Photo by Joe Raedle/Getty Images
While tech giants like Amazon, Apple and Microsoft have recently announced sweeping and immediate compensation increases, where does that leave others?
“Time and time again, we see that our talent is in high demand, because of the amazing work you do to empower our customers and partners,” states Microsoft CEO Satya Nadella in a memo first obtained by GeekWire. “Across the leadership team, your impact is both recognized and deeply appreciated — and for that I want to say a big thank you. That’s why we’re making long-term investments in each of you.”
An Amazon leader recently posted the following to an internal site at the company, also corroborated by GeekWire: “This past year has seen a particularly competitive labor market and in doing a thorough analysis of various options, weighing the economics of our business and the need to remain competitive for attracting and retaining top talent, we decided to make meaningfully bigger increases to our compensation levels than we do in a typical year.”
In hard numbers, Amazon decided to more than double its maximum base pay to $350,000. At Microsoft, it will nearly double its global budget for merit-based salary increases in 2022 while simultaneously increasing the range for annual stock-based compensation by at least 25% for those team members at senior director levels and below. Apple announced starting pay for hourly workers will rise to $22/hour.
Suffice to say that Microsoft, Apple, and Amazon have done the math.
Pay now or pay the price later.
At the end of March in the United States, there were a record 11.5 million job openings. That is a significant amount of choice when it comes to employment opportunities. Purpose, culture, employee experience, flexible work conditions, and overall strategy are obvious markers that will entice someone to an organization. That must be backed up by job autonomy, creativity, teamwork, and career progression.
But total rewards (including one’s take-home pay) is also a huge deciding factor. So, if you’re gainfully employed and can swap one awesome job and company for another but get paid a significant amount more money to do so, why wouldn’t you make the jump?
This is the dilemma facing current organizations with great purpose, culture, strategy, and employee experience – but are watching employees leave for other roles in this hot job market.
I spoke with a director of a company today. We’ll refer to her as “Jann.” She’s running a team of digital strategists, developers, and designers. The team is relied upon in the organization of 20,000+ employees to help with the digital transformation and execution of the firm’s goals. In sum, there are significant impediments to the company hitting its short and long-term goals around digital transformation without this team.
“I’ve now watched four individuals leave the company this year already,” she said. “And there was nothing I could do about it. Our culture is great. Our team chemistry is top-shelf. But they left anyway. Why? They were poached by other companies—not even our competitors—to do basically the same work for way more money.”
She then offered up another angle.
“The offers they got were 50 to 75% higher than what we were paying them. We countered with 20%, but they left anyway. And you know what’s even more frustrating? Me and the team are picking up the slack while I have to try and recruit, interview, and backfill the roles. If only our company could see that it’s going to be worth it in the long run to pay up now. Sadly, we’re not going to meet our stakeholder’s goals.”
Microsoft, Apple, and Amazon saw the writing on the attraction and retention wall. It’s a lesson for many organizations.
Do you want to spend leadership time you didn’t budget for in 2022 and beyond backfilling roles with talent that has left for similar jobs due to inadequate pay bands?
Or—like what Microsoft, Apple, and Amazon have done—do you want to do the math now and see that sooner or later, whether through indirect or direct costs, your organization will run into similar circumstances as “Jann.”
There’s not just a war for talent; it’s the jobpocalypse.
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