Let’s talk money!
As a recruitment partner to North American tech companies, we’ve talked with hundreds of high-growth start-up and scale-up leaders about their experiences, aspirations, motivations, and of course…. their compensation history and expectations!
When establishing a target compensation range for a new search, clients always ask us “What are you seeing in the market right now for a role like this?”. So let's pull back the curtains and share some insights to help you create a competitive compensation package for your next big hire. Or, if you’re on the hunt for a new role, we hope you’ll find this data useful in the negotiation process.
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Teaser: Here are some interesting statistics that you’ll learn more about in this snapshot:
Wages have grown by 17.4% on average across all Software Engineering levels between 2021 and 2023.
The average on-target bonus for Software Engineering Managers and Leaders across all levels was 21.2%.
Senior Engineering leaders continue to hold a power position despite a shift towards a buyers' (employer-sided) market.
Far from being replaced by AI, software engineers are evolving alongside it, making their skills more critical than ever.
The gender gap is glaring, especially at leadership levels, where less than 15% of Director and VP-level positions are held by women.
Let’s dive into the numbers
Our analysis of compensation in tech start-ups and scale-ups focuses on the top 20-25% of Software Engineering leaders (Manager, Director, VP/CTO), offering insights into how they blend base and variable pay, with data mainly from those with proven success in product-oriented companies.
What are you looking at?
This data represents volunteered current compensation (CAD) aggregated at the 25th, 50th and 75th percentiles.
Data was collected by the Artemis team, through interviews and insights from our network of software engineering leaders in SasS startup or scale-up based in Canada. Data points were collected between Jun 1, 2022 and December 2023. No data from secondary survey sources has been used in this analysis.
The structure of compensation plans varies for Software Engineering leaders, but we’ve seen the majority structured as base-heavy with a 10-30% bonus, plus an equity stake. The average bonus across all levels was 21.2%. Because this is such a base-heavy role in most cases, we’ve opted to show data as total on-target earnings rather than separate variable incentives.
Compensation packages for Software Engineers and Leaders have experienced an impressive average growth of 17.4% across all levels. This data indicates that companies continue to focus on retaining and attracting top engineering talent over the past two years, even amidst widespread cost-reduction measures in the tech industry during the economic downturn. Wages have not only kept pace with a high inflation rate of 11.1% during this period but have outpaced it.
We recognize that there is a wide range in compensation at the most senior levels, with outliers reaching as high as $804K and a standard range spanning from $190K to $455K. This isn't such a surprise, and gives us inspiration to do a deeper dive into how these numbers further breakdown across size and stage of company, and the focus of the individual leaders.
What factors drive demand for Software Engineers and Leaders?
As many software companies face increased difficulty in raising capital, we've seen a marked shift in internal investment - from product to commercialization. Before 2022 many companies were focused on ambitious product roadmaps, adding features and product lines backed by abundant capital. Since that time we've seen engineering teams downsized as the focus shifts to sales and repackaging of existing products, driving ARR in hopes of stretching runways and appealing to more fickle investors.
Despite the fact that there are fewer open roles for software engineers and leaders, there is still a gap between supply and demand, and salaries for top engineers and leaders continue rise. We think this is happening for a few reasons.
Everything is Tech: The focus on building digital-centric organizations has intensified the need for developers and the managers of these builders - for companies in all industries, not just those building Saas products. With the need for software solutions across every tech-enabled industry (which is every industry!), the breadth of the tech sector keeps expanding. This is a key factor resulting in 'Software Developer' as the top job in the United States, as noted in U.S. News and World Report's "100 Best Jobs" list.
Leveraging AI Advancements: As technology evolves, so do developers and their software skills. The emergence of sophisticated AI tools, does not seem to be diminishing the importance of software engineers but, instead, shifts the need for expertise in building, managing and optimizing these tools. Competition for advanced skills, especially across AI, security and UI remain intense, and salaries remain high as a result. Rather than replacing developers, AI seems to be enabling more advanced solutions - and right now we need developers to build these solutions.
Cybersecurity: With growing cyber threats, development expertise in secure software systems is crucial to protect digital assets. Software needs to evolve more quickly than the threats.
Solving Problems for a Complex World: The needs of consumers, and business users are evolving rapidly, as are the ethical, political and regulatory environments we're operating and living in. The tools we use must keep up and strong software engineers are needed to build at the pace of this evolution.
What about the Gender Gap?
In 2023, women made up 23% of North America's software engineering workforce, a 2% increase from the previous year, according to Celestial's AI-powered talent graph covering over 10 million software engineers. Compared to the 50% representation of women in STEM jobs, primarily in healthcare (as per 2021 Pew Research Institute data), women in software engineering are underrepresented by about 13-18%, with their presence in leadership roles (Director and VP levels) being less than 15%.
The underrepresentation of women in software engineering, particularly at leadership levels, stems from various complex and persistent factors within the tech and with our society at large. We can explore these reasons in another post, but if you're also motivated to make some changes in how your organization recruits and hires a more diverse workforce, Take a look at the Inclusion, Diversity, Equity and Accessibility Recruitment Toolkit here.
What’s behind the data?
Our snapshots provide valuable and current insights, derived from a select sample of individuals with verified and noteworthy experience in successful Canadian companies. This data, gathered from our recent searches, offers a more focused and relevant perspective than standard salary surveys.
Each Salary Snapshot represents between 60 – 120 sources.
Each source is an individual who we deem a promising candidate for a role within a high-growth tech company. Most are gainfully employed and many were recommended as exceptionally talented. As a result, our salary numbers might be skewed towards the top of the range.
We elected not to show compensation figures related to equity or options. Though this was a significant aspect of the comp package for many execs, it’s often tough to put an annual dollar value on equity.
For privacy reasons, we will not disclose any specific information that could reveal the identity of an individual or their employer.
Sharing is caring!
In the dynamic landscape of employment, salary data transparency acts as a transformative force benefiting both employers and job seekers alike. For employers, it provides a strategic advantage by aligning compensation packages with industry benchmarks, fostering equity, and enhancing recruitment appeal. Job seekers, armed with this knowledge, navigate their careers more strategically, negotiate effectively, and make informed decisions, contributing to a more open, fair, and empowered job market.
We believe that our Salary Snapshots are an effective delivery method for this data with our 4 T’s model:
Targeted: Specializing in the tech and innovation industry, our data reflects the compensation landscape of tech companies, making it directly relevant to your world.
Timely: Unlike traditional reports with multi-year lags, our 2023 salary data is up-to-date, providing you with the latest insights.
Trustworthy: Unlike free crowdsourced data, our information comes from one-on-one conversations with candidates actively involved in searches for our clients, ensuring reliability and accuracy.
Trim: We're agile and focused, offering a concise snapshot of current compensation trends, and avoiding lengthy reports while retaining all the essential contextual information and analysis.
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Created and published in December 2023