5 Myths About Tech Hiring in 2020. The Truth Will Surprise You
Hint: They all have to do with salary
When things took a turn for the worse in March, businesses shuffled to stay afloat. From negotiating rent contracts to company-wide pay cuts, most had to adopt a nimble approach. With a unique position in the market, affix saw first-hand the range of effects on businesses of all sizes.
Startups had concerns around continued investment. Enterprises had concerns about overall uncertainty. ‘Survival mode’ was in full effect.
But despite headlines around the country, not all was doom and gloom in the world of Aussie tech.
History shows us the tech sector is one of the most recession-resilient sectors out there. Just take a look at the tech giants that emerged from the Global Financial Crisis in ’08. And although 2020 brought on a whole new host of challenges, the tech jobs market has remained as steady as everyone hoped.¹ Many businesses remained untouched, while others even thrived.
Yep, you read that right…
For many, growth has been both inevitable and essential to their success during the pandemic. And yet, there’s been more caution than ever around hiring than I’ve seen in my 20-year career.
Caution is normal. Expected, even. But partner that with a generalised assumption about the state of the market (e.g. lots of talent but few jobs)? And you get some employers offering salaries far under market rate.
I’ve seen these experiences all across LinkedIn. I’ve heard the stories from mates in the industry. While money is only one piece of the puzzle, it’s a big one that we must address. Because the truth is, the repercussions go far beyond a few (uncomfortable) conversations.
Here are 5 myths that seem to be pervasive in the tech jobs market today. The truth about them could end up hurting your business more than you realise.
Myth #1: The market is saturated with unemployed people
Redundancies seemed to be a hot topic of conversation earlier in the year. While some had to let go of employees, others quickly took advantage of the new talent on the market.
Take Brisbane-based Flight Centre and Virgin Australia, for example. With the travel industry taking one of the earliest and hardest hits, these two companies were forced to make much of their development teams redundant. Leaving many talented developers looking for their next big thing.
Brisbane scaleups fortunate to be in a cash positive position quickly hired many of these devs, knowing they wouldn’t be open to opportunities for long. Once again highlighting the fast-paced nature of hiring in the tech sector.
So chances are, the developer you’re talking to is going through the process with more than one business.
That’s why it’s in your best interest to be transparent about the salary package from the beginning. Offering a salary under market value makes amazing talent turn towards the next offer that comes their way.
Now more than ever, being competitive is crucial to hiring and retaining the best talent. Because your shortlist of talent won’t wait around forever.
Myth #2: Candidates expect to be paid less during a recession
The type of talent you’re willing to pay for is the type of talent you’ll attract. If you’re hoping to hire someone with 5+ years of relevant experience, proven client results and leadership skills but offer them a Junior’s salary… good luck.
You see, there are no shortages of tech jobs on the market. It might be a controversial statement seeing as there are many businesses who are doing it tough. Many others are playing it safe and keeping growth 1.5m away. But week after week, new jobs are coming up and new jobs are getting filled. Why then, would a talented software developer expect less pay?
Best case scenario, you’ll attract talent with far less experience than your team needs. Worst case? You don’t attract anyone at all.
Myth #3: Candidates are desperate and will take any job that comes along
Let’s put aside the likelihood of candidates interviewing with more than one business. Another thing to remember is people aren’t stupid. Sure, desperate times might call for desperate measures. But a Full Stack Developer knows better than to accept a role for a salary they earned 5 years ago.
Job offer rejection rates have increased in the last four years according to a 2020 study by Glassdoor. In the United States alone, 17.3% of job offers are rejected. That figure jumps to 19.4% when looking only at technology jobs. Due to the high demand for tech professionals, nearly 1 in 5 candidates in tech reject job offers.²
To reduce your risk of losing out on valuable talent, it’s crucial to have a fair understanding of the market. Show a prospective candidate you value them by offering an attractive salary package (equity, shares, etc.).
If the timing isn’t right but you want them on your team, agree to tee off a salary review in a few months time. Add it to their calendar right away and show them this is as important to you as it is to them
Myth #4: Once hired, candidates will forget about salary
Your new hire might be keen to be on your team, but the initial tension around salary means you’ve started off on a bad foot.
In social psychology, the primacy effect is used to inform our first impressions of others.³ This first impression can influence how we interpret other information about that person later on. Chances are, whatever feeling or impression your new employee felt throughout the interview process (devalued, distrustful or resentful) could shape their experiences at work.
The short of it is, they care and they remember. Salary might not be front of mind at all times, but feelings of distrust or resentment could lead them to share their experience with colleagues or other professionals in the industry.
In which case, it can quickly lead to a tarnished brand reputation. Your business might be known as the employer who doesn’t pay fairly, value employees or worst of all take advantage of people’s economic circumstances.
Myth #5: If a candidate cares about their career, they’ll work harder for a raise
When employees don’t feel valued their motivation, engagement and performance can fluctuate. A 2017 Gallup report shows 71% of Australian employees are not engaged in their workplace. With as many as 15% being actively disengaged.⁴
The cost of disengagement? Is far greater than you might realise.
For starters, your new hire could have a harder time adding real value to the team. Low morale, self-doubt or fear to ask for feedback could all result from feeling undervalued. In turn, you miss out on their insights, innovation, creativity and more.
Lack of employee engagement is also a direct indicator of employee turnover. Research has found that teams who score in the top 20% of engagement have 59% less turnover.⁵
Not to mention, the immense cost associated with it. In Australia, the loss of productivity⁶ from annual turnover is $3.8 billion according to PwC.⁷
Talented developers are always getting the attention of other businesses and recruiters. Pair that with low engagement and this puts them at risk to leave before their probation period ends.
It’s easy to see why to have the best talent, you must remain competitive as an employer. And if you want to both attract AND retain the best? You need to give them the best you’ve got.
Some final thoughts:
Look, I get it. This year has been tough as it is. But for several businesses, this year has proven to be their best one yet. As founders and business owners, it’s easy to play it safe when those around you are playing it safe too. But it’s crucial to remember there are various ways to cut costs without infringing on the trust and skills of others.
At the end of the day, it’s all about being fair and creating an environment in which your team feels safe and valued.
However, everyone’s story and situation are different. So if you find yourself having to offer a candidate a salary package under market value, here are two tips:
1. Be honest with yourself and with the candidate.
Offer the salary package your business can *actually* afford from the beginning. Consider other forms of incentives and communicate why it is what it is. If appropriate, offer a salary review 3 or 6 months into their employment. Schedule it into your calendars and make it happen.
2. Share other ways the business has cut costs.
This one might feel a bit too personal. But by sharing ways you’ve already cut costs around the business (e.g. company-wide pay cuts, reduced resources, new commission structure), the candidate will understand they’re not the sacrificial lamb. Most importantly, they’ll respect your transparency.
As a final piece of advice – ask questions, do your research and talk to others. We’re all living in strange times and the state of the market is always changing. That burden isn’t yours to bear but it’s crucial to feel confident when making important business decisions like hiring.
Asking questions will also help you better manage your expectations and avoid disappointment. Talk to friends in your industry or your trusted recruitment consultant *ahem* to gain the confidence you deserve to grow your business.
Want to know how your business matches up to market rates? Schedule a 30-minute chat with me and we’ll dig into it. I’m here to help (and learn too).
Who am I? I’m the Founder and CEO of affix, father of 3 boys and lover of great food and better wine. My mission? To push the boundaries of traditional recruitment processes and lead real industry change. My team and I are passionate about partnering with inspiring tech businesses and leading employers who challenge the status quo and innovate through technology.
⁴ State of the Global Workplace Gallup Report 2017
⁶ Turnover costs include expenses for in-house hiring, termination administrative, training and induction; as well as lost productivity from other employees filling in for vacant positions, in the early and final stages of employment