Within the fast-changing tech industry, managers face a constant challenge of determining compensation packages that will motivate their existing team, and that will attract new talent at the level of ability they need. But as the market fluctuates at a pace, how do you know if you are getting it right?
Spoiler: if your software developers are leaving the business, and you’re failing to replace them, you’re probably not getting it right. BUT if you’re trying to recruit, or you are faced with annual appraisals and not sure how to reward your team, you might want to consider using a salary survey. There are many companies that specialise in this, and depending on the complexity of the data you require, it might cost you anything from hundreds to thousands of pounds. Fortunately, though, there is a lot of data available for free in the UK, but it’s worth recognising that using any kind of data like this has limitations as well as advantages, and it should not be the only thing you consider. However, if you take care to understand the nuances, strengths, and limitations of a salary survey when it comes to how much it should influence your decision making, it can be a useful tool.
As we partner with our clients to help them to recruit software developers, I’m looking specifically at how a salary survey can benefit employers within this industry. As recruiters, we’ve seen salaries within software development improve rapidly, due to a skills shortage in recent years, and we’ve seen them stabilise as well. So, on the surface, a salary survey is a useful tool for managers. It can help them in the following ways:
- Benchmarking and Competitive Insights: Salary surveys provide valuable benchmarks for gauging compensation structures within the industry, enabling managers to ensure their offerings are competitive. These insights help attract skilled professionals and retain existing talent.
- Informed Decision-Making: With comprehensive data on compensation trends, managers can make informed decisions regarding salary adjustments, benefits, and incentives. This ensures alignment with industry standards and helps in creating attractive job offerings.
- Understanding Market Trends: These surveys offer a glimpse into evolving market trends, such as the demand for specific skill sets or the impact of emerging technologies. Managers can anticipate shifts and strategically plan for future hiring needs.
- Employee Retention: Knowing the market value of their team’s skills and experience allows managers to make proactive adjustments, potentially increasing employee satisfaction and reducing turnover.
But rather than basing your decision making on a salary survey exclusively, it’s worth considering these external factors that often influence salary:
- Software developers are often motivated by the technology they get to work with, as much as, or even more than, salary.
- Working from home and having flexibility often means a lot to software developers – the job role lends itself well to working remotely, and many developers will prioritise finding a home-based role over an inflated salary, for a better work-life balance.
- Our industry moves quickly. By the time your salary survey is completed, you may have to be prepared for the fact that the marketplace has shifted again, and the information you are basing your decisions on is out of date.
- Sample size can be a good thing or a bad thing. For example, if you’re a small software house in the East Midlands whose developers work from home, it probably isn’t relevant what a large team of office-based developers are being paid in the South East.
- Lack of nuanced information: Surveys may not capture the whole compensation package, such as bonuses, stock options, or other non-monetary benefits which can significantly impact an employee’s overall package.
- Potential Inaccuracy: The self-reporting nature of many surveys may lead to inaccuracies or biases in data, affecting the reliability of the findings.
To use your salary data wisely, it is essential to recognise the limitations and variances in survey data. Use it as a reference point rather than an absolute determinant, considering unique factors within your company and the local market:
- Supplement with Internal Data: Combine survey insights with internal metrics, performance evaluations, and employee feedback to form a comprehensive view of compensation strategies.
- Focus on Total Rewards: Look beyond base salaries and include non-monetary benefits, such as flexible work hours, professional development opportunities, or healthcare benefits, which contribute to employee satisfaction.
- Regular Review and Adaptation: Keep salary structures under periodic review to stay competitive and aligned with market changes while ensuring internal equity.
In conclusion, salary surveys are valuable tools for software development managers when used judiciously and carried out regularly. While they offer critical insights, their limitations necessitate a cautious and informed approach. Combining survey data with internal assessments and considering the holistic compensation package enables managers to create competitive and enticing offerings, vital in securing and retaining top talent in the competitive tech industry.
Finally – why not ask your recruitment partner’s advice on what you should be paying? Chances are they deal with other companies of a similar size and location – what trends are they seeing in the marketplace? Their insight from talking to developers and employers on a daily basis could be invaluable, so consider making this your starting point. If you’re way off, they’ll consult with you and help you to get it right, in order that you can attract top talent and ensure you keep your existing team happy and motivated.