship

Many employees with long-term vision prioritize professional development. A former engineering manager at an edtech startup building in Django and React shared with me that he felt his recruiting superpower was to communicate that he really would offer mentorship to the mid-level developers he pursued. Paired programming and collaborative projects are rare, but they offer lasting learning for ambitious technologists. Mentor-orientated senior tech talent may be valuable for attracting and retaining talent right now.

###

Compensation matters. You may not be able to meet the demands of a candidate looking to maximize their take-home salary. In some ways that could be comforting. An impossible feat is best accomplished in an unusual way. Spend your time looking hard at why your company is a great place to work. Prioritize people. Invest in your current team. Spread joy. Work hard. Have fun.

How will surging tech salaries play out? I asked that seasoned CTO.

Even among cash-rich VCs, he says everyone understands there is an upper limit to rates of growth. Once there was a Series A Crunch. The next 18 months might see a tech salary crash, in which startups can’t outpace their own compensation commitments. Maybe there will be more Better.com stories. But salaries don’t go backward. Hope for inflation to slow by the summer, and productivity to grow.

The CTO added: “That doesn’t change what’s happening right now, though.”

Sign up for the Culture Builder newsletter -30-
Subscribe to our Newsletters
Technically Media
Connect with companies from the Technical.ly community
New call-to-action

Advertisement