It’s Going to Be a Great Year
A new year often brings new careers. In our last post at the end of 2019, we cited an interesting statistic: 50 percent of Americans think about finding a new job in January. Good news for those candidates: companies are apt to kick off their recruiting in January with fresh budgets allocated towards adding headcount. But January is just one of the high seasons for hiring. The U.S. unemployment rate is at 3.6 percent, making it a “historically great time for job seekers,” says Forbes.
Related: New Year, New Career: 7 Tips to Kick 2020 Off Right
But Forbes is quick to caution that not all jobs will be plentiful in 2020 and beyond. In fact, with the insurgence of AI, robotics, and technology, many jobs will be displaced. It’s not all bad news, though. Job seekers in the science, technology, engineering, mathematics, and coding fields look to be the ones that are most difficult to replace and the most in-demand. Here’s the kicker: there will still likely be more IT and digital job openings than there are people to fill them. That means demand will outpace supply and companies must find ways to differentiate themselves if they want to attract great employees.
Compensation Is King When It Comes to Hiring in 2020
This is no shocker: compensation still matters. Yes, people want work-life balance, benefits, and opportunities for professional growth, but when push comes to shove, compensation is what most candidates look at first when considering a job offer.
First off, let’s define compensation. When candidates think of compensation, it’s not just the base salary that’s important. It’s the “all-in” compensation that includes base salary, bonus structure, equity, and long term incentive plan (LTI).
Highly-skilled IT candidates know they are a hot commodity. They want a compensation plan that is well-defined and allows for growth. Companies that want to attract top talent to their IT teams must be able to articulate all opportunities to augment their salary. Those are basically the goals the new hires will reach for, so they must be attainable both in the short and long terms.
Related: Why Is IT Staffing in Austin Difficult?
Here’s an example of how this can go wrong. A well-established, high-tech company in Austin that heavily recruits top college graduates offered a job with an impressive salary to a young woman graduating from a prestigious college in the northeast. She had another job offer from a software company she had interned with in San Francisco that offered slightly less.
She was a day away from accepting the Austin-based job until she reached out to several people via LinkedIn who worked for the Austin-based company. They told her that the company offers attractive starting salaries and tells candidates they have all kinds of opportunities to grow their salaries, but once they’re in the door, the new employees realize they’ve been had. The bonuses and LTIs are based on unreachable goals, even for the most adept. Their compensation, therefore, was stagnant and they could hardly afford their Austin rent. Two different employees, both with the same story.
No surprise, she declined the offer and accepted the one from the San Francisco company that she knew offered a better compensation structure. Keep in mind, the Austin-based company didn’t just lose a top recruit to another company, they spent a fortune on courting her – flying her to Austin twice, paying for hotel and food, arranging no less than a dozen meetings and interviews, etc.
Developing a Solid Compensation Structure
For companies who want to get the best talent in 2020, a well-defined, solid compensation structure is a must. Transparency is a key trend in 2020, particularly amongst millennials. It should be clear what the compensation structure looks like for every position. Some candidates care more about a guaranteed base salary, while other candidates have a higher risk tolerance and are seeking larger bonus and equity opportunities.
IT leaders must work with HR to develop a compensation structure that works for the company and the employee. Base salaries should be attractive on their own, but bonuses and other compensation elements should be the icing on the cake. They give candidates a reason to say yes, knowing that their income will only grow. Any additional opportunities to increase their take-home pay must be reasonable. Offer short-term incentives that signal they can begin receiving rewards early on, as well as long-term incentives that give them a purpose to continue contributing at a high level.
Understanding Compensation Expectations
Although compensation structure and expectations should never be the first thing discussed in an interview or a top priority for the candidate or hiring manager, it is important to gauge the candidate and company compensation for a position before it’s too late in the process. Skill fit, culture fit, and career paths should be a priority, but if the candidate’s compensation expectations are too far out of line upfront, you can save time and energy getting to that answer sooner than later.
It’s important to know what the candidate is currently making and what they hope to make in their next job. This is a slippery slope. First, the candidate doesn’t have to tell you, nor do they have to tell the truth. It can be awkward to ask this in a way that doesn’t seem self-serving. While using a staffing agency can allow you to avoid such conversations upfront, your best bet if going at this alone is to do a market analysis to understand the current salary range for that position and go from there. Finding out the other compensation elements is a bit trickier, as most companies don’t disclose that information publicly.
Using Compensation as a Competitive Advantage
Considering that the IT job market is highly competitive, especially at the mid- and senior levels, companies will have to beef up their compensation strategy if they want to have a competitive advantage. A competitive compensation package will not only attract top talent, but it will also retain them.
It is important to communicate the benefits of your compensation package with the candidate. They need to understand exactly how the compensation is structured, the benchmarks they must reach to receive stated incentives, and the ease at which those incentives are typically obtained. Do the math for them by adding up all of the ways they can grow their income and how long they can expect to reach certain milestones. When candidates can see the roadmap, they are more likely to consider the full spectrum of their compensation.
Related: Candidate Communication Is Key: How to Do It Right
Know Your Candidates Before You Meet Them
This may sound counterintuitive, but the more you know about your candidates before you ever meet them, the better chance you will have to impress them. This is one of the key benefits of working with a reputable IT and digital staffing agency. Good recruiters will find out all of the motivating factors for a candidate’s desire to look for new opportunities before they recommend them for the position you’re offering. This ultimately saves the hiring manager time and money from recruiting the wrong people. The staffing agency does all of the legwork upfront, only sending you candidates who they know will appreciate your compensation structure, culture, opportunities to develop their skills, etc.
So, what will be the compensation ranges in 2020 for technical and digital jobs in Austin and Denver, two of the hottest IT job markets in the U.S.? At Zilker Partners, we get questions about compensation often and there is no one answer that fits all. We collaborate with our clients, providing specific compensation range recommendations on each position based on the specific job requirements and the market. We help our clients get it right so they win over the candidates they really want and beat out the competition. With the 2020 job market only expected to remain competitive, having insider knowledge of how best to structure winning compensation packages is a significant advantage.