Will the ‘golden hello’ soon be commonplace in UK tech?
Earlier this month, I was fortunate enough to attend a Tech Nation Talk at the Bradfield Centre in Cambridge. As a co-working space for some of the region’s fastest-growing tech companies, it was an ideal venue to discuss the current state of tech in the East of England and the UK as a whole.
The event marked the launch of Tech Nation’s new report, UK Tech on the Global Stage, which reveals how the UK is punching above its weight when it comes to inward tech investment. According to the report, £6.3 billion of venture capital was invested in UK tech in 2018, more than any other European country, meaning that the UK is now fourth in the world for scaleup investment, behind only the USA, China and India. £5 billion of this investment was in scaleup companies, and it’s clear that there is a huge appetite among investors to support new tech companies.
On a regional level, turnover from digital tech companies currently stands at £8.3 billion, with employment in the sector reaching 89,000. While Cambridge accounts for a significant amount of tech investment in the East – the city raised the second highest amount in the UK, behind London, between 2015 and 2018 – it doesn’t change the fact that tech is well and thriving in the East of England.
Tech talent and recruitment
As a recruiter in the tech space, it was interesting to hear more about the topics that are currently piquing the interest of developers. Using data from Stack Overflow, the tech collaboration platform, Tech Nation revealed that data science has emerged as a significant trend in recent years, generating more questions than front-end development in 2017 and 2018. Having recently hired a data science specialist, it is a trend we are well aware of at Bristow Holland, and we fully expect it to be a huge growth area for us in 2019 and beyond.
However, the most thought-provoking part of the event, for me at least, was a panel discussion on talent acquisition and retention. I was particularly intrigued by the comments of one panellist who said her company is now rewarding its employees with a referral bonus, rather than paying a comparatively higher fee to a recruitment company.
While I can see the logic of paying several thousand pounds to employees as a referral fee – on the surface, it’s a good way to retain and recruit talent – I would query how long a company could feasibly sustain such an approach. Sooner or later, employees’ “networks” will dry up and outside help in the form of a specialist recruiter, whose networks tend to stretch a lot further, is inevitable.
In my experience, businesses that invest significant time and effort in avoiding the use of recruiters are normally in a growth phase with pressures on revenues and cost management targets in place (and as an investor I would be loath to see a significant chunk of my investment disappear in recruitment fees). However, I rarely come across mature businesses with strong revenue streams who object to paying for specialist help as soon as they are in a position to afford them. The truth of the matter is that a company probably wouldn’t offer referral fees if it was successfully sourcing candidates through other channels.
The whole discussion did trigger a thought: with the market becoming more competitive, I wonder how long it will be before more companies are using “golden hellos” to attract development talent – in addition to referral and recruitment fees.
Saying hello to the golden hello?
For those not familiar with the term, a golden hello is a payment or bonus paid to an employee upon joining a company, the size of which can vary according to industry or role. Golden hellos are traditionally associated with exec-level roles, but various online sources indicate that employers in certain industries are beginning to offer them to candidates applying for mid- to entry-level roles.
I am yet to see any evidence of this myself, but given the way the market is going, I wouldn’t be surprised if a client comes to me in the next couple of months and says they’re willing to pay a sum of money to a candidate upfront, on top of the recruitment fee. It’s hard to say how this would impact the market, but it would certainly be an interesting development.
Despite the financial risk that comes with golden hellos, employers may offset this by making the payment dependent on an employee staying with the company for two years. Similarly, in cases where companies can’t afford to pay incrementally higher salaries for every new hire, a golden hello can be a tactically astute way of incentivising candidates to take the risk of a new job while not upsetting the company’s existing salary structure. It will also work out cheaper than hiring contractors in the majority of cases.
I’m certainly not recommending that employers start using golden hellos as standard, but if it means consistently attracting the cream of the crop, they may not have a choice. Watch this space…