The webinar recording is available for on-demand viewing: Attracting and retaining technology and digital talent in times of economic uncertainty.
WTW’s Metro NY Work & Rewards team hosted a webinar to discuss the latest trends in the technology talent market. WTW consultants Vidisha Mehta, Steve Hinden and Daniel Fang – along with IBM HR leader Maria Tarsia – provided valuable insights into a variety of topics including tech talent supply and demand, pay actions and compensation practices, and attraction and retention for critical digital talent.
Tech talent is critical to most companies, impacting nearly every industry and cross-functionally within organizations. Technologies in areas such as cloud computing, cybersecurity, robotics and most recently, generative AI, are all accompanied by significant infrastructure requirements, which demand teams of highly specialized and sought after talent to build and support these applications. Further driving this demand is the wide variety of new technologies that have emerged (many of which are evolving rapidly), a limited talent pool with directly relevant experience, and the push for greater levels of digitalization and automation by business leaders.
Live polling indicated:
Given the pace of change in these technological areas, notwithstanding recent layoffs for tech workers, many companies are struggling with attracting and retaining key employees.
Layoffs across the tech talent landscape seemed to be largely driven by an overestimation of demand for online services that arose during the pandemic, leading companies to over-hire. This was the first time that many companies had to execute a headcount reduction, which amplified the pressure felt by employees. However, these layoffs represented only a small fraction of new hires over the same period and coupled with the potential growth in talent demand for tech roles, many signs are pointing to strong employment in this sector overall.
The tech jobs with the highest demand include data-related roles (e.g., business analyst, data engineer, data scientist, machine learning engineer) and software-related roles (e.g., software engineer, application developer, solution architect, system engineer). Artificial intelligence (AI) engineers are not referred to specifically, but are typically captured under machine learning. Also, while there has been a tremendous amount of media coverage on generative AI, companies have still not determined use cases that would justify increased hiring. This could change dramatically over the next few months as companies further adapt novel technologies.
From a compensation perspective, leveraging insights from WTW’s 2023 Tech Industry Pay Actions Pulse Survey conducted in Q1 2023, our colleagues highlight that the projected median salary increase for the technology sector is 4.75% for 2023 – a more significant increase versus general industry, which hovered closer to 4%. For bonuses, about 60% of companies paid at or above target in 2022.
The biggest differentiator of compensation in this talent market is equity. Our latest survey results indicate that the majority of tech companies are not planning on changing their LTI grant values. Given the downturn in stock prices seen in 2022 and into 2023, particularly among Big Tech, granting LTI at levels consistent with prior years’ becomes more costly for the organization – especially for tech talent, as participation tends to extend further down the ranks. However, most companies are expected to maintain their LTI participation rates in 2023.
Any increases to grant levels are happening on a more targeted basis for the most critical job families, and are more likely to be for tech than non-tech roles/functions. Although 35% of companies expect share spend to increase in 2023, burn rates are expected to remain generally flat, except within smaller organizations. Managing headcount and cooling hiring practices are the primary levers companies are using to manage their share spend in 2023.
Pay alone is not enough to lure tech workers from Big Tech or elsewhere. While competitive pay has become more of a baseline expectation, there have been significant changes in what employees prioritize. Job security is more highly valued in today’s volatile market. Additionally, the opportunity for career growth is an increasingly important part of an organization’s employee value proposition (i.e., how employees can grow within the organization and what can they look forward to in the short-, medium- and long-term). This requires companies to have a well-articulated set of skills taxonomies, a clear path for progression for tech roles, mobility across functional areas and the opportunity for participation in upskilling/reskilling programs.
Identifying and articulating career pathways with a positive trajectory is one of the most critical aspects to both attracting and retaining top talent. Having a clear work architecture with career levels, job functions and families, and skill requirements are necessary infrastructure to build these career pathways.
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