Recruiting Challenges Spur Higher Salaries, Better Perks

Climbing salaries, more voluntary departures, and flexible work options are signs of a challenging IT hiring environment that favors job seekers.

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Skilled job seekers are in an enviable position in the simmering tech industry, as hiring managers compete for talent, boost job offers, and improve on-the-job perks to keep existing employees from looking elsewhere.

“It’s really the technologists’ choice right now. They can be very picky,” says Jack Cullen, president of IT staffing and recruiting firm Modis.

IT pros are more willing to consider a job change than they might have been a few years ago, and when they start exploring their options, it’s not uncommon for candidates with hot skills – in security, app development or data science, for instance – to wind up weighing multiple offers.

Candidates today know they’re marketable, says Shravan Goli, president of tech careers site Dice. “They’re feeling a lot more confident, they’re asking for more money, and they’re voluntarily leaving their jobs,” Goli says.

The pressure on wages and restlessness are confirmed by hiring managers: 64% said they’re seeing candidates ask for more money, and 40% reported an increase in the number of voluntary departures compared to mid-2014, according to Dice’s semi-annual hiring survey.

Counteroffers, too, are becoming more commonplace as workers use outside offers as leverage to negotiate for more money from their current employers. “Forty-three percent of recruiters noted that they have to make more counteroffers to retain existing staff, and that’s a 10-point upturn from just six months ago. That’s a big shift,” Goli says.

Looking ahead, demand for tech professionals won’t slow down anytime soon, according to Dice. As the new year gets underway, 75% of recruiters said they anticipate hiring more tech professionals in the first six months of 2015 than in the last six months of 2014. The numbers of new hires is fairly substantial: 72% of companies said they plan to expand their staff by more than 10% in early 2015, according to the recruiting community.

Research from Robert Half Technology (RHT) echoes that optimism.

In the first half of 2015, 19% of CIOs plan to expand their teams, according to RHT. That’s a significant gain compared to mid-2014, when 14% were planning to add more staff to their departments. (Another 68% of CIOs expect to hire for open IT roles, 10% plan to put a hold on hiring, and 3% expect to reduce their IT staffing levels in the first six months of the new year.)

Strong hiring numbers will translate into strong negotiating power for tech professionals who are looking for a job or considering leaving their current one. “If you're not addressing compensation levels, you're putting yourself at a distinct competitive disadvantage,” says John Reed, senior executive director of Robert Half Technology. “Not only does it make it difficult to attract the talent you want, but it's also causing you to lose people within your organization who are being recruited away.”

Already, IT pros are in line for the biggest pay increases compared to other working professionals. Starting salaries for professional occupations across all fields in the U.S. are projected to increase an average of 3.8% in 2015, Robert Half predicts. In tech, the average starting salary for newly hired IT pros is forecast to climb 5.7%. (See related story, “15 job titles getting big salary boosts in 2015”)

Salary bumps are just the beginning. IT pros can also expect to see greater bonus pay and more generous benefits in 2015, experts says.

On the compensation front, more companies are offering financial incentives such as project bonuses. Given to employees when they complete a critical deployment, project bonuses allow companies to dole out extra compensation without committing to permanent salary increases.

Retention bonuses are also becoming more common. A tactic for retaining critical personnel who might be considering leaving, retention bonuses are typically awarded to employees for staying for a specific time period, such as through the completion of a project or merger. Likewise, some equity grants are designed to vest when project milestones are achieved, which also helps encourage employees to stay longer.

Worth noting is companies’ restraint: While pay is trending upward, it’s not increasing dramatically, notes Cullen.

“You would think in a high-demand environment that people would be paying better-than-market rates to get these folks. But companies are really trying not to do that. No one seems to be just rolling out a wheelbarrow of cash. The increases in salaries, and the increases in hourly rates for contractors, are there, but they’re increasingly slightly.”

“I was really expecting to start seeing a substantial rise. I thought we’d see it in 2014. We haven’t seen it,” Cullen says.

Hiring managers also aren't rushing into new hires, despite the competition for certain skilled workers. The time it takes to fill open positions has lengthened relative to last year, according to 46% of recruiters polled by Dice.

“Companies are very picky, too. They’re still maintaining discipline in their hiring approach,” Cullen says. Part of the reason is to avoid unnecessary employee turnover. “The turnover that companies have experienced has become very much a turnoff, so they’re really being particular in their hiring process to make sure they bring in somebody who’s going to stick,” Cullen says.

Meanwhile, instead of simply throwing cash at candidates, companies are trying to be as creative as they can in attracting talent. “Companies are doing a really good job of managing their budgets, and managing their pay rates, so they've got to find other ways to convince people to come work there,” Cullen says.

That’s where perks come in.

While compensation is paramount, it’s not the only factor IT pros consider. Amenities can make a difference, and companies are bolstering their offerings with extras such as subsidized meals and free refreshments, on-premises fitness and daycare centers, training opportunities, and subsidized public transportation.

“Certainly there’s a lot of creative stuff going on, especially around Silicon Valley. It’s sort of a comeback of what we saw 10 or 12 years ago,” Goli says. “Onsite services, from getting your shirts dry-cleaned to getting a haircut to getting a dentist appointment. Free food, more types of food, healthy food – that’s happening a lot more.”

Coveted perks include flexible schedules and the ability to occasionally work from home. “What motivates people more often than not is something that allows them to have flexibility and work-life balance,” Reed says.

The extracurricular perks that resonate with IT pros are generally the more substantive extras, Cullen adds. IT pros are a motivated group, in general, and the opportunity to keep skills fresh and stay challenged is paramount. Candidates look for an environment where they can improve their skills, do things they like to do, learn new technologies.

“Anybody who feels their environment is stagnant is immediately looking, and they’re the easiest ones to encourage about the next opportunity,” Cullen says.

Given all the churn in the marketplace today, there’s even more pressure on CIOs and IT leaders to take care of their existing people. “Culture development inside the company has become very important. Creating an environment with these extracurricular benefits, training, and flexibility is important for attraction; it’s equally as important for retention. The whole attrition game has really been bothering companies,” Cullen says.

“Your recruiting efforts really begin with the people on your team,” Reed says. “As you're looking at recruiting people into the organization, make sure you re-recruit the people who work for you now before you worry about the people you're trying to bring in from the outside."

Otherwise, as you're bringing people in the front door, more will be leaving out the back door, he warns. “You have to be engaged and make sure you have your finger on the pulse of job satisfaction of your employees,” Reed says.

In the big picture, 2015 looks really promising, Reed notes. “The new year brings new budgets, new projects and new initiatives. We anticipate a really strong start to the year.”

“It’s absolutely a great time to be a tech pro,” Goli says.

This story, "Recruiting Challenges Spur Higher Salaries, Better Perks" was originally published by Network World.

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