The huge jump is demand for employees in recent months, especially at tech companies, has also led to a jump in salaries in the tech industry, and that poses a dilemma for managers - to go with the flow or swim against the current.
Gotfriends CEO Shiri Vax, an employment agency which is part of the SQlink Group, said that there was a 10% rise in the average salary in the second quarter of 2021, compared with the first quarter. She added that it is not only the largest companies that are paying the high salaries. "In the past only companies like Google, Amazon and Facebook offered market-breaking salaries but today we also see startups that held IPOs paying programmers with six years of experience NIS 45,000 per month. Signing on fees have again become one of the efficient means of recruiting talent. They are a tie breaker when the candidate has several attractive offers. The salary rise is felt more for junior programmers with a year or two of experience."
According to numbers, taken from the database of salary and benefits provided by Israeli startup Compete and published two months ago in "Globes," salaries for tech sector workers in ancillary, non-technological positions have also jumped by tens of percentages over the past six months.
Is employing juniors an answer to the situation?
Software security company CheckMarx chief human resources officer Dalit Krainer estimates that salaries have risen 7% since the start of the year. The company is very preoccupied with the situation. "It began in the fourth quarter last year. We understood then that in terms of the labor market, Covid was over and it was a market for employees. We examined ourselves on the issue of salaries in the market, and we conduct periodical salary surveys and raise salaries if necessary in response to salary rises in the market."
How do you know what people at other companies earn?
"We compare ourselves to similar companies so that we know where we stand. We have information from candidates and employees who leave and tell us how much the new company is paying them. People come with very clear expectations about how much they want to earn."
Do they come with reasonable salary expectations?
"Yes but we have limits. There is a very fine line between chasing after employees and needing to be in control of expenses. Ultimately every advanced tech company is based on its people. There are professions that are very much in demand and we are prepared to pay a great deal because otherwise you have not chance of employing people in this sector."
Krainer says that one of the ways to cope with the situation is to employ development people at the company's site in Portugal. "But there too salary demands are rising, especially with people being able to 'work anywhere,' although not like it is in Israel. We are also employing more juniors, young, bright people who are integrated more quickly and earn less. That is part of the answer to this dangerous spiral."
Has it happened that employing a talented candidate has fallen through because of the salary?
"No. So far we have been successful in reaching a compromise or introducing to the candidate the other qualities of the company.
Vax stresses that a salary is not everything that it appears. "It is seldom the trigger to look for a job. For most people it is the relationship with their manager, the feeling of being a small screw in a big machine or pressure on the work and family balance. When somebody goes out to look, they define expectations as NIS 2,000 more than they currently earn. They don't begin the process because of the salary but they certainly choose where to sign up because of the salary."
Ariel Halevi, co-owner of Vayomar, which specializes in consultancy and training to improve performance and decision making, suggests that companies stop looking at salaries on the tactical level but rather at the strategical level, so that they can understand where it is worth putting their money.
The answer on the salary question, he says, stems from understanding its purpose. "When you look at remuneration for employees from the perception of output you talk about the salary, bonuses, for one-off performance and promotion. When deciding that your value to an organization is higher, you are promoted and receive a salary hike. Today the competition creates a feeling that the reason salaries are high is getting access to you and not because you are creating more value. Organizations have got lost in a not very smart competition over prices and they are destroying their own ecosystems.
"An organization must ask itself how an amount that it is spending on raising a salary will contribute systemically. For every shekel that I spend there is an alternative effect. If I need to hire 300 employees by the end of the year and add a few thousand for each one of them that is a huge addition. I could for example take the money and invest it in my employees and enhance and develop them. Even if they leave after two years, I could have turned my organization into a springboard for other organizations and attract new employees."
There is a lot of talk about development and learning but isn't the main factor that keeps people at an organization the salary?
"The individual employee might prefer salary but at an organizational level there is a connection between the investment in employees and satisfaction in the organization. If an employee stays only because of the salary, then the next time he is offered several thousand shekels more then he will leave. I need to invest in keeping employees by strengthening the 'transparent glue' that creates group coherence. We see that working from home has cut off some of this glue because it has ended the possibility of random meetings between colleagues. Covid has allowed organizations to save fuel, office space, commuting, and I recommend that this money be invested in fun leisure time for the organization, once a month or once every quarter. This is the way to strengthen the organizational glue."
Krainer says that Checkmarx has also adopted alternative efforts to salary hikes by developing employees. "We have reinforced our study system and provided many platforms for development. We have built tools for employees that allow them to build a career and examine their suitability to disciplines that they want to develop and to check what is the gap that they need to close and how they can move between fields, for example from development to sales, as well as to jobs with greater responsibility and to management."
More responsibility instead of more salary
Halevi thinks that what keeps an employee in an organization is areas of responsibility. "Everything that will help employees realize themselves will strengthen the feeling that they belong to the organization. Let me feel significant, and the system recognize my value, let me expand my experience in other areas, and invite me to make presentations to the CEO. That doesn't cost the organization money but it increases output of the employee and produces huge gains."
How do you propose that an organization increases the involvement of the employees?
"To let employees do things beyond their day job, for example to take part in conferences that set the organizational culture and to give them the odd strategic project that falls between stools and is not under the responsibility of any vice president, and to create projects of a broad nature, perhaps five or six of these a year, and allow employees to engage in these projects for 205 of their time. Let's say that I work in human resources and help marketing one day a week.
This seems to be an excellent solution for an organization - you don't have to pay more and you also get more from the employee. "You'd be amazed but very many organizations have not freed themselves from the paradigm of control at the level where they tell employees just to do their own job. The concept of releasing responsibility cannot be taken for granted. I cannot describe to you how many times at a management meeting someone from product development asks a question related to sales and is told 'why are you interfering.' I recommend that organizations stop causing employees to seek permission and instead encourage an environment of trial and error."
Published by Globes, Israel business news - en.globes.co.il - on August 17, 2021
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