While well-financed startup companies are offering increasingly high salaries for tech professionals in an attempt to lure them in, tech professionals themselves are bucking the trend, stating that a lucrative salary is not their only basis for deciding whether to take a job or not. We take a look at the options startups face and why tech professionals are making the decisions they do.
The average salary for a senior software developer in the USA is £124,396, in Japan it’s £88,329 and in the UK it’s £46,740, depending on seniority and experience. With the level of salary that some European startups are offering having increased by up to 60% in the last three years, it’s clear that competition for the right tech specialists has begun to have an effect on salary levels. This is primarily driven by the lack of suitably qualified people which has led to a bidding war for talent – a recent report noted that security professionals, database administrators, cloud architects, systems analysts and DevOps engineers are most in demand but least available. And with tech recruiters reporting that they are increasing salaries in order to not only recruit but also to retain experienced employees, it seems that tech professionals are definitely reaping the financial rewards of this skills gap.
However, like many other professionals today, a high salary, whilst still desirable, is becoming secondary to other factors. In fact, salary is listed third in importance after technical challenges and flexible working hours, in a recent poll of developers.
Startups’ remuneration packages can be considerably different from traditional companies’ and usually consist of three different elements – salary, benefits and equity.
Salary – a tech professional’s salary will depend on their qualifications and experience, but will also vary according to what stage the company is at – a startup in its early stages will most usually offer a lower base salary than one that has already established itself successfully. However, with success will come rewards, and more fully-mature startups will eventually be able to offer salaries which are closer to, and perhaps even exceed, market rates.
Equity – often provided as part of a compensation package in startups, equity means that employees are given the option to buy stock options in the company, often at heavily-discounted prices. Taking a risk by joining a startup early means that an employee usually has the option of a larger number at a lower price – once the perceived risk has been dispelled, later hires may be offered fewer at a higher price.
Equity can be extremely lucrative if the company is eventually sold or listed on the stock market – think Instagram or Facebook – but equity is not a guarantee of returns so must be considered with all due diligence.
Benefits – benefits tend to reflect the culture of the startup and, like salary, may be limited in its early years. However, upon reaching a level of success, benefits may be extended and can often be used as part of a recruitment package to entice employees in.
Often benefits include gym membership, free snacks or lunch, company trips and events, generous annual leave or even ‘bring your dog to work’ days.
However, increasing numbers of tech professionals are citing intangible benefits, such as flexibility within the workplace, caregiving leave, the opportunity to advance in their career, the ethical reputation of a company, an inclusive and diverse workforce, and volunteering opportunities in a local community, to be as appealing as ‘traditional’ benefits like a company pension or health insurance.
In addition, the demand for flexible working, as evidenced during the pandemic, is increasing. Tech professionals want the ability to work from home, avoiding a long and costly commute, and to work variable hours, many eschewing the 9–5 in favour of a culture that values the quality of work done, rather than the hours worked.
Research has found that considerations such as leadership transparency, giving back to the community, and shared values were hugely important for potential employees. This shift reflects changing values in our society and an awareness that no business exists in a vacuum.
In order to attract and retain the best tech talent startups must make their workplaces outward looking, emphasising their brand values, their openness and the opportunity for both employees’ continual learning and their professional advancement. The work/life balance of employees must also be considered, given that people spend around one third of their lives at work. Today’s employees are no longer tolerant of hierarchical working relationships, preferring collaboration, respect and the meeting of mutual needs. If tech startups can put together a package which contains all these elements, or a combination of the best of them, they’ll be at a distinct advantage in terms of recruiting and retaining the best tech talent.
If you’re looking to make the right hire for your business, whilst minimising risk and maximising effectiveness, get in touch with JIE Search.