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Post by Rich Moy on Sep 19, 2018 12:00:00 PM

Many aspects of the technology landscape change on an almost constant basis. As a result, even the most established companies in the world are starting to see themselves as technology-driven organizations. But as the business landscape evolves, one thing has remained consistent: For the developers driving this innovation, salary is one of the most crucial job evaluation criteria.

Today, talent acquisition leaders have more insights about developer salaries than they’ve had in years past. While salary data can help you optimize your hiring strategy in many ways, it also creates new challenges for employers. Each time salary predictions are updated, it also equips developers to compare their compensation to current market trends. If they find that they’re earning less than their peers, it’s not difficult for them to find new job opportunities.

So how should salary trends influence developer salary increases? Here are a few things to keep in mind.

Adjust Salaries Based on Market Rates, Not Performance

Earlier this year, Nike made waves when it announced raises for over 7,000 employees. According to The Wall Street Journal, the company implemented these changes after an internal pay review showed widespread pay discrepancies, particularly for females in leadership roles. For the most part, this move was well received externally. It also highlighted the importance of market-based salary increases.

In a recent study, PayScale found that 33% of professionals receive no rationale for lack of a pay raise. For those that did receive some explanation, only 25% believed it. According to Lydia Frank, VP of Content Strategy for PayScale, over 70% of these workers said they planned to seek new jobs in the next six months. The statistics are symptoms of a more significant problem: Developer salary raises that are driven solely by performance metrics.

While it’s important to acknowledge good work and remedy underperformance, market rates should also influence your decision to increase salaries. Frank adds, “It’s also important to look at internal pay equity for any employees in the same role to ensure you’re not solving a pay issue for one employee while creating one for their peers.” Take advantage of the data available to you and evaluate your engineering team’s salaries on a yearly basis—and whenever appropriate, make adjustments to ensure that each person's salary matches their value on the open market.

Be More Transparent About Salary Ranges

Not too long ago, the phrase “salary transparency” was seen as a buzzword. Many leaders agreed that it was a nice idea, but didn’t feel it was realistic. Fast forward to 2018, where technology leaders are incredibly open about developer salary ranges with current and potential employees. How is this possible? The compensation insights available to us today make it much easier to be transparent about what you can (and can’t) afford to pay developers.

Although developers want to be paid well, they’re just as interested in honest conversations about their employer’s compensation strategy. Imagine that one of your programmers discovered that she’s earning 2 percent less than the industry standard. In this scenario, she would likely approach you to discuss her research and a potential raise.

But let’s say that you’re paying her the highest amount that your company can budget for a developer’s salary. In this scenario, you should acknowledge that she’s earning slightly less than what she could get on the open market, and reaffirm your commitment to be as competitive as possible. Knowing the market rates for each role shows developers that you’ve done your homework—and can make uncomfortable conversations like these much more productive for everyone involved.

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