The technology sector is facing a compensation plateau. Amid rising tech layoffs and shifting IT priorities, employees are experiencing slowing salary growth in a field once known for fierce hiring competition.
Notable shifts have included:
- Average tech salaries dropping for the first time in 19 years in 2023.
- The number of IT professionals facing pay cuts doubling from 2022 to 2023.
- Salaries for IT workers in non-technology industries continuing to decline in 2024.
But is this stagnation actually beneficial for employers? Not quite.
While labor costs might be stabilizing, employees are frustrated. In fact, 59% of tech professionals feel underpaid, and many are simply staying in their jobs because they feel anxious about the economy or stuck. It’s a perfect recipe for burnout and disengagement—but strategic employers can drive job satisfaction even as tech compensation levels off.
Here are four ways you can engage and retain employees without relying on an attractive salary.
1. Invest in Professional Development
Does your company offer structured career paths and continuous learning opportunities? Doubling down on professional development can strengthen IT team engagement—especially since 67% of professionals say they are aiming to advance their careers.
Technical employees who can visualize their five-year growth trajectory gain motivation to contribute, grow, and stay with your organization.
Offering the resources for professional growth is key here. IT employees need support—whether in the form of mentorship, certification stipends, or regular training—to feel like they’re capable of advancing in the first place.
With nearly half of tech professionals actively searching for new opportunities, largely due to layoff anxieties, your initiatives can prove key to retention, too. Actively investing in these resources shows employees you’re envisioning a future with them in it. And that offers a sense of job security.
2. Enhance Work-Life Balance and Flexibility
Hybrid work is no longer a competitive advantage; it’s a baseline expectation. A recent EY survey found:
- 40% of knowledge workers want to work remotely 3-4 days per week.
- 28% of knowledge workers want to be fully remote.
- 26% of employees say the ability to work from anywhere is a top priority.
Employers often underestimate the fluidity of the labor market, believing that IT employees will return to the office simply due to the decrease in job openings. However, many tech professionals deeply value workplace flexibility, which means companies that offer hybrid arrangements are best suited to meet the expectations of top talent.
If you want to exceed expectations, go above and beyond with a culture of trust. Focus on results rather than hours logged, accommodating different life circumstances and working styles. This simultaneously reduces the burnout-inducing pressure of micromanagement.
When in-office work is essential, prioritize high-value collaborative, relationship-building activities that strengthen morale—not individual tasks.
3. Rethink Total Compensation Beyond Salary
Base salaries may be stagnant, but creative approaches to total tech compensation can still attract and retain talent. In fact, the EY survey reports 37% of knowledge workers are now prioritizing bonuses and incentives related to their performance and contributions.
Rather than relying solely on annual performance reviews, empower IT managers to set aside funds for immediate recognition when employees go above and beyond. For example, if an employee helps launch a high-quality application faster than the project timeline or proactively identifies and fixes a significant security flaw, consider compensating them for going the extra mile.
Strong health benefits and lifestyle subsidies, like fitness and family care stipends, are also growing increasingly valuable as the cost of living rises. At Capstone IT, we have even offered an Employee Assistance Program (EAP) providing mental health services, caregiving support, and counseling services to employees for extra support.
4. Personalize Retention Strategies
Every IT professional has unique motivations and retention triggers. It’s important to personalize the career experience for each individual, first by connecting their role to the organization’s greater purpose. When employees see how their unique contributions make a meaningful impact, it can strengthen their commitment to the company.
Customizing roles to individual strengths can be powerful, as well. When possible, shape responsibilities around employees’ skillsets and interests. A data scientist with strong communication skills might enjoy customer-facing roles, while a more introverted colleague might thrive in deep analytical work. Furthermore, IT leaders can work with each team member to understand their career aspirations and develop individualized growth plans.
Finally, consider conducting regular “stay interviews.” Don’t wait for exit interviews to learn what matters to your technical employees. Proactively ask what keeps them engaged and what might cause them to leave. These conversations should happen separately from performance reviews to keep the focus on employee satisfaction rather than evaluation—then address frustration points quickly.
The Long-Term View on Tech Compensation
While tech compensation may be leveling out after years of rapid growth, this adjustment period offers an opportunity to build more sustainable talent strategies. Organizations that rely exclusively on above-market compensation face constant vulnerability to competitors who can pay more.
In contrast, companies that create compelling employee experiences build loyalty that transcends salary comparisons. When the inevitable next compensation cycle heats up, these organizations will retain their core talent while competitors experience disruptive turnover.
At Capstone IT, our technical staffing experts can help you optimize your compensation strategy—all while connecting you to top talent that aligns with your culture from day one. Our proven processes support performance and retention, whether you’re aiming for a direct hire, contract to hire, or temporary placement.
Strengthen your talent strategy with support from Capstone IT. Connect with our IT staffing experts today.
