Let’s talk about money!
As a recruitment partner to North American tech companies, we’ve had the opportunity to talk with hundreds of high-growth start-up and scale-up leaders about their experiences, aspirations, motivations, and of course…. their compensation strategies!
We are excited to share some updated salary insights based on recent searches for Software Engineering leaders. VPs of Software Engineering play a critical role within scaling tech companies. They typically shoulder responsibility for hiring, growing and leading highly technical teams, lead the technology strategy, and put process in place to ensure that teams can scale while delivering quality product.
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In our last VP Engineering salary snapshot in early 2020, most companies had their teams in the office, with a limited number of employees working remotely. For most companies, this reality has flipped through the pandemic, with engineering teams now working fully remotely and distributed around the globe and thus fundamentally changing the way VPs interact with and lead their teams.
The VP’s we spoke with were typically reporting into a local CEO or CTO, but in some cases they serve as the Canadian ‘site’ leader for a tech company with the HQ in the US or overseas. Regardless of scope or structure, the engineering leader plays a critical role in bringing product to market, delivering high-quality software products that meet customer needs.
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?” Since we’re having these conversations on a regular basis, we thought we would pull back the curtains and share some insights to help you create a competitive compensation package. And if you’re on the hunt for your next challenge, we hope you’ll find this data to be useful in the negotiation process.
At the VP level, the Software Engineering leader is typically responsible for all product development staff and their output. Occasionally this scope will also include DevOps, technical product management and/or technical support. The individuals in our sample reflect a range of skills and experience, but all are currently working at the VP level within technology-based businesses - predominantly SaaS, and most within start-up or scale-up tech companies.
We’ve analyzed a spectrum of comp packages to share both a high-level summary and some insights. Let’s see how your peers are crafting plans with a mix of base and variable pay:
What are you looking at?
This data represents volunteered current compensation (CAD) from VP Engineering/Head of Engineering in SaaS start-up or scale-up software companies based in Canada.
The structure of compensation plans vary for Engineering leaders, but we’ve seen the majority structured as base-heavy with a 10-30% bonus plus an equity stake. 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 out variable incentives.
It’s important to keep in mind that we support organizations who are looking for the cream of the crop when it comes to hiring VP and C level executives. Our sample is for product-oriented tech companies with talent who have demonstrated staying power. Consider these numbers the top 20-25% of the market, which in most cases is exactly what you’re looking for.
Deeper Insights
Yes, the rumours are true - salaries really have skyrocketed in the tech industry over the past two years. Total compensation plans have gone up by over 25% for VPs of Engineering since we first published this report in 2019, and while this might level off to more reasonable growth, the numbers aren’t coming back down.
Based on recent data, total cash compensation plans range from $180-455K, with a median of $275K.
This salary data followed a pretty normal distribution, with more than half of the sample in the range of $200-300K.
While many leaders had a bonus as part of their cash comp plan, these bonuses were typically tied to overall company performance as opposed to the success of the Engineering team or the individual leader. This is not surprising, as we've seen that very few start-ups or scale-ups have reliable metrics for the performance of their engineering organization.
So - What about Diversity?
The data shows that male engineering leaders are being paid on average 6.4% higher than their female counterparts. A bigger difference was found when looking at equity allocation, with 70% of male candidates reporting an equity stake as part of their compensation package as opposed to 45% of female candidates.
It should be noted that female candidates represent a relatively small proportion of the total sample (15%). Which begs the question: Why are female engineers still being paid less than men, especially as the more scarce ‘commodity’? (Psst… If you’re reading this and you’re in a hiring position, please read why you should always lead with your best offer).
What about Start-ups and Equity?
Individuals who are part of earlier stage companies were naturally on the lower end of the range, but this group received a larger share of equity to compensate for a lower base salary. We’ve seen this as typical for all roles in the tech industry, not just VP Software Engineering. Leveraging equity as a key component of compensation not only enables companies to conserve limited cash resources, but also ensures that your team is aligned around the collective success of the business as a whole. However, the downside of highly leveraged compensation plans is the exclusion of great candidates who have fixed financial commitments that preclude them from opportunities with below-market salaries.
What’s behind the data?
Our snapshots are not typical salary surveys, as they represent only the data we’ve collected from a handful of recent searches. We find it to be pretty useful and topical information, as it represents current data from a sample of individuals who we’ve carefully selected as having credible and validated experience with successful local companies.
Each Salary Snapshot represents between 60 – 100 sources.
Each source is an individual who we deemed 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.
Specific details that would identify an individual or their employer will not be shared for obvious reasons.
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