Giant perms. Parachute Pants. VCRs… Some things are best left back in the 80s.  

Most of us moved on from Jane Fonda workouts and ACDC mullets.  So why are our pay philosophy’s still stuck in the past?  

If you’re looking to attract top talent, you need to update your ideas about compensation.  And you can follow the lead of Netflix.  

Yep. Not only does Netflix offer binge-worthy content, they offer next-level compensation to their staff too.  

Gone are the days where the paycheck is the priority - and Netflix knows it. 

They developed a modern pay philosophy that embraces a work / life approach; centred on giving employees the benefits, working environment, and salaries they need to fire up productivity. 

Why is that important? How can work/life balance and benefits benefit everyone?  Read on to find out.   

In this blog, we’ll look at: 

• Why salaries (and other benefits) are playing such a critical role in corporate strategy 
• What you can do to attract  - and retain - the best staff with salary, 
• And how anew pay philosophycould be the game-changer you need. 

IT staffing today: the challenge your organisation faces 

Ok, buckle your seatbelts, it’s time to speed through some stats: 

According to the Deloitte / Australian Computer Society’s Digital Pulse Report, 5,500 ICT graduates enter the local market each year.  Sounds healthy, but the industry has one heck of an appetite. 

In 2017, Australia’s ICT workforce surged by over 20,000 (3.5%) to 663,100 workers. A further 100,000 roles are expected to be created by 2023. 

So, even though we’ve got 5,500 new grads skipping on to the market each year, we actually need 16,000. The volume of international skilled migrants entering Australia would typically help to boost our workforce. As volumes haven’t picked up to pre-covid numbers as predicted - we are find ourselves in one of the tightest markets we’ve seen in decades. 

The temperature’s rising - and it’s unlikely to change any time soon. 

So, how do you ensure the employees you want actually, well…want you back? 

It could be time to consider a new salary philosophy for your business. 

Netflix built their empire in one of the toughest, tightest markets in town. To stand out from the crowd - and secure the best staff - they needed to offer more than just big money. 

So they changed the way they did things. 

Instead of focusing on pay packets, they adapted their whole philosophy: offering big money and a balanced future.   

The Netflix team discovered that a different approach to pay, people and productivity works. They learned that the salaries you pay, the benefits you offer and the culture you embrace dictate who you attract - and what their performance looks like. 

Keeping your salaries market-fresh: why salaries are critical to corporate success 

Netflix’s pay philosophy - which first came to prominence at the production giant back in 2013 - forms part of a larger people philosophy. 

Curious about how it works? Let us break it down for you… 

Netflix doesn't pay bonuses. 

At first, you might think that’s a bummer.  But it’s not that bonuses are gone - they’re just included in your base pay! There’s no bonus/reward, as they expect high performance. 

They have an attitude of excellence - ‘an average performance gets a generous severance package’ - and major perks to joining their team. 

As a staff member, you’ll get:   

• 1. Stock Option Program 

Every year, each employee chooses how much of their compensation they want in salary vs. stock options. They can choose all options, all cash, or whatever combination they like! They get to choose how much risk and upside they want, and their 10-year stock options are fully-vested. Not only that, but they get to keep them even if you leave Netflix. 

• Personal Top-of-Market 

To help attract and retain the best of the best, Netflix pays employees at the top of their personal market. 

‘There’s no “raises” and there is no raise pool to divide up. The market for talent is what it is and is not defined by set bands and grades. If your market adjusts, we do not have to wait for an annual compensation event to make changes. We hope through this compensation approach, we can dismantle pay disparities across gender and race.’ 

This pay philosophy is a work / life approach, centred on giving employees the benefits, working environment, and salaries they need to fire up productivity. When the philosophy launched in 2013, it was talked about as one of the most important documents to come out of Silicon Valley.  

And it’s easy to see why.  It puts people and productivity first. 

Whether you subscribe to such a staff-centric approach or not, recruiting in a tight market often boils down to 2 choices: 

1. Pay many average people an average salary for an average performance OR 
2. Pay one stunning employee a salary that means you’ll get outstanding performance and productivity. 

You may struggle to swallow a pay pill like that, but consider this: happier employees mean higher output and better retention rates - ultimately reducing hiring costs.  Oh, and it creates a culture where people feel energised, valued and supported.  And that’s something we should all aspire to, right? 

(Btw, businesses living this philosophy adjust their salaries in line with market rates as they happen - not just at annual compensation reviews). 

Not sure if your salaries are hitting the sweet spot? Check out this salary guide for the latest market intel. 

Levelling the playing field: finding gender parity 

Organisations reshaping their pay principles can make big gains with gender equality. 

It makes sense: if you create, nurture and encourage a culture of equality, you attract more high-quality people - including women. 

For too long, companies have missed out on the contribution from women - in large part because family commitments prevented them from taking on the big, juicy roles. 

By not offering ‘raises’ or ‘bonuses’ and instead offering top of the market salaries - it evens the playing field. It’s not awarding those who yell the loudest or has the most bravado in meetings. You don’t have to be the best negotiator to be rewarded - it’s equal across the team so if you’re good at your job, your raise will come as the market moves. 

Netflix understands that representation matters. To help further inclusivity and diversity in the industry, they’re joining a growing list of companies that have full transparency of their staff’s gender and racial makeup - even when it doesn’t reflect their customer base or the wider population …yet. 

From this transparency, we know that (as of Feb 2022) women make up more than half of Netflix’s full-time staff! 

How are your staff numbers shaping up?  

By shifting your approach to salary, you could open yourself up to an incredible bank of potential employees. 

Paying up for productivity 

There’s no right way to reward and retain your employees. In the end, you know your organisation best and what’s going to work for your people and culture. 

But if you think it’s time to shake things up, start by downloading this salary guide. Then, if you think the time is right, you can give your entire pay philosophy the once-over, too. 

In a red-hot market, a fresh approach could well hook those high-performers in, ensure they’re being paid their worth and keep them firing on all cylinders. 

If you’d like to chat more about what’s going on out there, your people strategy or where to find first-class candidates, drop us a line here.