Digital salaries – The White Elephant In The Room

In this guest post, Resolution’s head of people, Jess Rogers (pictured below), says digital-savvy employees are changing they way salaries are negotiated. And it’s no longer a Mexican Stand-off as employees go for the maximum and employers start at the bottom…

Digital salaries continue to skyrocket. The price war for talent has hit nuclear proportions. It’s time to recruit the merry men and band together.

Back in my day, salary negotiations were a skill. Everyone knew the deal. The company would come in at the lowest possible rate, and the employee would negotiate from there. Any ground gained on the employee side was a win and something to feel great about. As long as a happy medium was reached, there were no hard feelings about the company’s original offer.

Many painful salary conversations later, we have grudgingly acknowledged that the digital playing field has shifted. It’s time to approach ‘the salary chat’ from a different perspective. The good ol’ way of offering the bare minimum and negotiating from there no longer cuts the cake. Talent now see this approach as a major breach of trust, and companies’ risk offending their well-informed sensibilities.

On the other hand, companies who sway the other way and succumb to the temptation of ridiculous salary increases put pressure on their bottom line. Pressure that results in severe under-resourcing, working those same employees to the bone.

For the second year running, Resolution has been recognised as An Employer of Choice by the Australian Business Awards. In the spirit of celebration, we would like to share with you some of the lessons we have learnt.

1. Salary banding

Invest time in updating your salary bands. Make sure to pay attention to your organisation’s specific context. If you are agency-side, do not compare yourself with client-side digital salaries. For the right employee, working across multiple clients is attractive enough to sway the ball back in your court. Equally, be careful about using the salary bands your predecessor set yonks ago.

2. Honesty, trust and good faith

For those of you who managed to sit through high school economics without dosing off, please forgive my simplistic description of opportunity cost. I was a snoozer.

We’ve all experienced it at one time or another. You are headed to the shop, excited at the prospect of that new phone | TV | couch | designer item you’ve been waiting to buy, only to be slapped in the face with 20+ options. No matter what choice you make, there are 19 other options you have missed out on. Your purchase satisfaction takes a dive.

Experience has taught me that engaging in an endless salary negotiation can be likened to the above situation. No matter what the outcome, the focus becomes whatever is missed out on. We have changed our approach and no longer get stuck in salary negotiation loops that leave both parties feeling dizzy and ripped off. We offer what we feel is a fair and reasonable amount for the skills and experience the talent brings to the table. Our employees can trust that we are not whittling them down to save every penny. Likewise, we are not paying them exorbitant rates that blow up our salary line, and ultimately force us to work them into the ground.

3. Address underperformance

This is the big one. Salary equity perception does not work the same way here, digital talent won’t compare apples with apples. Not only will underperformance be seen as a gross injustice, but equity perception will shift as people inevitably compare their salary with that of an underperformer – regardless of level.

Here is an example of a conversation I have had hundreds of times with junior digital talent:

“John’s salary is higher than mine because he’s an Account Director. I contribute more than he does. I should be on more money than him.”

Don’t be afraid to rip the Band-Aid off. Shifting perceptions and expectations around salaries takes time, commitment, and bravery. Prepare for there to be some causalities – you will find this isn’t always a bad thing. The overall impact on your organisation will be worth it. The relationship between you and your talent will change for the better. You will helping the talent war efforts in a big way.