Tech workers are still milking the cash cow. But companies are looking for ways to scale back.

The war for talent rages on, but dynamics are shifting back to the employers.

Illustration of an entrepreneur raining money into the air.

Compensation packages could start to look different as companies reshuffle the balance of cash and equity.

Illustration: Nuthawut Somsuk/Getty Images

The market is turning. Tech stocks are slumping — which is bad news for employees — and even industry powerhouses are slowing hiring and laying people off. Tech talent is still in high demand, but compensation packages could start to look different as companies recruit.

“It’s a little bit like whiplash,” compensation consultant Ashish Raina said of the downturn. Raina, who mainly works with startups that have 200 to 800 employees, previously worked as the director of Talent at Index Ventures and head of Compensation and Talent Analytics at Box. “I do think there’s going to be an interesting reckoning in terms of pay increases going forward, how that pay is delivered.”

Sought-after engineers will continue to command large compensation packages. But those packages could start to look different as companies reshuffle the balance of cash and equity.

Keep fighting the war for talent — but don’t be stupid

There’s still a huge shortage of tech talent, and that will push wages up “for the foreseeable future,” said Shankar Raman, global leader for the Technology Industry Group in the Human Capital Business at Willis Towers Watson.

“Compensation levels don’t go down,” Raman said. “What happens is they don’t accelerate at the same pace they’ve been accelerating thus far.”

Raman doesn’t expect a huge, immediate change in pay practices, noting that hiring freezes are more likely as companies recalibrate.

Raina is urging his startup clients to be more conservative and thoughtful about compensation going forward. A relative lack of financial restraints in the last few years, and unprecedented pressure to compete for candidates, left some CFOs “asleep at the wheel,” Raina said.

One client, for example, gave hiring managers too much leeway in deciding how much to offer candidates. Another client’s hiring managers perceived market compensation as “what candidates ask us for,” a mistake when candidates feel empowered to ask for “ridiculous” sums, Raina said.

“There’s a lot of stupidity that was going on that will have to get ironed out,” Raina said. “What gets mistaken for moving fast and being agile and adaptable can then turn into something that looks reckless and loose.”

Companies that have touted geo-neutral compensation — offering similar pay regardless of where the employee lives — might be regretting that decision soon, Raina said, since it gives them one less way to save on pay packages.

In order to stay competitive — and appease investors who will now be more scrutinizing — companies will be looking for other places to cut back, like cushy benefits packages. Raina expects that annual merit increase budgets could also cool off. In the red-hot talent market, those soared from the 3%-to-4% range to between 4% and 6%. But a downturn could reverse that trend back to normal.

What about equity?

Companies offering huge equity packages in hopes of competing against FAANG competitors may want to think again, Raina said. Big Tech companies that are slowing their hiring pose less competition than they did even a month or two ago.

Startups may want to scale back the amount of equity they offer and the number of employees to whom they offer equity as well as the frequency of grants, Raina said. A startup that once offered 60% to 70% of its employees a $100,000 equity grant may choose to cut back, offering half of its employees an $80,000 grant instead.

But there will be variation here. If the market continues to slump, Thanh Nguyen, the co-founder and CEO of the compensation benchmarking startup OpenComp, expects some startups to offer more equity-heavy packages to save on cash. Regardless, companies will need to determine what they can more easily part with: cash or more equity.

Sign-on bonuses are “now gone,” Nguyen said, though Raina pointed out that bonuses could become a bigger lever for larger tech companies.

Technical talent is safer than non-tech roles

Layoffs and hiring freezes are most likely to target non-technical roles, Raina said: sales, marketing, recruiting, HR.

“Some jobs are worth more than others,” Raina said. “If you’re in a more technical role, regardless, you’re probably going to be more insulated and protected, and everyone else is going to get screwed.”

This applies to compensation, too. Tech leaders may allocate more pay raises and equity to employees who are less easily replaced and whose work generates more revenue.

Might be a great time to recruit for startups

Startups that raised funding recently are better positioned than most, Nguyen said.

“If you raised recently and you’ve already banked the money, this is actually a great opportunity to pick up talent,” said Nguyen, recalling Warren Buffett’s advice to get “greedy when others are fearful.”

With hiring freezes in place at some Big Tech companies, Nguyen expects to go up against fewer competing offers when recruiting candidates. As Gem’s Chief Recruiting Officer Rich Cho put it earlier this month, for startups, “recruiting is the most strategic thing you can do right now.”

Pre-IPO companies could lure candidates who don’t see room for growth at their Big Tech jobs, Raina said.

“Startups that have a decent story can actually play this to their advantage,” Raina said.


Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.


Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories