Hiring experienced software engineers is hard, and it’s not going to get any easier — Part four: The impact

Photo by Luca Bravo on Unsplash

In part three we saw that despite the uncertainty surrounding Brexit, the UK economy is seeing more new businesses registered year on year, unemployment is at an all time low, creating a larger demand for a smaller supply pipeline. In this section we’ll look at the impact we face as businesses struggle to compete.


Salary

The fundamentals of supply and demand dictate that with diminishing supply and an increase of demand, prices will rise. This is observed with software engineering salaries in London. Median salaries in London increased 25.9% between 2005 and 2018, whereas software engineering median gross salaries increased by 61.5% in the same period. That’s a disparity of 35.6% of income growth being driven by higher demand and significantly lower supply.

Source of data: IT Jobs Watch and the ONS

Software engineers are being paid more today than ever before, far outpacing the rate of inflation. Whilst this is great for engineers, it has implications on wider aspects of business such as fewer total number of hires, higher acquisition costs (recruitment agencies being one example, where fees are typically a percentage of salary offered), more conservative hiring processes resulting in slower hiring decisions (it’s easier to approve an offer of £38,000 versus £66,000), higher employment costs through pension contributions, and PAYE.

Investing in our people is incredibly important, but it’s also incredibly important to invest in other areas of businesses to ensure there’s innovation in all areas — not just software engineering.


Retention

With more opportunities available to software engineers than ever before, businesses are increasingly more prone to attrition due to higher levels of competition for people and often paying higher salaries.

However, in my opinion, that’s quite a simplistic view. Retention is a variable that organisations have more direct control over than they sometimes think.

Referring to the annual StackOverflow developer survey, engineers were asked what they hope to be doing in 5 years. Based on 75,718 responses 33.9% said that they wanted to work in a different or more specialised technical role to the one that they are in currently. 25.7% responded to say they aspired to work as the founder or co-founder of their own company. 9.9% stated a desire to work as an engineering or functional manager. The themes we can identify from this sample is that software engineers are highly ambitious, life-long learners. They look for change, technical challenge, and well-defined career progression. Only 19.4% stated they’d hope to be doing the same work.

That’s only 1 in 5 of the software engineering workforce that’ll likely be retained in the next five years without making any changes.

There’s a common view that competition in the market is incredibly high and is a key reason to losing our team members. Whilst it is true that competition is certainly high for attracting new engineers to a company, it should be a smaller factor in retaining existing staff.

Data source: StackOverflow 2018 Developer Survey

Developers tend to be more satisfied with their career than their current job.

Our ability to retain our existing team is intrinsic to our own organisation. The importance of providing opportunities around growth, and challenging work is vital to maximising retention to levels more than just 20%.


Summary

The growth of average software engineering salaries have deviated enormously from the national average, unemployment is at an all time low, and we’ve learned that whilst developers are generally satisfied with their career, they’re slightly less satisfied with their current job.

We’re finding it harder to hire, paying more to hire yet aren’t always getting the basics right in order to keep our teams happy. The importance of retention is higher today than ever before.

In part five, we’ll look at what all of this means for the future of hiring and building engineering teams.

How have the difficulties with hiring affected you? Leave your thoughts below to continue the conversation.

Thanks for reading.

The thoughts and opinions in this post are shared with my employers, they just don’t know it yet. Just kidding — something something legal jargon here. For some of my other ramblings, you can follow me on Twitter.