Compensation is just one piece of a company’s total people investment, but a difficult one to get right, particularly while managing the dynamics of being a rapidly growing company in a highly competitive job market. Seeing how other companies scale and where they invest resources can serve as a guiding beacon for your growth strategy.
Salaries across the U.S. are increasing rapidly. While the west continues to lead the country in salary levels, the rise of remote work coupled with high levels of venture and private equity investment is dismantling regional talent barriers and cultivating a true nationwide war for talent.
The homogenization of pay
As startups compete with national and global firms for talent, we see cash compensation at startups once only found at the largest firms, and equity opportunities at large firms once only found at startups. If the boundaries of local and regional labor markets continue to soften, will we see pay levels become more uniform across the nation? We may already be seeing this in highly competitive engineering and product roles.
Pay mix is important to look at in terms of how companies are compensating their workforce through fixed pay, variable pay, and other incentives. Our data shows that those in more technical roles receive the highest share of pay from salary alone. On the opposite side of the spectrum, those in leadership, sales, and administrative roles tend to have significant portions of their overall pay come from sources other than salary.
Pay equity continues to be an issue throughout the labor market, but the demand for change has never been greater. Employers are responding with a greater commitment to DEI initiatives while software and service providers are bringing more effective pay-equity solutions to market. Even so, our gender gap data shows that companies are still struggling to offer their female and BIPOC workers equal pay for equal work. With a broad stroke, male and White/Caucasian workers simply earn more than their counterparts. But when we drill into the data, we can see more nuanced insights looking through different lenses like salary overall, department, tenure, and salary growth trends.
Pay Gap by Tenure
Pay gaps between newly-hired and longer-tenured employees are a consequence seen through most eras of highly competitive job markets. However, the tenure pay gap is accentuated when delineating between men and women. The “Great Resignation” may present an opportunity for long-tenured, underpaid workers to find competitive pay elsewhere.
Pay Gap by Salary Growth
Although a pay gap continues to exist between genders and between ethnicities, growth rates of pay may point to a more equitable future.
Insights from this report represent data collected from Sequoia’s 2022 Dataforest DEI survey, and anonymized information and trends from our database. Dataforest is refreshed periodically with updates from new survey submissions.
Get ideas for improving your plan design and participation rates.
How are companies finding and retaining talent?
How are companies caring for their global workforce?