The 10 Minute Talent Rant is live. I’m James Hornick joined by Jeff Smith and we are on the clock. The 10 Minute Talent Rant is our ongoing series where we break down things that are broken in the talent acquisition and hiring space, maybe even pitch a solution or two.
Before we dig in, all of our content can be found at talentinsights.hirewell.com. This week’s topic. Are you ready, Jeff? I am. And I will say the people get collared shirt, Jeff. So it will come with increased visual credibility. Is this a first? I think it’s maybe the first time you’ve dressed up a little bit.
A little. I mean, I still look like a, you know, a savage Yeti, but yeah. Yeah. That’s the end joke. I only wear collared shirts on this show to make up for the fact that you’re usually- homeless. Not there, anyways. Yeah. Episode 103, compensation is a train wreck. So the quick intro to this, over the holidays, I wanted to post about this, but I realized doing so might actually get us in trouble.
Jeff and I, both being upstanding citizens of the great state of Illinois, land of Lincoln, January 1st realized we had this new law going into effect on pay transparency. And it’s one of those ones, I actually thought this was a law already. Anyways. To be honest, I did too. Yeah, because Colorado has this. A bunch of other states already do.
I thought we did, but we didn’t, but now we do. Salary ranges and benefits have to be in every job posting or job ad, I should say. So whether it’s on LinkedIn or whether it’s on your website and you’re in Illinois, you’re advertising in Illinois, has to be on there. So I say, gotten us into trouble because we realized our website,
we always put job salary range on our website, but we realized we didn’t even have the API written to pull benefits info to our site. We didn’t even think of that, is that was kind of the gotcha. So I think that’s done. I don’t know. Anyways. If you’re in Illinois, side note, your job ads now need to have both salary comp information and benefits, or you’re probably going to jail.
Yeah, audit it for sure. It opened up a larger discussion. We had this internal kind of brainstorming about just in general, how much of a mess compensation banding is right now. It’s always been hard, but the in joke about salary ranges is employers only see the bottom number of that range.
And the candidates only see the top number and it doesn’t really make anything more clear. So we want to dive into like the last few years and like little tranches and see how we got here. So James, start us off. Yeah. So, rewinding time, the post financial crisis. From the time everything started to rebound up until about 2020, good times, it was a great decade.
It was a great decade. Everyone’s salaries inched higher, every company did better. Companies just baked it into the cost of doing business, but everything was fine. And there was also the stability. It’s just like, it was kind of, it was probably, it was the best of times. Things went on and on year after year uninterrupted, you know, technology and digital is a boom time.
It was when venture capital firms and IPOs just kind of went through the roof. You know, people in those industries saw the most gains but really everybody did. And I think I mentioned, this is kind of starting this discussion off. That’s also when people get used to that kind of linear salary increase, that also provides lifestyle inflation,
people start spending more, they get accustomed. So it becomes kind of self fulfilling that people just kind of expect that salaries should always go up because after for 10 years, that’s all they’ve seen. And for you younger folks that it, the lines were correlated, but it wasn’t, inflation wasn’t completely out of whack with salaries.
Like they both kind of stayed to your point, linear. Yeah. And we had the crash, the COVID crash, and people fell, generally speaking, into a couple buckets. They either realized that, you know, really quickly that their livelihood was in jeopardy, could disappear, and learned to either hustle at what they were doing or develop something on the side to side hustle. Or they just hung on like grim death and think they’re lucky stars that they were gainfully employed.
For companies, it was the first time in a while where they had a golden opportunity to cut costs and gain negotiating power with their group of employees. I don’t think any company was thinking about it advantageously at that particular moment in time. It just so happened that, yeah, we need to cut costs because the world might be ending.
The side hustle thing, however, was the first time where workers were like, shit, like I might be able to do a couple of things at once. Which probably had a heavy influence on the next, my coined term here, micro era. I invented that, by the way. Yeah, that’s good. That’s good. I like that. Yeah. The 2021-2022 boom, AKA the great resignation. My most hated moniker ever.
The worst. That was used- that was used every day by every influencer on LinkedIn for a year and a half. Worst. Again, reviewing salary skyrocketed once again. So after the decade long increase and the crash, then it got really out of control. Shouldn’t say out of control. For workers it was a great thing, but it was, it was a pretty insane kind of increase.
Remote work flourished for the same reason. Every company learned how to do it because they had to, but then to hire anybody, you had to kind of like allow remote work. And companies, they paid whatever it took to hire. It was a great time for us. Moving the long haul, turns out to be kind of fool’s gold. But the one thing I want to kind of point out here, the one thing I think gets missed a lot in the discussion is worker shortages and rising costs drove a lot of offshoring.
So long story short, you know, the cost of doing the same business that you did in 2019 just skyrocketed.
Marker
so Nia, let me, I’m going to restart that whole segment. All right. Um, so which brings us to the 2021, 2022 hiring boom, AKA the great resignation, which I still hate worst, worst moniker ever worst, um, salary skyrocket again, because just absolutely insane demand, you know, remote work flourished for the same reason.
Anybody who wanted to hire anybody had to hire remote workers, but also because companies learn how to do it. There’s a downside to this, which I’ll tell you in a second. Yep. Yeah. Companies paid whatever they needed to hire these people. Great time for us. Turns out it was kind of fool’s gold in the long run.
But, um, back to the point I wanted to make, worker shortages, ability, remote work, rising cost, TLDR, cost doing the same business in 2019 skyrocketed. Offshoring became a big thing in a big way, really fast. Yeah. And I don’t think people knew it. When it was happening, it was kind of happening in the undercurrents of the company.
Next era was, you know, maybe 20 late 23 into all of last year was the free money is over era, essentially. So workers still by and large were bucketed into two groups essentially. But they were, I made it through layoffs and I’m never leaving because I have a great big inflated salary from the great resignation and it’s going to take, you know, an act of God to get me to move.
Or number two, I got let go and I’ll take anything. That’s what we call a wide market. People who expect a ton of money to leave or people who expect not very much by comparison. All of them in one labor market. And side note, there is a corollary to the real estate market. Anyone, me included, anyone who got a three or sub 3 percent mortgage rate back in the day, back in the day, three years ago.
I’m not moving. Yeah, it’s the exact same thing. Exactly. So meanwhile, you know, companies got another opportunity to cut costs and headcount, which kind of resulted in that second bucket. Yeah. So left us with, like I said, two groups, those who need a lot of money to move and those who don’t. Yep. So base level, we have this large group of handcuffed workers who can’t move because you know, because of that compensation, even if they wanted to. So they’re disenchanted with their jobs.
It’s like, well, I’m not moving because I make a lot of money. And then there’s the 2nd larger group that, you know, we’ll take the same work for way- and I don’t, we don’t have a percentage. I’m just going to enfor- like, way less than group 1. And it’s resulting in the salary bands that y’all are seeing that say
digital product manager, 100K to 220K. It’s not, I guess that’s the thing that gets lost. It’s not just like companies like throwing out a bullshit salary range. It’s because they see people in the market that are at the both ends extreme to that range. And we mentioned it at the beginning, we know which number the companies look at,
lower end. And we know which number the candidates look at, higher end. We have a director here. We brought this to the people at Hirewell, director here, nameless, you know, to guard her innocence. She doesn’t lead with this stuff in her messaging. She always asks what the individual is targeting.
Then she shares, you know, the ranges of what she thinks it’ll take to get a deal done and I don’t. When we say a deal done, it’s, we want to make sure that it is market appropriate, the candidate’s going to be excited, the company’s going to be excited, okay. No malintent here. The point is, again, when you share a range, candidates hear the high number.
Conversely, we see requests from candidates all the time now, where we know that person is Insanely under market 40, 50 points under market. Like how are we supposed to navigate this? Yeah. And I think one of the key things here is companies really miss this nuance. They talk to the latter group or they look at aggregate salary data, which combines all this together.
So they talk to the lower, the less expensive people, or they look at salary data, which kind of combines all these things and they don’t understand “market rates” don’t entice happily employed people to leave their jobs. Yep. We can go to market and get anyone we want. Well, okay. You just said that you don’t want anyone from bucket two.
So, that data is meaningless to me. Anyway, gets us back to the real disruptor. It’s not AI or H1B visas as, you know, the media and all the talking heads want you to believe. It’s offshoring to Latin America. Fact. Eastern Europe. Eastern Europe. All those places. India.
Companies are more comfortable with all of this now. We’re a global economy for the, really the first time. All interconnected. And the workers are really good too. They’re trained. Yeah. So five to six years ago we started to get a lot of business from European and APAC firms who needed to build US entities. And in now in the past three years or so, two and a half years, it’s now US based companies who are hiring
US based salespeople and pushing everything else offshore. Yeah. And this is the downside of remote work. We allow this to happen inadvertently by making companies more comfortable with doing it. I mean, I got a couple of examples. There’s a organization, a woman I know runs a company called Cradle, which actually they do a lot of offshoring from Africa where there’s very highly educated population.
The job market there isn’t great. I have three different friends who have used her service. It’s excellent. These are like SDRs or admins who do marketing, that type of stuff. So kind of more, you know, lower end type of work, but it’s still, it’s just like a fraction of what it is here for the same quality of work.
Yep. Similarly, I’ve got another friend who owns an RPO firm, does kind of some stuff similar to we do. Most of his recruiters are in Latin America. He pays them half as much as he pays his U.S. based sales force. And straight up says to me, like, they’re just as good or better. Like these are people who used to work at Google or Meta or whatever before, like they know what they’re doing.
And I even said, friend of the show and comments when I was talking about this the other day, Aaron Riska, you know, she pointed out that if you survey 10 recruiters out there who work for a tech company with fewer than 250 employees, ask them where they hired their software engineers or most recent hire sit,
nine out of 10 are going to say Latin America or Eastern Europe. Yeah, fact. All right. What are our takeaways? Takeaways. So, here’s where we’re headed. Companies are going to decide what they need here and what they need to offshore. It’s as simple as that. Offshoring is happening at an increasing rate, whether you like it or not, and it’s having a direct impact on the compensation ranges here.
Yeah, it’s not going to stop. So, buckle up and get used to it. Because of these big disparities, companies are going to have to shell out what they may perceive as overpaying for the key roles in the U.S. but keep in mind, a lot of what happened, you know, during the great resignation kind of already got us to the point of what those numbers should look like.
So I don’t think anybody should be expecting another bump anytime soon. Yeah. Now for the worker side of this, if you’re a U.S. based worker, you’re going to have to look at a few things like higher skill roles, things that have to be done strategically, have a lot of strategy involved, or stuff that has to be local.
There are positions, especially when you get outside of the office to work circles, there are lots of things that have to be local. And that’s where you have more protection against wages, wages getting decreased. Yeah. You can’t build a house remotely. That’ll never change. Look, we don’t know how this is going to unfold, but one thing’s for sure is we always, you and I are always ready to throw the bag of popcorn in the microwave and fire it up.
So, see what happens. We are short on clock. That’s a wrap for this week. Thanks for tuning in the 10 Minute Talent Rant, part of the Talent Insights series, which is always available for replay on talentinsights.hirewell.com, as well as YouTube, Apple podcast, Google podcast and Spotify. Jeff, thanks again, as always. Everyone out there, we will see you soon.
