With the results of  TAP Network’s 2023 Tech Sector Salary and Total Rewards Survey now shining through across the Canadian tech sector, we sit down with Stephanie Hollingshead, CEO of TAP Network, to talk about the changes and trends being tracked from last year’s survey results. From a renewed focus on incumbent talent to evolving benefits beyond compensation and steps forward for pay equity, Stephanie shares insights from this past year and notes some key areas to pay attention to in 2024.

Key Takeaways:

• While tech industry layoffs dominated the headlines last year, TAP Network’s 2023 Tech Sector Salary and Total Rewards Survey told a very different story;
• With new hire pay pressure lessening, Canadian tech turned its dollars towards incumbent talent and pay equity adjustments;
• With transparency legislation in BC and tabled for Ontario, Canadian tech reduces the pay gap for women at the entry and executive levels, but the gap remains most prevalent at intermediate levels;
• As the Canadian tech industry matures, so do the benefits beyond direct compensation—many of which are considered table stakes in other industries.
  
  

Although the Canadian tech industry primarily captured news headlines with layoffs in 2023, Stephanie Hollingshead, CEO of TAP Network looks back with a bit more quantified insights than most and sees a very different story—one of a young industry maturing in a global spotlight.

“I think the big interest going into the 2023 Salary Survey was whether the layoffs in the tech sector would cool the compensation market. What impact did it have? Where did salaries go?” said Stephanie. “Another key area of interest for me is the pay transparency legislation recently put in place in BC and whether that would drive pay equity improvements. There was a fair bit of scrambling when that legislation came into effect last year.”

The story that emerged from last year’s data tells a story in progress, one of enduring talent demand, the value of incumbent talent and a renewed focus on pay equity due to recent transparency legislation.

Case in point, Stephanie points out that even with the layoffs, voluntary turnover within the Canadian tech industry continued at a near all-time high of 17%—this is the second highest that figure has crept in the past five years according to TAP Network’s survey.

Now including data from over 30,000 incumbents across 234 jobs within 204 technology companies operating in Canada, the 2023 survey remains the most authoritative of its kind until the next is released in September 2024.

Not only does this survey keep the pulse of compensation in Canada’s tech sector, Stephanie points out it also provides a platform for measuring diversity within the sector—with TAP’s Diversity in Tech Dashboard.

The most marked trends this past year were the lessening of new hire pay pressure, a renewed focus on incumbent talent and a continued evolution of benefits beyond cash compensation.

“We saw some pretty distinct trends in 2023. It was clear looking at the data that the new hire pay pressure has reduced. When we look at the analysis of new hire salaries versus the salaries of people already in those roles, they are now very similar,” said Stephanie,. “Our compensation partners at Mercer have flagged that there is still work to do as new hires compensation is ideally lower overall than the common incumbents, but given that new hire salaries were previously higher, that pay pressure has been reduced.”

As compared to recent years, organizations have been turning their financial attentions instead towards their incumbent talent with equity and retention top of mind.

“There was a big trend last year of catching up existing employee pay to the new hire pay resulting from that intensely hot talent market from a year or two ago,” said Stephanie. “We saw a lot of money given out last year to those common incumbents who remained in their role from the year prior. We track that across the database and the median increase for those common incumbents across the dataset was 7.5%. That’s not only high, but well above what companies stated they were budgeting for increases, which was 4.5%. They clearly blew that budget out of the water.”

“We saw a lot of off cycle-increases happening last year, with adjustments being made for retention or to address pay equity,” said Stephanie.

Moreover, Canadian tech is getting serious about pay equity—jumping onto the priority list for greater numbers of companies as leaders recognize both the impacts of legislation and the lay of the land in a competitive, global talent market.

“Interestingly, in our data we now see pay equity making the top five list of considerations for companies’ salary increase budgets, with 44% of companies stating it was a budget factor for them. I don’t think we’ve seen it there before,” said Stephanie. “It really comes down to transparency and companies realizing, ‘Okay, we have to be open with salaries on our job postings, so we need to put more money towards pay equity adjustments as we do that. I think we’ll see that budget focus on pay equity again this year because many companies were not prepared for the legislation when they were setting last year’s budgets. I’m very curious about this year’s results because many companies were still scrambling with prioritizing the issue last year.”

While the gender pay gap appears to have shrunk at the entry and executive levels, a notable gap remains, and widens significantly throughout the intermediate and management levels.

“Our compensation partners at Mercer analyzed gender data for the pay equity analysis because gender is the most robust diversity data we have in the survey. Ultimately, in terms of pay equity, the numbers were both up and down. It’s not a clear good news story,” said Stephanie. "It’s going to take time.”

While limited to gender pay gap analysis at present, as already mentioned, TAP Network continues to compile and share additional diversity data through their Diversity in Tech Dashboard, a free annual report on the diversity in Canada’s tech sector.

“We’re tracking diversity and pay equity across the sector and encouraging companies to track their own progress. Companies can access our complimentary Diversity Benchmarking Toolkit to support measuring diversity of their workforce,” said Stephanie. “How many people do you employ who are women, who have disability, who are Black and/or a Person of Colour, who identify as Indigenous, or who identify as 2SLGBTQ? Once you track diversity within your company, then you can explore that diversity and pay by level—looking at technical jobs, management roles, senior leadership. For me, the measurement is an important step. It shines a light on it.”

A continued sign of growth across the Canadian tech industry as a whole is a growing exploration of benefits beyond cash compensation.

“Another interesting trend is that companies are paying more attention to other components of compensation, beyond direct cash— benefits relating to financial health, paid time off and flexible work arrangements. We’re seeing offerings increase year over year. Obviously remote and hybrid work continue to dominate the tech sector, but beyond that employee benefits offerings continue to grow within the sector,” said Stephanie, who attributes this largely to the industry maturing. “As the average age gets a little higher and companies scale, benefits that are often considered table stakes in many of other industries are being introduced in tech. Benefits like RSP matching and family leave top-ups are increasing in prevalence every year and are now offered by more than 50% of companies.”

Stephanie points out that this evolution of benefits not only acknowledges the diverse needs of a multi-generational workforce, but gives more attention to diversity overall, as companies look at benefits from an inclusive perspective and offer more supports like fertility coverage, flexible holidays and family leave top-up benefits.

What continues to drive greater change in an industry of perpetual change and should have owned the tech-related headlines in 2023?

In a word, talent—and the continued demand for it worldwide.

“I call tech the Hungry Hippo—like the old table game. The biggest driving force for compensation in the tech sector is the growing global competition for talent. It just wants more talent every year,” said Stephanie. “You’ve got companies south of the border offering remote work to Canadians for double the salary and large U.S. multinationals with offices in Canada offering significantly higher pay. They have much deeper pockets than a boot-strapped, tech start-up. That’s the biggest force driving our tech sector compensation market right now.”

Stephanie noted that force continued to drive salaries and voluntary turnover alike last year and continues to shape the tech landscape.

“The size of the increases, given the economic conditions, was really interesting. The hottest jobs in the sector—job like Dev Ops Developers, Data Scientists, UI/UX designers, and Game Designers—saw 9-10% salary increases. There were a lot of jobs with big increases,” said Stephanie. “All we heard in the media last year was LAYOFFS, but this is a survey of 30,000 incumbents working in Canada’s tech sector, and I think it provides a better picture of what has actually happened versus the more sensational stories. There were a lot of layoffs, yes, but a lot of salary increases too. The more senior tech talent are still getting poached and people are looking to change jobs.”

All of the above points towards another tumultuous year for tech, Stephanie notes, which makes keeping abreast of available data key to smart decision-making around talent. From changing pay practices in a remote working world to new building blocks of benefits beyond base pay and to the evolution of pay equity beyond gender, Canada’s tech industry is definitely maturing, but not without its growing pains.

“With so much change, tech leaders need to make sure they have good data before making compensation decisions. A company told me recently that they were planning 10% merit budgets for the year and then they reviewed our survey results and realized they didn’t have to pay that much,” said Stephanie. “Then there are other companies who pay too little and keep losing people. Having  good data to make compensation decisions can really help save money. It can also help save on turnover whether if you are looking to retain or recruit people.”

And while that serves as a good pitch for the upcoming 2024 Tech Sector Salary and Total Rewards Survey, it also serves to protect those companies that can least afford to flex fiscally.

“One other area leaders need to action is pay equity. If you are not already doing pay gap analyses, start now. Your company might not be big enough to analyze data based on multiple diversity categories, but you’re big enough to analyze the gender data. Start there and if you fix those discrepancies and the systemic biases creating them, you’ve made a good start on fixing other inequities in your workforce. Pay equity is becoming more important—especially with Ontario now having tabled legislation around pay transparency as well,” said Stephanie with one final caveat.

“With the current economic conditions, the tech sector has good access to talent right now, but if you are underpaying people in any category, you are going to be losing them at a higher rate than other companies. That equity is just going to get harder to ignore.”