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How Tech Companies Are Responding to the ‘Great Resignation’

  • As employees leave at a record rate, even the biggest tech companies are struggling to retain talent.
  • Tech companies like Amazon, Shopify, and Doordash have changed the way they pay their employees.
  • But tech workers say companies are still dismissive of pay rises and flexibility.

Employees are quitting at a record rate and tech companies are scrambling to manage turnover.

This issue affects even the biggest tech companies, which have long been talent magnets. Employees at companies like Google, Amazon and Microsoft have told Insider they feel undervalued and underpaid compared to new hires, who are offering outsized compensation deals amid a hot job market.

This market dynamic, which creates tensions in teams and a ripple effect of departures, forces companies to rethink their method of hiring and remuneration. E-commerce company Shopify recently addressed attrition issues in its town hall, while Amazon more than doubled its salary cap on entry-level positions to $350,000. Google has sped up its hiring process and Doordash has radically changed how it compensates employees with equity to stay competitive in the tough talent market.

But employees at various tech companies say those efforts don’t go far enough, saying wages remain unfair and management has dismissed complaints about low pay. At the same time, managers trying to get things done face pushback from higher ups and struggle to keep their teams’ morale up.

“My team saw that our software continued to grow, but our salary didn’t grow accordingly,” a former Salesforce executive, who recently left the company and asked to remain anonymous because he doesn’t, told Insider. was not authorized to speak to the press. . “When new recruits earn more, it’s a slap in the face and it kills morale.”

Some say pay rises are applied unevenly, leading to massive disparities between employees in similar positions

While companies like Amazon have overhauled their pay structures, some employees and hiring managers still say pay increases aren’t being applied consistently across tech companies.

An engineer who works at Amazon previously told Insider that despite Amazon’s attempts to stay competitive, their salary is still only $127,000 and they’ve had three managers in the past year. And since the company’s salary cap announcement in February, more Amazon employees have announced uneven pay increases — some employees have seen pay increases of 60% or even 90%, while others have seen single-digit wage increases that they say barely keep pace with inflation.

When approached about low-wage issues at Amazon’s recent general conference, CEO Andy Jassy dodged employee concerns.

An Amazon spokesperson previously told Insider that total compensation — which consists of base salary and equity-based salary such as restricted stock options — is based on an employee’s role and level and informed by location, performance and a number of other factors. The spokesperson added that employees and applicants have a choice of where to work and that the company regularly reviews its compensation and benefits to ensure salaries remain competitive.

But the problem is not specific to Amazon. Tech workers across the industry say their complaints about low wages are continually dismissed by senior management. A manager at a major UK tech company has said a key member of his team quit after the company was unable to raise his salary by $120,000 to match a competing offer. However, when the manager took over the position after his departure, the company offered the new candidate $200,000 despite having less experience.

Similarly, the former Salesforce director, who worked at the company between 2019 and 2021, told Insider that on his team of 25, he received multiple complaints that tenured employees were being paid significantly less than new recruits.

Specifically, new hires in 2021 were paid an average of $4,500 more than permanent employees who worked at the company longer than a year, he said. For example, an employee hired in 2021 was offered a salary of $72,000 while another employee who had been in the same position for over a year only earned $63,000.

When he approached human resources to negotiate higher raises within his team, he said he was constantly shot down for “budgetary reasons”, with management prioritizing competitive hiring over to the salary increase of current employees. And as employees began to openly discuss compensation in light of the hot job market, the disparity caused three team members to leave for other companies, according to the Salesforce manager.

Salesforce did not respond to a request for comment.

“Management told me that employees specifically had to come forward and ask for a raise, and they had to give you a number. You can’t just offer them a raise. Yet the demands were tied to so much paperwork “, the former manager told Insider.

Some companies have started offering tech workers more equity

While some companies are increasing base pay, other tech companies are offering employees more equity, according to a survey by Organization of global actions. This includes Doordash and Amazon, for example.

But the current performance of the stock market has raised concerns among employees about this strategy, because increasing the equity component of compensation becomes costly for employees when the stock underperforms. Hot and hyped companies like Shopify, which were once able to offer employees lucrative packages due to their competitive stock prices, must now address employee apprehension over low wages caused by falling stocks. .

Similarly, an employee of a well-known payments company, who also asked to remain anonymous, pointed out that stocks play a big role in the pay gap between new hires and tenured employees.

The employee joined the company in April 2021 with what he believed to be competitive compensation. But the value of their RSUs, or Restricted stock unitshas since dropped nearly 40% compared to new colleagues who joined in February 2022, the employee said.

For this reason, the employee is looking to change jobs after only less than a year with the company.

Companies are radically rethinking how they pay and hire, but some employees say they’re not getting to the root of the problem

While some tech executives are taking drastic measures to stop attrition, employees say companies aren’t addressing the root causes of the problem: higher salaries, better transparency and more flexibility.

While Google has sped up its hiring process to stay competitive on talent, current employees are leaving due to its back-to-work policy, which cuts wages if workers move.

Especially since companies like Airbnb offer to let employees work from anywhere for the same pay, a Google employee, who asked to remain anonymous because he is not authorized to speak to the press , told Insider that Google’s work-from-home policy isn’t “forward-thinking.”

A Google representative told Insider that the company has “always provided above-market compensation” and that its “approach has not changed as we moved to a hybrid working model.” Google believes the “future of work will be flexible,” the spokesperson said, pointing to the Work Location tool the company created last year, which helps employees calculate roughly how their salary would change s they were moving to another region or another state.

More than 85% of remote work or location transfer requests have been approved, according to the Google spokesperson. However, Insider previously reported that work-from-home approval has been applied unevenly.

Flexibility proves to be a sticking point for many tech employees, but pay equity and transparency remain a major issue. According to a survey of 3,252 women in the professional network Elfa, 87% of technology employees would appreciate a company-wide transparency policy. Yet many tech companies to discourage employees to openly discuss compensation.

In one approach, compliance training startup Ethena recently completely overhauled its compensation structure by adopting a formula standardized expectations such as level, performance reviews and seniority to produce consistent salary increases. Additionally, Ethena announced that if the company hires a new employee at a higher rate than it is currently paying, it will increase the salary of current employees in the same position accordingly.

Matt Dean, the company’s vice president of engineering, told Insider that implementing the formula was “harder than it looks at first,” especially since the startup went from offering all employees the same salary, below market, to one where employees are paid at different rates. But he hopes transparency can lead to better retention.

“The past few years have given people a sense of clarity about what matters most to them,” Dean said. “I think a lot of companies lose out in this new world – companies with toxic cultures and companies that don’t treat their team members with respect.”