Economic changes combined with shifts in employee expectations have affected the employment landscape for every industry. What does this mean specifically for companies in the dynamic tech, media and gaming (TMG) industry?
WTW’s TMG Steering Committee, comprised of prominent global TMG survey participants, recently participated in a Pulse Survey designed to identify what organizations in the industry need to be aware of to overcome talent market challenges. Here’s what we learned.
01
The past six to eight months have seen substantial layoffs by major U.S. tech companies like Amazon, Meta and Twitter. This has also been happening in the financial services industry, and this combination is fueling speculations that a recession is still around the corner. In fact in the UK a recession is still predicated for this year, despite the economy managing some modest growth.
02
High inflation has increased attrition as employees have sought job opportunities with higher pay. However, with an anticipated economic downturn, job security may become the focal point for employees, causing them to stay longer with their current organizations. For employers, this may signal a relief from retention challenges, which they have been grappling with since 2020. Perhaps power will now shift from the current seller’s market toward a buyer’s market.
03
2023 salary budgets are a mixed bag in the TMG industry, according to the Pulse Survey results. About one-third (29%) of respondents said they expect their 2023 salary budgets to be higher than in 2022, while 24% said budgets will be lower this year compared to last year. A further 12% said they are waiting longer than usual to set their salary budgets.
04
Given the current economic climate, recent layoffs and cost-saving initiatives being reported, it would be logical to assume that TMG organizations would pull back on their salary increase budgets this year. However, the Pulse Survey respondents indicated otherwise, with more than half (56%) reporting that they will not pull back at all, while another 38% will pull back modestly.
05
Eighty-eight percent of respondents surveyed said they do not plan to delay the effective date of their salary increases this year. Only a small minority said they would postpone their effective dates by three to six months or longer. See Figure 1.
06
Shankar Raman, senior director and global leader for WTW’s technology industry group, has said that, even though the tech industry is facing some uncertainty, the demand for top tech talent is expected to remain robust. Tech companies will need to continue to be careful about compensation actions, balancing the need to attract and retain top talent while addressing cost and productivity pressures.
While the substantial layoffs across major U.S. tech and media companies may suggest a weak landscape for the sector, this is not the case. During the pandemic, many companies hired aggressively to meet the increased demand for TMG services. Additionally, the anticipation of long-term changes in consumer behavior also drove hiring.
“Tech companies need to continue being careful about compensation actions, balancing the need to attract and retain top talent while addressing cost and productivity pressures.”
Shankar Raman
Senior Director and Global Leader, Technology Industry Group, WTW
However, the market unfolded differently than anticipated, prompting organizations to readjust their projections and reduce headcount. The Pulse Survey results show that companies are more carefully reviewing staffing decisions before replacing employees lost through attrition. See Figure 2.
07
Last year, high inflation coupled with extreme difficulty in attracting and retaining talent created the perfect employment-landscape storm. The aftermath of this storm may continue to be felt this year, as Pulse Survey respondents reported challenges in hiring as the current economic climate is encouraging people to prioritize job security and stability. See Figure 3.
The majority (76%) of survey respondents said they found it at least somewhat challenging to fill open positions for tech jobs. The most challenging tech job families to fill identified included:
Meanwhile, 65% of respondents said they are encountering the same difficulty for certain non-tech job families, including:
08
Though the practice of remote work has been in place for quite some time, companies still vary in how to implement it and pay for those roles. For example, 65% of respondents to WTW’s recent Work from Home Expenses Survey said they do not have a minimum requirement for in-office time during the week, while 29% said they require employees to report on-site three days per week.
The same survey also found that organizations have different approaches in how they compensate for work-from-home arrangements:
For organizations that provided compensation for work-from-home arrangements:
09
In line with pay transparency regulations, we asked organizations what the bases of the midpoint of their published pay range is. See Figure 4.
10
Most Pulse Survey respondents (71%) said they do not have a formal policy to pay based on skills; rather, they approach skill-based pay on a more ad hoc basis. Only 18% of responding organizations said they have a policy in place, and 12% said they are considering adopting such a policy.
Looking back just four years ago or so, there likely weren’t many (if any) TMG companies that had a skill-based pay policy in place, nor were they even considering it. Today, though, it seems as though businesses are increasingly realizing the importance of skill-based pay – even if it is a slow-moving trend. It is logical though: Digital talent is widely sought in the market as organizations across all industries aim to keep up with rapidly advancing technology and digital transformation efforts.
