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The Impact of the IT Labor Shortage on Salaries

Do you really know what your employees are worth?

Competition for talent is coming at us from every direction. Canadian regions battle each other for top talent. American companies dangle higher wages and opportunity for more cutting-edge work. And the ability to work remotely brings more global competition.

While Canada is among the fastest growing tech markets in the world, we are suffering from a scarcity of employees. It compels us to take a hard look at salary and the fact that wage inflation has us paying more than 30%+ year over year for technology workers. Yet, even if organisations meet this escalating rate, will that be enough?

In the S.i. Systems 2022 IT Staffing Market Insights Report, we analyzed the hottest roles within IT and discussed salary expectations for those roles. The key takeaway was twofold: higher salaries are expected; but higher salaries are not the only thing employees care about.

Opportunities to attract and retain workers requires creating a culture that speaks to the employee and proves that you value them -- with perpetual life benefits. Just getting them in the door is not enough in 2022. Expectations are high for competitive salaries and offering that salary speaks volumes about how you value their work. But keeping employees even once you’ve raised their salaries is still a challenge.

 

The new salary bar

According to BetaKit, Canadian tech salaries have jumped 38% since 2019. Clearly, the bar has been raised. Overall compensation budgets are therefore rising with a new baseline set for attracting and retaining IT talent. 

This leaves companies and institutions with a challenge: make the work experience appealing so that your investment in their salaries doesn’t leave with the next high offer.  

The competition for tech talent isn’t limited to tech companies. Remote workers and the spread of digital technologies across every industry means that your best workers will be contacted by other firms -- each of which is undergoing the same budget stressors. 

If your workplace culture doesn’t live up to employees’ expectations, you may be seeing more resignations. And so, the hiring cycle begins again.

Each company must be true to their mission, but also identify how to communicate your corporate values. As IT ProPortal notes, employees want to feel like their work matters. Initiatives surrounding Diversity Equity and Inclusion (DEI) are becoming more important, not just because it’s the right thing to do, but because top talent wants to be exposed to a diverse range of perspectives and ideas. 

Lifestyle benefits are equally important. More and more, health drives employment decisions. Work/life balance, scheduling flexibility, and remote or hybrid work offerings can make the difference between a happy employee and one who is likely to take those other offers seriously. As noted in the Globe and Mail: Leisure Matters. Also, Microsoft’s Work Trend Index Report noted that 53% of workers globally - and half of Canadians - say they will prioritize health over work.

Employees are looking for community. Facebook noted that, in their twice per year employee surveys, the need for community regularly scores at the top. This sense of community in the workplace is all about people feeling respected, cared about, and recognized. We see more hiring success in companies that identify ways to help employees develop a sense of camaraderie. Often, that can be accomplished by hiring and onboarding in groups, developing affinity groups, or developing and executing mentorship programs. 

 

A strained pool

Studies have shown that technology jobs are particularly stressful. Yet the extra work IT employees have taken on since 2020 has added to the strain. More positions go unfilled, meaning each person must take on extra work. This often results in disenfranchisement. 

While Canada has not been hit as hard as the US by The Great Resignation -- where 72% of US-based tech employees are thinking of quitting their jobs in the next 12 months --  we are not immune. Computerworld calls this trend an emergency, and says that technology is to blame. The incompatibility between the reality and the expectation of the employee experience is growing. IT workers are hit the hardest. 

Where pay is lower than average, workloads are higher, and recognition and community are non-existent, workers will feel pushed toward resignation. When people become exhausted, they are not sure why they stay on board.

 

What’s an employer to do? 

Again, start with the wages that let them know you take them seriously. But then also take seriously one of the top demands from potential employees:  

1.  Flexibility: how things are done; how work is done; and when it is done.

2.  Culture commitment: communicate values; embrace diversity; facilitate connections between employees.

3.  Health focus: empathy; opportunity; workplace wellbeing

 

How do you get there?

Let’s make this as easy as 1. 2. 3.

1.  Download our report. Read up on each of the roles in highest demand, and ensure your salaries are competitive.

2.  Calculate the cost of vacancy (COV). The rule of thumb is that the average value of employees for an organization is three times higher than their salary. But to find a specific number for direct costs try this. And then, consider: how will the unfilled position affect innovation? How much will it impact your ability to grow and deliver products? How many others will you lose while you keep up the search? If those costs seem high, reconsider your predisposition for direct-hires. In response to a changing approach to how work gets done, we’re seeing a big move to a different way of hiring. You might be surprised to find that the non-employee population -- contractors, freelancers, and outsourcing -- represents almost half of today’s total workforce. 

3.  Finally, check your processes and evaluate your employee experience. Are you able to provide a desirable experience for clients and employees alike? If so, promote it. It’s the best way to convince others that you are a great place to work.


If we’ve intrigued you, let us know. Reach out to S.i. Systems and let’s chat about how we can help you fill those outstanding positions.

2022 IT Staffing Market Insights Report

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