For many organizations, the process of establishing salary ranges is almost a yearly tradition. Typically, employers consider a variety of factors, such as the importance of each role and the company’s financial standing, to determine pay rates for each job. While average market rates influence this process, it’s difficult for many leaders to find reliable information about developer salaries.
But with the amount of data available today, many employers are taking another look at their compensation strategies. There are a few critical questions that these organizations ask themselves. What are developers earning on the open market? How do our offerings compare to what programmers will find elsewhere? How much room do we have to increase our budget and compete for tech talent?
To answer these questions for your company, here are a few things that fair pay scales for developers have in common.
Business Insider recently reported that candidates don’t have much room for negotiation at Facebook, which is by design. Janelle Gale, Facebook’s VP of HR, told the website that the company uses one formula to determine everyone’s salary, which avoids a compensation strategy that revolves around negotiation. “We don't want to get into a negotiation, because that basically means whoever is the best negotiator wins," Gale continues. “We're not hiring you for your negotiation skills, unless you are in a negotiation role, like business development."
Here at Stack Overflow, we use a similar method for determining developer salaries. Our CEO Joel Spolsky once wrote that when he started Fog Creek Software, he wanted to strike a balance between a formulaic salary scale and looser salary ranges. “I wanted Fog Creek to have a salary scale that was as objective as possible,” he added. “A manager would have absolutely no leeway when it came to setting a salary. And there would be only one salary per level.”
These two examples add up to one takeaway: Think through the salary formula that works for your company. Once you’ve analyzed and finalized your approach to compensation, use that formula for all candidates. Not only will this help you ensure that you’re paying developers as fairly as possible, but your commitment to doing so will also make a positive impression on candidates.
This might sound obvious, but the talent landscape in 2018 has changed drastically. Large organizations such as Nike have made sweeping changes to their compensation strategies to avoid pay discrepancies for women and underrepresented groups. Now, it’s illegal in nine states to require candidates to disclose their salary history.
So, how does this impact your developer salary ranges? Let’s say that you’ve identified a candidate that you want to hire, but that he or she works for a company that you feel pays below market value. In theory, you could offer that person a slight increase over what you think they’re earning, even though you can afford to pay them more. The benefits of doing so include a small cost savings and, of course, hiring a talented programmer.
But remember, salary averages are available to candidates, as well. If they feel that you’re lowballing them, they won’t have too much difficulty finding another opportunity. While a developer might accept your initial offer, get right to the point and pay them what you can afford to—regardless of that person’s previous compensation. If you’re convinced that this developer will be a major contributor to the team, pay them according to the skills that he or she brings to the table.