As the U.S. economy heats up and a new paradigm of remote work means employees expect flexible work arrangements, startups are finding themselves vying for top talent in a hyper-competitive market.
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Tech companies have always been ahead of the curve when it comes to employee benefits and perks (Free lunch! Wellness stipends! Booze in the office!). But remote-friendly policies mean that tech workers in 2021 have more options in where to work than ever, and that in turn means companies are doling out signing bonuses, flexible work hours, and other perks to compete for talent.
Popular perks include a stipend for an employee’s home office setup, mental health resources and flexible hours, as well as budgeting for quarterly team meet-ups.
In tech, the advice has always been ‘be ahead of the pack,’ when it comes to attracting top talent, Ryan Sutton of recruiting firm Robert Half’s technology group said in an interview.
“But now it’s a must to survive,” he said.
The Employee Wish List
Tech workers don’t want to be told when and how they should do their work. Number one on the wishlist for many tech job candidates is flexible working hours and the ability to work remotely, according to Nadia Vatalidis, the director of people at Remote, a payroll, benefits, and human resources company for distributed teams.
The new phenomenon of employees who would rather quit jobs than return to their offices has been documented. Many tech job candidates want a clear policy about remote work, rather than a fluid one that could change as public health guidelines change, according to Sutton.
“The perks don’t matter if you don’t understand the policy,” Sutton said. “And if you’re afraid the policy is going to be rescinded in 3-6 months time, when you talk about your career, a perk for six months isn’t going to retain you.”
About 30 percent of the jobs on tech career company Dice’s website are remote-qualified, which is “way, way up from pre-pandemic statistics,” according to Dice CEO Art Zeile. Companies are also offering stipends for home offices. Dice parent company DHI Group, for example, offers employees $150 per quarter to spend on their remote work setup.
“I think that’s becoming more of a norm as a perk,” Zeile said. “Acknowledging that you’re going to be working more at home and we want to make sure you have the right equipment.”
But while more roles are open to remote employees, that flexibility also comes with the touchier subject of compensation. Many companies, including Facebook, have adopted a scaled salary to take into account the cost of living and market rate for certain roles in various geographies.
And areas outside of Silicon Valley and New York have seen the average tech salaries rise over the course of the past year, according to Dice data. Charlotte, North Carolina, and Orlando, Florida, are seeing tech salaries grow the fastest.
Raw compensation is still the biggest draw for tech workers, according to Zeile, and smaller companies are more likely to be location-agnostic when it comes to pay than the tech giants.
“Smaller companies have to acknowledge that they are competing against these giants: the giants do have these great benefits,” Zeile said.
While companies have begun offering signing bonuses and more flexible work schedules for employees, they’ve also had to adjust perks related to remote team morale.
“The biggest theme that keeps coming up is employees and event planners aspirationally want to do IRL events, but there are inclusion matters (to consider),” said Shane Kovalsky, CEO of virtual events startup Mystery.
The solution many tech companies have settled on is keeping most team events virtual, often using professional services like Mystery to help plan and facilitate events, but with quarterly or bi-annual gatherings in person.
Data from Kruze Consulting, an accounting and consulting firm for startups, backs that up.
Startup travel spending is basically back where it was back in February 2020, according to Healy Jones, a vice president at Kruze. But Airbnb spending specifically has blown up, and has spiked more dramatically than airline travel and travel and entertainment in general.
“Now that startups feel that you can get together safely because you’re vaccinated, they’re renting an Airbnb and having a product jam session,” Jones said.
Data from Kruze Consulting shows that startup spending on Airbnb rentals more than doubled between April 2021 and May 2021.
It’s the idea of a remote sales team format moving to technology teams, according to Zeile from Dice.
“We’re seeing companies say, ‘We’re going to connect as a team on a quarterly basis as a functional work team,’” Zeile said.
Airbnb has its own program designed for team travel and bonding. And with remote employees traveling periodically to their company headquarters, Airbnb expects more business travelers to travel together and stay together rather than at separate hotels, CEO Brian Chesky said on the company’s most recent earnings call.
Companies essentially have three ways of retaining employees, according to Kovalsky: their mission, compensation, and the people they work with. Changing a company’s mission and compensation scale is often more difficult than helping employees get to know each other and feel connected.
When companies moved to operate remotely, “the main cost people saw was as it related to team cohesion,” Kovalsky said.
While morale budgets used to be more fluid, now they’re something companies plan and budget and bring in outside vendors to help with. Mystery, for example, has organized events for tech companies including Stripe and Amazon.
But shifting to a remote-first or hybrid workplace isn’t all about adjusting bonding activities and finding ways for teams to connect. There are also less fun things to consider when a company goes from having employees in the same office to having them in different states, like figuring out compensation, tax compliance measures, and employee health care plans.
Kruze Consulting has seen more startups shift away from popular payroll systems like Gusto in favor of professional employer organizations that can help them with matters like state compliance and picking the appropriate health care plans. The share of companies using professional employer organizations for their payroll has doubled since the beginning of the pandemic, according to Jones.
Startups with California-centric health care plans have also found it expensive to do additional state add-ons, and some have begun to domicile their health plans in other states, Jones said. That’s just one of the hurdles that comes with having employees in multiple states.
Illustration: Dom Guzman
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