You can’t argue with the fact there is still major economic uncertainty across the globe. And as often happens in times like this, the Salesforce jobs market can suffer. A recent report said that permanent placements were down compared to the previous year. Although temps have seen a slight increase. And whilst skills supply falls, the cost-of-living heaps more pressure on businesses to pay higher than market rate salaries. We’ve seen a much more cautious approach to hiring at the end of 2022, which has resulted in a lot of competition between organisations when it comes to hiring the right Salesforce talent. Companies are more willing to pay higher salaries to retain top Salesforce talent, rather than go through the hassle of finding a replacement. However, this can be a disastrous approach both for the individual and the business. The long-term ramifications of which, are yet to be seen. But given that past behaviour is a good indicator of future behaviour, we can take a good guess.
The downside of offering more
Offering pay increases to keep staff may in the short term solve a problem. Particularly in a skills short market, where talent is hard to come by. But, increasing the salary of those who have naturally run their course within the company, could end up backfiring.
For starters, you may end up with other employees feeling disgruntled, when they get wind of the fact that a peer might now be earning more than them. Particularly when compared to their level of skills and experience. We’ve witnessed this first hand, when employers end up losing good team members, because of pay discrepancies.
In other instances, employers have forked out the extra bonuses and pay to keep an employee, only to end up losing that individual anyway. So not only have they paid more than was necessary, but they’ve also still had to hire someone new in.
Then there is the issue of what happens when the skills market improves. You end up having team members who cost more to the business than their expertise warrants. Indeed, some of our own clients have had to bear the consequences of costly redundancy packages, following periods of economic uncertainty. As a business it really comes down to whether your pockets are deep enough to increase pay across the board or keep people who can’t provide the value to the business in the long term.
The downside of accepting more
On the flip side, we have the individuals themselves. Accepting a pay increase has the potential to stunt career growth. Of course, if financial security is your main driver, then accepting the increase seems like the most obvious choice. Having worked in this space for what spans two decades, we have seen the pattern of higher starting wages being offered in tough markets. But it’s usually the individual that suffers the most in the long term. Why? Because they end up pricing themselves out of the market.
This pattern of inflated wages in the tech space, is nothing new. We’ve seen it several times, over the years. And of course, it’s important to note, that not everyone’s salary is inflated. Which is where a proper and full evaluation of skills, experience and knowledge is important. However, in crunch times, salaries do get pushed up and subsequently individuals end up staying in their roles longer. Even though they’ve outgrown the role and the company. Simply because they cannot afford to take a pay cut.
In other instances, we’ve witnessed first-hand, the stress faced by some individuals who have taken roles way above their capabilities, purely because their salary expectations demand it. Only for it to end up in ruins, months later. But when the evitable happens, and an individual finds themselves needing to move on, or facing redundancy, they can’t find a role that will provide for them financially. And in these cases, they often bite the bullet and drop their salary expectations, or sit and wait things out, in the hope a role will come along at some point.
Although taking the increase may seem an attractive option, particularly when faced with the increased costs for basics such as food, housing etc., it’s important to weigh up the long term consequences. Perhaps look for other options that can provide for you in the short term, without impacting your future over the long term.
Whilst it may not seem like it, there is usually a silver lining. For starters, we have seen a steady increase in the number of technology jobs during the early part of 2023. Whilst this doesn’t necessarily indicate a recovery in the economy, it does indicate an improvement in the Salesforce jobs market as businesses strive to get back to business as usual, after what has been a tough year.