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Free Food Isn鈥檛 Cutting It: How Startups Are Competing For Talent In A Tight Labor Market

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Soon after the COVID-19 pandemic started, social media management software startup made a radical change: It switched to a four-day workweek.

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The decision came as a result of the pandemic and feedback from team engagement surveys. The pandemic and the lockdowns that came with it weighed on employees, especially the parents who now make up around 30 percent of the company.

So Buffer shifted to a four-day workweek, partially to help the parents on the team, but really to mitigate burnout across the company. One of the company鈥檚 newer benefits, the shortened workweek is now one of the perks that helps Buffer stand out in a competitive hiring market.

鈥淚t comes up a lot in hiring, and we鈥檝e had a couple of senior people we鈥檝e hired recently,鈥 Hailley Griffis, Buffer鈥檚 head of public relations, said in an interview. 鈥淎nd it鈥檚 a really competitive talent market right now so the four-day workweek is a differentiator.鈥

Startups are hiring for workers in a brutally competitive talent market. The U.S. unemployment rate fell to 3.6 percent in March, a new two-year low, according to the most recent report by the. Startups flush with cash after a record year in venture investment made lofty hiring goals, but face stiffer competition amid the 鈥淕reat Resignation.鈥澛

That means the stereotypical startup perks鈥攑ingpong tables, daily catered lunches in the office鈥攁ren鈥檛 cutting it anymore for companies that want to attract the best workers.

Tech鈥檚 reputation for cushy benefits and higher pay have helped the industry stand out among other sectors.聽But tech companies still need to step up their game to compete for talent in 2022鈥檚 tight labor market, and many are responding by offering higher salaries, flexible schedules, more paid time off and, increasingly, employer subsidies for things like fertility services, gym memberships, and child and elder care.

鈥淚f you鈥檙e not offering work from anywhere, if you鈥檙e not offering unlimited PTO, if you鈥檙e not celebrating that PTO and making sure people are actually using it 鈥 you鈥檙e falling behind,鈥 said , CEO of lifestyle benefits marketplace . 鈥淭hey went from nice-to-have to must-have to table stakes really fast.鈥

Tech salaries climb rapidly

鈥淲idespread hunger for talent鈥 boosted the average U.S. technologist鈥檚 salary 6.9 percent between 2020 and 2021, to $104,566, according to tech career website 鈥檚 2022 tech salary report.聽

That figure represents the highest salary ever recorded by the report, and “a positive sign for technologists in terms of the current and potentially future value of their skills and experience.鈥

IT Management CEO, CIO, CTO or similar positions had the highest average salary in 2021, at nearly $152,000. Systems architects and cloud architects/engineers came in second and third in terms of salary, earning an average of around $148,000 and $141,000, respectively.聽

Web developers saw the highest average salary jump between 2020 to 2021, with those in the profession earning nearly $99,000 per year, a 21 percent increase from the average salary in 2020.

Salaries are on the rise around the country, not just in tech hubs like San Francisco and New York. Pittsburgh and Atlanta posted some of the fastest-growing salary increases, with pay rising around 14 percent year over year, per Dice. Pittsburgh鈥檚 average tech salary was around $98,000 in 2021 and Atlanta鈥檚 was around $108,000, while Silicon Valley鈥檚 was about $133,000.

Perks, not just pay

Tech employees don鈥檛 just want more money. They also want benefits that encourage work-life balance.

About 27 percent of tech workers cited child and elder care as an important benefit, but only 10 percent said they receive the benefit, according to Dice. That demand is partially because more employees have reached the age where they鈥檙e caring for both their parents and their own children.聽

Remote work has also become a priority for talent, and the job market reflects that: The percentage of paid job postings on offering remote work jumped 357 percent between 2020 and 2021, with media and tech having the highest concentration of remote job postings on the platform,

The 鈥渕ost important perk鈥 really varies from employee to employee, and even changes for an employee over the course of their employment, according to Peace. A monthly fitness stipend, for example, could be an important benefit for an employee who enjoys working out, but may not be as useful for an employee who鈥檚 recovering from surgery.

Fringe鈥檚 marketplace allows employers to allot points to employees to use for whatever benefit they want. For example, an employee could use their employer-granted points for a fitness membership or for an credit.

The top category employees on the Fringe platform consistently choose to use their points on is food: orders, meal kits from , grocery delivery, coffee subscriptions and the like. That makes sense given that everyone needs food, but beyond that, the perks that employees choose varies.聽

For example, in March 2022, the top vendors employees on the platform chose were DoorDash and , followed by Airbnb and . Neither Airbnb nor Uber was in the top 10 places employees chose to spend their points in April 2020, given the pandemic.

Peace said offering workers those choices is important. 鈥淲hen you don鈥檛 restrict people, you don鈥檛 say you must care about wellness, you must use this money for your student loan payment,鈥 he said.

鈥楽upporting the whole person鈥

Sales platform undertook a 鈥減retty significant overhaul鈥 of its benefits going into 2022, according to , the company鈥檚 chief people officer.

The San Diego-based company has employees in seven countries, so it鈥檚 playing 鈥渃atch-up鈥 when it comes to providing benefits that other countries require.

The company鈥檚 decision to provide egg freezing and IVF benefits through its insurance provider proved to be one of the buzziest changes.

Seismic evaluates its benefits approximately six to nine months before the end of the calendar year and surveys its employee demographics and what they might want, Ho said. Employees were especially interested in the decision to offer fertility benefits, a rare offering for a company of Seismic鈥檚 size of about 1,500 workers.

Seismic looked at its competitors while considering what perks to offer to attract talent, Ho said. But she emphasized employees want to be supported in more than one way.

鈥淥ne singular benefit will never attract and retain employees,鈥 Ho said.

Seismic wants to 鈥渋gnite growth,鈥 both professionally and personally, she said. That means supporting employees in a holistic way鈥攕uch as if they want to start a family now or potentially later.

鈥淭here鈥檚 an expectation now, rightly so, that employers should be managing and supporting the whole person,鈥 Ho said. 鈥淭hose employers that don鈥檛 step in will be the employers that the big resignation will be affecting.鈥

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