#30: Recruitment - Understanding worth

This episode is part of a recruitment mini-series; where I will be focusing on various characteristics that I believe are important in recruitment. And while I believe many of these themes are universal, I will of course be focusing on software development.

In this episode I talk about getting a good understanding of the market before you go into it.

Software Development remuneration has risen steadily for quite some time.

Dependent on the skills and experience your role requires, you may find that previous recruitment may not be an accurate guide to current market rates.

Blindly going into the market with a figure based on historical recruitment can quickly affect you ability to attract the best people.

Also, given that many organisations has a recruitment sign off process, having a eye on the market before getting any rates signed off can avoid recruitment stalling for lack of enough approved funds.

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Published: Wed, 26 Feb 2020 16:36:25 GMT


I've previously written about this in terms of "Economic Shock"

The investment website investopedia.com describes "Economic Shock" as:

“An economic shock is an event that produces a significant change within an economy, despite occurring outside of it. Economic shocks are unpredictable and typically impact supply or demand throughout the markets.”

I've found over the years a number of instances where businesses have struggled to cope with the Economic Shock of dealing with the IT jobs market.

In summary, a lot of business simply haven’t realised how much their IT staff are worth.

Where most salaries have remained fairly static for the last few years, this hasn't been true for IT staff.

This has led to some fairly unrealistic (and damaging) expectations when recruiting new staff and retaining existing.

Fundamentally this is about the financial stability of your organisation.

If your financial planning is not correctly understanding it’s operating costs, then there is a real danger that your business model simply doesn't work. An Economic Shock can materially affect your financial outcome.

So when should be looking at this?

Any time you are financial planning – you should have a view of the true market value – even if you aren't currently paying it. Certainly this should be part of your successor or contingency planning.

The ITJobsWatch.co.uk site tracks developers as having a remuneration increase of 5.88% between 2018 to 2019 - which I think will likely be a conservative estimate for many of the highly in demand skills.

If you are recruiting regularly, you are likely aware of the market conditions – so you should have a really good idea of local conditions for the types of employee you have.

The biggest shocks I see however are for small to medium size companies that have grown up with a single Hero developer.

Hero developers are those individuals that are pulling the long hours and working miracles.

Hero Developers have been the place where I've seen the greatest Economic Shock – and I've seen it in a number of organisations.

This stems from an organisation growing up with the Hero Developer. The Hero Developer is generally the only developer the organisation has, and as such does their best to meet the organisations expectations over the years.

I've been in this position myself a few times.

I’d be the only IT resource that a company had and it relied on me for everything. In my early career I would work a very long working day (generally around 12 hours) & then come in on a Saturday as well.

It’s not that the business demanded it. I wanted to do the best job that I could. There was work to be done - so I got on with it.

I wasn't particularly bothered about salary either – I had enough for what I needed. But looking back I was very much beneath market rate.

I'm not unique in this. It’s a pattern I've seen in a number of businesses where they have benefited from a workaholic keen to impress. And over time, they perceive this as the norm.

When however that Hero leaves – the company is exposed to a massive Economic Shock. This stems from two things:

  • Basic salary – the individual seems to be generally under market rate.
  • Multiple people are needed to cover the same hours – the business is used to all that effort. The only way to match that is to have more people

And in most organisations this comes as a massive surprise.

Often this will surface as frustration.

The organisation has paid more for a one-to-one replacement; yet they are not getting the same hours or turn around. And the temptation is to blame the new guy.

It isn't the new guy’s fault – it is simply an unrealistic expectations from the organisation.

Unfortunately, I've seen it end poorly for the new guy simply because the organisation hadn't understood the additional benefit they had previously received.

The problem is that they simply haven’t been aware of the true value they had been receiving up to that point.

As managers we too often see staff as a number – a component of a machine which can be swapped in and out without consequence.

This is simply untrue when it some to any level of knowledge working. Each individual is different – you will never be able to perform a straight one-to-one replacement.

Our tendency to over simplify the higher we go up the management chain. The greater the gross simplification, the greater the hurt to our organisation.

In this podcast I've talked about how important it is to be cognisant of the recruitment market you are going into.

Its easy to have the wrong impression on what you are looking for - especially in a fast moving industry like software development.

Having the wrong value in your mind can cause material problems in not just attracting the best people, but can also lead you to mis-valuing your existing people - making it difficult to fill their shoes.