How Far Will Businesses Go to Lure Developers?

From sign-on bonuses to long-term equity bonus incentives to perks such as paying for the lease on a new Tesla, firms are upping the ante to attract and hire elite software development talent in a tight market.

Most of these specialized performance programs are relatively new, says Dice.com President Shravan Goli. Sixteen percent of 700 employers’ hiring managers surveyed by Dice noted that such programs were a new addition in 2014, and 26 percent of respondents say similar programs launched in 2013.

“Companies faced with a tight labor market are getting creative based on the competitive situation they’re in,” says Goli. When they’ve reached the top of their base compensation limits, they’re faced with a conundrum, says Goli.

HR departments and hiring managers can’t exceed certain caps without throwing their budgets and P&L statements into chaos, so individual departments must get creative and look for other ways to get their hiring needs met, Goli says.

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“They’re trying everything they can to lure elite developers to their ranks – sign-on bonuses, equity programs, retention bonuses,” he says. And he adds that the number of businesses using these types of benefits is growing, too. Before 2010, only about 50 percent of businesses surveyed by Dice.com said they used programs like this, while the percentage rose to around 90 percent in 2014, he says.

Money Talks in Tech

“These monetary incentives are in some way tied to the limited supply of hot, in-demand skills, especially around front-end developers, Hadoop, big data and the like,” says Goli. “Businesses are sending a message, and that message is: ‘We understand you’re valuable and you don’t have to wait years to be recognized – we’ll show you the money for your skills if you come work for us,'” he says.

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Tech Boom or Tech Bubble?

Unlike the technology industry bubbles in the past, Goli says he believes this demand is real and is sustainable in the long-term as companies double-down on technology to become more competitive in a global, digital economy.

“This is less of a bubble or a boom and more ‘real,’ especially in terms of the opportunities and demand for software developers,” says Goli. “Because of the widespread adoption of technology not just in the traditional tech regions like Silicon Valley and New York City, but across the IT industry as a whole, and unemployment in this area is at the lowest point in history,” he says.

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But, Goli cautions, there will be a “ceiling” on how far businesses are willing to go to attract and retain development talent; after the initial exuberance, the market will self-regulate, and will return to a new normal as supply and demand balance out, he says.

Things are Different in the Valley

“There are two distinct sides to this story; the first being the Silicon Valley and New York city perspective and the other being the rest of the country,” Goli says.

“In the Valley and in tech hubs like New York City, compensation, bonuses, perks, incentives are going to be a little crazier and over-the-top because firms are trying to outdo each other and the cost of living is higher. But in other cities there will be more stability and the talent war won’t be as aggressive, because the opportunities aren’t as widespread. People will be paid more, yes, but there aren’t as many technology firms so there aren’t as many other places to go,” he says.

Of course, Goli says, monetary compensation only goes so far when attracting and hiring talent – retention and longevity are still major issues for IT firms, and businesses must continue to nurture talent on an ongoing basis.

“The bottom line is your people have to be excited about what they’re working on. Incentives can only go so far, and pay can only go so far. Companies will still have to up the ante as far as innovation over six, twelve, eighteen months, because the money and the perks are only a temporary fix in the talent war,” Goli says.