How Can Your Company Attract and Retain the Best Technical Talent?

Accelerating demand for technical talent means companies should expect to pay an equity premium to secure the best. What can you do to attract and retain the finest?

How Can Your Company Attract and Retain the Best Technical Talent?

12 Feb 2016 by  Tim Brown & David Knopping

In an age where every person has access to an average of 3.47 connected devices, technical talent is increasingly prevalent at companies not traditionally associated with the technology sector, especially automakers, banks, manufacturers, and retailers. As more corporations look to boost their digital businesses, they are beginning to bring technical talent in-house, including teams of software developers and engineers.

Accelerating demand for these skills creates more competition, and as a result, technology companies are now more willing to expand eligibility for long-term incentives (LTI) and/or raise the value of LTI awards for employees in technical roles. (In this case, we define technical roles as engineering and product development positions requiring a bachelor’s of science degree (or higher), usually in engineering or computer science. Employees in business functions like marketing, sales, and finance are classified as non-technical.)

Further complicating the situation is the fact that most technical employees hold large amounts of unvested ‘in-the-money’ equity awards at their current employers, usually in the form of restricted stock. As such, large new-hire awards are often required to attract key talent. However, what is often less clear for companies is the extent of equity award premiums required to move technical talent compared to non-technical ones. Nor is there good data on how these premiums vary in Asia, Europe, and the US.

Equity award levels

To address these issues, we analysed data from the Radford Global Technology Survey for technical and non-technical employees at the individual contributor professional job level 3 (P3), the mid-career point for most individuals. As expected, when it comes to LTI awards, technical employees receive higher amounts compared to their non-technical colleagues. However, these premiums ranged widely from as little as 4% in Germany to as much as 45% in Canada.

Technical-talent-infographic-1

Equity eligibility

Technology companies are well-known for their broad-based approach in equity eligibility. However, equity eligibility is still far from universal. According to data from the Radford Global Technology Survey, LTI eligibility for technical employees is higher in most countries. Only in India and Germany do non-technical employees enjoy marginally higher eligibility rates.

Technical-talent-infographic-2

Equity receipt rates

Actual equity receipt rates are even more indicative of the premiums attached to technical employees.

In every major market except Germany, a higher percentage of technical employees at the P3 level received LTI compared to non-technical employees. However, aside from the UK, less than half of the work force at the same level—regardless of job role—received any form of LTI.

Technical talent infographic 3

Based on these findings, it’s clear that LTI and equity compensation strategies are fast becoming key differentiating factors in attracting and retaining technical employees in the technology sector. In spite of the equity premium, companies with lucrative packages for technical employees stand to benefit from a better choice of the talent pool, which ultimately leads to the opportunity to enhance performance over their competitors.

Start a conversation with us

Radford delivers compensation data and advice to technology and life sciences companies. It's part of Aon Hewitt, a business unit of Aon plc (NYSE: AON).

If you need advice on attracting and retaining the best technical talent, get in touch with us today.

Tim Brown & David Knopping

Since joining the firm in 1998, Tim has remained focused on data integrity, responsive customer service, and a commitment to expanding the value of product offerings for Radford survey participants. Tim earned a Bachelor of Science degree in finance from Santa Clara University and a Master of Business Administration from Pepperdine University. Since 2007, Tim has taught a course on compensation and rewards as part of the undergraduate human resources degree curriculum at San Jose State University.

David Knopping has nearly 15 years of compensation consulting experience. His primary consulting projects cover various sectors of the high technology industry, including software products/services, semiconductors and Internet/e-commerce. David earned a bachelor of arts in economics from the University of Michigan and a master of business administration from the University of California, Berkeley – Haas School of Business. He is a frequent speaker on executive and equity compensation topics.

Get in touch
Tim Brown
San Jose, California
David Knopping
San Francisco, California
Mollie Kohn
Mollie Kohn
Sydney, Australia