Your payroll is an investment – and paying good salaries and contractor rates can bring you good returns. Your products and services might be top-notch, but they’re not going to sell themselves or deliver themselves.
The strength of your company is your people, and your best talent deserves to be well rewarded. Salary levels are a vital factor in attracting and retaining top software engineering talent. Not paying a competitive salary can leave you unable to compete for the best people.
How paying less costs more
Losing a software engineer can cost you more than twice their annual salary in finding a replacement. And that’s without factoring in the intangible productivity cost, the expense of finding and training their replacement, or the cost of onboarding programs. You can avoid all these costs by just paying a competitive salary to begin with.
High employee turnover also impacts the morale of your remaining engineers, drains knowledge from your company knowledge base (possibly to enrich your competitors instead), and makes you look bad to potential hires, further impacting your ability to attract talent.
How paying more costs less
1. Paying competitive salaries and rates shows you care
Engineers who are paid well are more likely to be loyal, engaged, and willing to give their best at work. When you show you are there for your people by paying them fairly, they’re likely to have your back in difficult times.
Constructing your salary policy carefully shows your commitment to your software team, which can be a great incentive for your people all by itself. Morale and productivity are higher when people can tell you care about their wellbeing.
2. Skimping on salaries is a false economy
Employee retention should always be one of your business goals. That means you need to make sure the salaries and rates you offer match or exceed the average for your industry and location.
It’s a reality of modern life that your top talent will have competitors and recruiters trying to headhunt or poach them. No matter how much they enjoy working for you, if you’re not paying them a competitive salary, they’ll be tempted.
Losing software engineers will cost you money, may impact your project timelines – which will cost your company more time and resources – and will definitely impact team morale. Not having the right software engineer in a key role could mean your company doesn’t hit its growth targets. All in all, it’s cheaper just to pay a competitive salary.
3. See your engineers as an asset
It’s easy to get anxious about the cost of payroll when you see individuals as an expense, but it can help to frame things differently. See your software engineers as appreciating assets of the company. The initial cost you invest in them will pay for itself as they learn new skills and contribute their experience, knowledge and loyalty to your company for years to come.
How much is a competitive salary?
“A competitive salary/rate” is a moving target. The employment market is always changing, so do some research using a salary guide (preferably one specific to your industry or sector). You’ll need to re-evaluate and adjust your compensation policies frequently to make sure you always stay up to speed. It is also worth reaching out to recruitment agencies; they are at the coalface and can very quickly update you on the current market position. For a particular hire you may consider asking a recruitment agency to perform a bespoke salary benchmark. This is where they take specific factors into consideration and provide you with a salary range that is forensically accurate.
Where can you find up to date software engineer salary information
JAM have produced an exclusive salary and day rate review for you to understand and evaluate the average salary rate in engineering and software.
Our salary survey is drawn from the activity of our dedicated consultants working in the software engineering field. We have analysed all locally published vacancies (both online and in printed media) over the past 6 months. We have also evaluated our own database and most importantly conducted general market research. We have specifically benchmarked against all major organisations as well as start-ups.
This salary review is a great starting point when trying to understand what the correct reward levels should be for any given role, gain access to it here.