How Increasing IT Salaries Impact Budgets and Hiring
The trend of rising IT salaries has picked up so much pace that many organizations now accept it as a cost of doing business. But what is that cost? The allure of higher salaries is a major factor driving tech pros to new jobs, and subsequently has employers across the U.S. expecting to raise salary budgets by 3%. Increasing IT salaries impact budgets and hiring, and have repercussions that can affect an entire organization.
A Budgetary Jigsaw Puzzle
At the surface level, higher compensation means payroll will comprise a larger percentage of the overall budget. But things are not so simple. While this may be true with a cursory glance, it creates a chain reaction that will require multiple decisions from many departments to ensure an organization remains fiscally healthy. Even the likes of Google and Facebook cannot flip a switch and instantly increase their hiring budget without changes elsewhere.
In fact, worldwide IT budgets are expected to remain unchanged in 2017. With this in mind, does offering a large salary to a bright IT candidate make sense if it results in an inability to afford the cutting-edge tech they need to succeed at their highest level? At the same time, spending on workplace tech is expected to rise by 6.7%. This indicates that organizations are shifting around funds as necessary in order to meet their most urgent needs.
It’s sometimes forgotten that candidates greatly value company culture, and accept roles based on the environment as much as salary. When money earmarked for break room coffee, office parties, and other perks is used instead for the payroll budget, employees may become bitter that half the reasons they were drawn to their job have disappeared. This is why moving around limited budgets makes hiring a top challenge for IT executives.
Prioritization is one of the most important aspects of budgeting. A successful IT hiring manager must often determine the top two or three open roles that are essential to fill this quarter. With the knowledge that investing in candidates for these jobs may result in a hiring freeze in the following quarters, it has become a way to borrow from the future budget.
Other methods of alleviating the strain high compensation puts on a budget is to focus on a smaller base salary and supplementing it. Using clear bonuses and incentives, as well as moving away from a traditional yearly wage increase and instead promising smaller, more frequent raises can spread out a high salary’s impact.
Speed of Hiring
Hiring has been impacted by increasing IT salaries in a number of ways, most notoriously by decreasing its speed. Before, stable salary expectations meant an organization had a budget that could accurately capture the talent required. Today, with salaries continuing to rise, budgets end with question marks instead of periods. Each year, the amount needed to secure top talent is rising.
As a result, many organizations have begun to stretch out the hiring process as they wait for enough funds with which to make a formal offer. With market competition at all-time highs, this practice almost always results in losing the preferred candidate. Investing time and effort into the interview process can go to waste when hiring managers don’t have an approved budget or the authority to quickly extend a competitive offer to the right applicant. It’s better to delay the start of the hiring process rather than the middle, where it is sure to frustrate and push interviewees away.
Securing Niche Skills
Available IT talent is rare, and the highest-quality candidates with specialized expertise are even more scarce. On top of that, a quality hire also must fit into an organization’s culture. These factors result in a tiny talent pool of appropriate candidates for many open IT roles, and that’s why big data and security experts have been commanding high salaries. Despite the cost to secure such talent, extending a significant offer can have a strong ROI by landing someone at the top of their game, justifying a budget expenditure.
Given how hard it is to find high-quality talent in a specialty, it’s tempting to hire a candidate that fulfills the majority of role responsibilities with the idea that they can be trained for the rest. While this can work, and will mean some salary will be saved, the cost of future training is often ambiguous and can be an unclear budgetary expenditure. With human error accounting for 52% of security breaches, the mentality of training someone into certain vulnerable roles can prove costly and should be approached with caution.
Increasing IT Salaries and the Impact on Your Budget
Recruiting the right tech pro can take a great deal of effort, and will often leave budgets decimated in the process. And that’s if you’re lucky enough to even locate a star candidate in the first place. A great IT staffing partner can lessen the negative impacts of increasing tech salaries, helping you to quickly locate and hire the best talent at a salary that works for your organization.