We’ve all been trying to figure out what’s going on with compensation and benefits since the great resignation started. Over 3.8 million people quit their jobs in April of 2021 looking for better pay, conditions and work/life balance. For those with a career in digital, it sure looks like they found it. But is it sustainable? Read on to learn more. Oh, and if you’re a member, check the #announcements channel in Slack. You’ll find the complete 2022 Salary Guide waiting for you. 😉
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Carl: I said the cold open was dead, Gene. And then you cold opened me saying the cold open was dead.
Gene: Isn't that the best way to do it?
Carl: It was pretty good.
Gene: Yeah.
Carl: How are you, man?
Gene: I'm good. The [inaudible 00:00:57] thing, I'm obsessed with this Elizabeth Holmes documentaries, there's two of them, and there's the HBO special. You familiar with her?
Carl: I don't think so.
Gene: Theranos, where she faked the whole blood testing thing, pretending to be Steve Jobs. I'm obsessed with this story.
Carl: Okay. There's that, and there's Inventing Anna.
Gene: Yes.
Carl: Those two are getting together.
Gene: They're pretty much the same. Yeah. It's the same type of crime.
Carl: I've got bits and pieces of Inventing Anna, and I swear to God, it feels like she was raised in my family. Not so much from the money perspective, but from the perspective that any slight will not be tolerated. You've never met a more privileged crew, that doesn't think it's privileged, it's just we're better than everyone.
Gene: Well, I mean, that's a given.
Carl: Thank you. Finally, somebody gets it.
Gene: Somebody gets me.
Carl: I don't know why they call this a coffee mug. It holds rum just fine. Oh, my God. Yeah, it's good stuff. Gene, you know what we're talking about today?
Gene: No idea.
Carl: Really? I sent you a text.
Gene: Let me pull up email.
Carl: Didn't you ever look? Oh, crap. This is why we're never going to be The Two Bobs, because we're the two dweebs. Look at us.
Gene: We're talking about the salary survey.
Carl: Salary guide.
Gene: Sorry, salary guide.
Carl: The survey is what we sent out.
Gene: Yes, the result that [crosstalk 00:02:40]
Carl: The guide is what we present. I say this to you in a condescending tone, because I'm really talking to myself. Because I constantly say, "Hey everybody, the salary survey is here," and they're like, "Who cares?"
Gene: I already filled that out.
Carl: [inaudible 00:02:52] you think? So yeah, we're going to talk about it. For everybody, what we're talking about is changes since mid-2019, which was the last time we did a salary survey. So there's percentages and stuff. It's all about since mid-2019, it's not about this year or last year alone. But I think one of the things that's happened... Thanks to all the shops we had. I don't know how many hundreds of individuals that are represented their salaries are represented in here. I want to say it's... I'm not going to say it because Nick will get mad at me. But there are hundreds of salaries represented to get us to this point. And what's one of the things you've heard, Gene, about salaries in general? Not just in digital, but just across the board. What percentage have you heard that things went up?
Gene: I don't know that I can recall a percentage.
Carl: Because you're busy watching TV shows about con artists.
Gene: That's true. Let's go with 10%.
Carl: Oh, my God. Where do you live, South Carolina?
Gene: Let's go with 100%? I don't know, man.
Carl: Well, boy, have you set us up to be a shocker jaw-dropper. It's the first time I put those two together, but I like it. I'm going to keep it. Maybe we do jaw-dropper shocker.
Gene: Yes, I like that.
Carl: Next jaw briefing, it's the jaw-dropper shocker. Salaries have gone up 25% to 35%, for most positions.
Gene: That is not sustainable.
Carl: Right? That's why I found, in the newsletter... I actually put in the newsletter, "Is this sustainable," three times. I think my subconscious was just coming through. But 25 to 35%... Now nationally, I've heard a lot of people outside of digital, salaries are going up 30%. So we're right in that range, but that's from most positions. That's not for everybody. So, is that crazy, or is that a correction? Is that what it should have been the whole time?
Gene: That's debatable, yes. I hear you. I mean, I'm thinking it's probably a blend. Yeah, you'll like what I'm doing today. Half of it [crosstalk 00:05:24].
Carl: Thank you for the shirt, Carla.
Gene: I mean, when you look at just minimum wage, when you factor for inflation, it is still way low.
Carl: I noticed you saw my shirt. Gene, I want you to know something about this show. People send me free stuff, and I don't think you've gotten anything, have you?
Gene: Not yet.
Carl: I want to thank Carla's auntie. This blend shirt, oddly enough, is 100% cotton. Super comfortable.
Gene: That's a nice touch.
Carl: I know. That was great. I enjoy that one. I'm going to use that every time I wear this. So, yeah, 25 to 35% increase in salaries for most positions. You know what else is amazing?
Gene: That shirt.
Carl: It is. It's so comfortable.
Gene: It's 100% cotton.
Carl: I'm not sure if it's really applicable. I don't know if it's really... She lives in South Dakota. Isn't it cold there all the time? Could you wear a t-shirt? I had to show that there were no long sleeves. Sorry. Guess what else is happening? Along with this 25 to 35% increase, most owners say that's not true. No, they don't say it's not true. They put it in the survey. Most owners anticipate 78% of their staff will get a raise this year.
Carl: I might have this a little bit wrong, but I think it's in the 68% range, though. And I remember when I was working for somebody else, the cost of living raise was always one and a half to 2%, right? So annually, you were looking at something like that, but this is obviously on top of a correction, right?
Gene: I think so.
Carl: So let's say it's the great correction. Let's say we get everybody to that 30% mark. And then we're going to have to keep giving annual raises, which gets back to the fact that prices can't be static. I mean, it's the whole sustainable thing. Prices can't be static. Because if you have customers that are expecting the same thing year over year, and don't expect that you're going to have to pay more. That's just not reasonable. And that's where we had this conversation before. But I think people need to put some sort of salary clause... Not salary. Sorry. Payment clause in their contracts that basically say, "These are the rates for this time period. If you'd like to lock into a longer time period, we can do that. Here's what that looks like. But if not, expect that your rates will probably go up three to 5% a year."
Carl: That's what it's going to take. Because the other thing we're going to get to in a minute is there was one group who did not get this big bump. I think we know who it was, because we can see how they're responding to the world right now, and it's not like they're suddenly going to Aspen for a vacation. But the big winners in the group, and I think this makes a ton of sense, if you look at all the roles, what role would you think got the biggest bump? Who do you think is the most instrumental, influential, in terms of success of a digital shop?
Gene: Well, I don't know that the most instrumental or influential would be the one to get the biggest bump, necessarily, by default.
Carl: Fair enough.
Gene: But I would it is probably, in our industry, straight up designers, developers.
Carl: Yeah. Developers were up there, designers too. I want to say developers, they were in the 30, 32% increase, which makes sense. And 30% was what I heard across the industry, just talking to people who weren't necessarily part of the guide, that was like, "What was going on." But operations folks, 38% increase for people in operations. That's a lot.
Gene: I wonder why that's so.
Carl: To lock them in, right?
Gene: Yeah.
Carl: What's the one thing that's going to keep an owner from being able to focus on what's coming up in the distance? Somebody who's taking care of what's going on right now. So you think project managers too, right? Their bump wasn't wasn't up there, although project managers often go into the operation's role. There's a lot of similarity in terms of understanding. But when you look at that, that 38% increase... And we heard this at both owner camps in December and January, people are trying to lock in those teams that make things happen. And these are the people who, from the second a lead comes in, to when you're trying to convert them over into some sort of maintenance, or the next project to build it, they're involved, soup to nuts, the whole thing. So that to me made a ton of sense.
Gene: Not to mention just client and continuity in terms of your interface with the client. You don't want to be changing that person up every six months.
Carl: No. And the operations folks probably aren't in front of the clients.
Gene: Probably not, but we were talking project manager operations. I'm curious how at a smaller firm, say, a five to 10 person, how much of the operations is done by project managers.
Carl: Exactly is done by project managers, is still done by the founder or the owner. You brought up a really interesting point, which is who should be the face of the shop now. Project may managers, in my opinion, can be client facing, but they really need to focus on what's going on with the integrity of the project, of the health of the project. There's not a more important frontline person than a project manager, because if they've got all the right skills, if they've got the right personality, if they're able to turn on just a touch of extroversion or just enough, but really focus on what they're great at, which is the details, which is making sure that you've got the right people, that you're dovetailing projects, you're doing all those types of things. But should they be the face?
Carl: I mean, for their smaller shops... I don't know that you have an option for the larger shops. You've got people who are coming in and account management. We really didn't see... Account management is really pretty new. It's still five years, a little bit older than that in terms of the industry looking at it. So maybe there's something there, but they're not supposed to be managing what's going on in the project. So I don't know. How do you find the stability for the client? That's a great question.
Gene: And I've seen some chatter in Slack about this dev stuff, sales stuff, versus client facing stuff. And I'm making a big assumption, but I think in a lot of cases, that is also a lot of the same person in terms of client facing. And maybe that is mostly the client facing. I know in some of my experience, it's always the sales team who winds up being client facing. And that's the old, "Well, the sales brought back some shit we can't build." There's always that.
Carl: Yeah. That's also challenging, because you can't be in Biz Dev if you end up being the public face. Because you need to be out there finding what's next, bringing in new stuff. Definitely not disappearing, because that'll freak a client out. But all of those things make good sense. I think that's a whole nother episode, is probably how do we rethink this? Because if it's going to be sustainable, we have to make sure that whatever's going on behind the curtain is not something that's impacting your client. I'm the not saying not to be transparent. I'm just saying it needs to not disrupt them.
Carl: Maybe it's good for them to know that you, like a lot of the other shops... I just heard from a shop that I know has a tremendously strong culture. And for the first time, since the pandemic, they're starting to see the turnover over the last two months. And so it's like that this isn't over. This is going to keep rolling. I think people will come back. I think you got a lot of boomerangers. But the bigger thing is just, how do we rethink who we are and what we're doing, because that's the path we're going to get it to sustainability. Because the other part we haven't even mentioned yet, is benefits.
Gene: That was next on the list. So are benefits generally considered part of compensation in terms of the salary?
Carl: Yeah. So, compensation is going to involve salary... It's going to involve salaries, stipends, time off, healthcare, so basically an entire package. And one of the things I've seen quite a few shops do that I think is really impressive is, instead of talking to somebody about their salary, they actually put together a report card that breaks down all of the things that they get being part of the organization, but it also shows all of the costs [crosstalk 00:15:24]. So that you can then look at it. And report card's a weird word, because it sounds like you're getting graded. But it's more like, just looking at, okay, we appreciate that you want another 10% bump. At that point, we lose money having you here because look at the numbers. And that's not making it about, you're not good at your job. That's making it about, this is where we live in time right now.
Gene: I think it's healthy for an employee to know how much they actually cost the company.
Carl: I think so too, because [crosstalk 00:15:59].
Gene: Yeah. I would want to know, but I think they should know.
Carl: I had a developer who was just a really good developer. And like a lot of developers, really a little shaky, because they knew that their shit could break. So that's got to be a tough place to be, man. If things go wrong at a launch, nobody looks at the designer. It's [crosstalk 00:16:28] the developer. But I'll never forget, one time he was like, "Hey, I put in 50 hours this week." And I was like, "Oh, God, we need to help you." He was like, "No. I was just telling you." He was sharing what he perceived as his value to me, which was, I made money for the company. And we went through that on quite a few different things. And finally I told him, I was like, "I've got to force you to take some time off, because your value is in the quality of what you do. Not just the quantity." I was like, "Yeah, quantity's great. But that's a short lived win."
Carl: We need the quality and we need you not to be burnt out, and we need all those things. But I think what you just mentioned is really important, people want to know their value, they want to know what they're bringing. And it's an honesty point. If the company is making 70% off you, that's probably not right. It'd be interesting... And I'll go back and talk to some of my friends over at summit, but it'll be interesting to see what is that healthy percentage where the company is able to grow and the individual is fairly compensated. But the thing that came out of the benefits, and this really worries me a little bit, a third of all our employees have unlimited PTO.
Gene: We talked about that on an earlier show, about the paid time off thing, like having a set policy versus letting people take care of what they need to take care of.
Carl: And a third, I guess it's lower than I expected, but it's also more than I'd hope for. And it granted, it could be companies that are handling this properly. But to me, there's always that danger of people just because it's not an expendable resource, they're just not going to take it. They're not going to take that time off. And then I do know the other side of it is, and I've heard this from a couple of people, new people coming in because there's a revolving door for a lot of places right now. And somebody comes in and then immediately says they want to take six weeks off. Obviously, they have things in place for that, but it becomes this cultural thing of, "No, I don't want that new person to get six weeks off. He just came in by." Can I not take six weeks off? You told me it was unlimited. There's a whole thing there, culturally, that I think is just really challenging.
Gene: It is it. Yeah. That's a whole nother episode about honesty and transparency.
Carl: Yeah. And you know I'm going to lie throughout that mother.
Gene: Well, I mean, just the first part of the fact that you never tell the truth.
Carl: Are you okay? I'm worried about you, buddy.
Gene: I think that it is probably healthy for your employees to know when they are reaching unhealthy levels of salary and benefits.
Carl: Unhealthy in terms of unsustainable, or unhealthy in terms of they're not making enough?
Gene: I mean, the overall business as an organism. What kind of security do you... Hey, great. You just made 120 grand, but we might not be in business in six months. Could you live with 90 and have us be in business forever? What's the healthy level of like communicating that, and being there... Come on.
Carl: It isn't just money. It's obviously not just money. Money is the thing that you turn to when there's nothing else there.
Gene: Exactly.
Carl: It's like, the whole time is going to go away and I don't like what I'm doing. I need to be compensated more. That whole concept, that cash is just stored energy, and whatever we do, we're doing in exchange. We're giving real energy for stored energy that we can use for other stuff. But if that fricking ratio isn't right, then that's when people leave. So there has to be more there. But I think the biggest story that came out of this for me was that, the people who have gone through and really put their neck on the line really sacrificed the people who started these organizations, the people who have gone through the down times, have gone through the good times, they've seen a 6% increase, a total compensation, a 6% increase across everything compared to everybody else, getting up in the 30%.
Carl: And I've been in a conversation where somebody said, "Yeah, but they are in control, and they have everything and they can give it all to themselves. They do all these things." I'm like, "That's not how it works." I was like, "There are shop who did that. I'll see if their websites are still up." But that's not a thing. You can't live that way. And the bigger thing to me is, I think this is why we're seeing all of the mergers and acquisitions right now, because we talked about how owners are looking to take a step back. We talked about how it's no Moss. It's like, "How do I get the fuck out of here?" And I built this thing. I was in a call with somebody yesterday. They had spent about 10 years building what they have.
Carl: And now they've got an opportunity to exit at a good multiple. It's like two and a half. And I know everybody's going to have their different multiples and all this kind of stuff. And I'll say this, you go into a broker and they're going to promise you [inaudible 00:22:20], but they are selling you a house. That is all they're doing it. And if you have a house, they're selling your house. And eventually they're going to tell you, "Well, unless you get the floors replaced, we're going to have to lower this 10%. You know what? The roof is like 20 years old, so we're going to..." You're going to go in there and hear what you want to hear, and then it's going to slowly get whittled down. So I think that's why so many people are more responsive to the story right now. And some people are winning.
Carl: Some people are getting a great exit, that sort of thing. I don't know how much longer this lasts. Because while you do have these brokers and these bigger shops, and they're mainly looking to get it as a talent acquisition, from what I could tell, especially with the bigger ones. With the smaller ones, there is this opportunity to improve service offering that you have, if you're a shop that's acquiring. Or to improve your portfolio, if you're looking to go into a new space. Maybe you're looking to go into higher ed, you got nobody. You hire somebody that's got Cornell and they've got UCLA. And so they've got that in their portfolio. And now you can say, "Hey, our team has." All of those things makes sense. I had this conversation in LinkedIn a little bit, but it's going to come down to things costing more in order to keep this together. You're going to have to raise those rates, but it's not just raising them once. It's putting in a sustainable way to make sure that you are compensating yourself and your team fairly.
Gene: I mean, everything in the world's more expensive right now. Why aren't your rates more expensive?
Carl: That's it. And I guess I get it. If you have a lot of holes in your process, if you have a lot of leaks in your operation where things aren't getting done effectively, cash flow can disguise a lot of problems. It can allow you, at the end of the day, look and say, "Okay. Well, we got a half million in the bank," and go home. But if you're slowly losing on each project because you haven't fixed some of these challenges or even know what they are, then yeah, just raising your rates isn't going to be enough because you're just going to have bigger leaks. I guess that's where I'm at right now, is what's going to change next? This isn't it. This isn't where we end up. There's something else coming. And I really think it's a full change in the way the digital shops and agencies work.
Gene: It could be.
Carl: Yeah. I mean, there's been flirtations with membership models. And some shops are doing great with that, but it didn't really catch. A lot of people didn't get in on that.
Gene: It's kind of niche anyway, to me right now.
Carl: It's very relationship focus, which I think is great. I used to really think that was a bad thing in our space, but I think relationship is great, as long as it doesn't overtake building things of value just to make somebody happy. Because you're going to lose really quick as soon as your portfolio is empty or you don't understand how to do something, because you just did what they wanted. It was easy. They paid, they got what they wanted, and then it didn't work. So I think there's a lot going on there, where we just have to figure out where we fit. And it's not going to be any time soon, because everything's moving, everything's changing. But I do think we need... This is going to make me sound... I don't know. I think owners need an advocate.
Carl: They're the one group in all of this who nobody really feels bad for. And that's not what it's about. But I think the burnout among owners is higher right now than it's ever been. And it's not like web shops aren't going to pop back up. That's part of the cycle. Some will close, some will sell, some will get bigger. But ultimately, new ones are going to show up. And in the evolution of digital services, there's always something changing, going from milestone billing, to monthly billing, to weekly billing. Going from waterfall to agile. There's something new. There's something new that's going to come, and it's going to allow certain shops to win. And other shops are going to see that. And because we are such a copycat industry, it's going to proliferate. And I think that's great, because it's just like getting a cure for a disease. You see somebody is healthy, you start doing what they do.
Gene: Yeah. And you said the magic word change. I would challenge anyone that you're not doing the same thing... If you've been in business for more than five years, you are not doing the same thing at year five that you started doing in year one. You've changed the way you bill, you've changed your team, you've changed the way you deploy project. You've changed something drastic. You can't be like, "We only work with the agile process." You're not going to do that for the next 10 years. It's going to be different. You're going to get a project that's going to be like... They're either going to dictate how it works, or they're going to ask you something, or you're going to change it. It's just going to happen. So I think that's the key man. I don't know. I'm not going to speak for all owners, but I would say a lot of the frustration of burnout comes from just trying to do the same shit the same ways all the time.
Carl: This used to work. Why doesn't this work?
Gene: In all this time, documenting this system [crosstalk 00:28:19]. Well, it doesn't fit. And a high paying employee may not fit. I mean, it just may not. You got to look at all that stuff, man.
Carl: Well, you got to figure it out. I mean, because rates are going up, the cost of things are going up. It's not that you haven't raised your rates, but it's about... It's not just putting more gas in the car. You've got to find a way to get there are smarter. This is with the bureau too. If I look at the bureau and I see... I mean, literally, I don't think I've sent this. Maybe I sent this to you, Gene. But I did this, just all the potential places the bureau could go. And it's mind numbing. It is analysis paralysis. It's terrifying. And then I had a conversation with a friend yesterday. And after that call, I looked at that list and I just started marking out, because it's not what I want to do. It's not what we've expertise at.
Carl: We're great at building community. And that's where we need to focus. And we do great at events. But you start looking at all these other things and it just becomes this situation, where, do I want to do this if I'm going to be at the helm? Do other people want to do it with me? Do they want to do it badly enough that they're not here just for the money? Not that the money won't be great. And other people who pay us for this. And I think that's where we're all starting over. We all have a new business. And if we don't have the energy to start over... Or we get some great offer, like, "That's amazing. I'm going to take that."
Gene: That's be great. That'd be awesome.
Carl: I mean, if somebody showed up a 10 million, it doesn't matter if I'm feeling like I don't want to start over. No, I'm good. I got to take care of family. I got to get all that shit out of storage. I guess we need a bigger house. But I think that the biggest thing to me is go and [ramsey 00:30:18] that shit. It's like, if you ever watched Hell's Kitchen, one of the first things he does is rip every menu in half. And he just says, "These are the things you're amazing at." I don't know. Everybody in positioning right now, right? Market Newfangled and David and all the people who are truly into that. They're going, "Yeah, Carl. No shit. We've been saying that for a long time. Focus on the thing that you're... Your superpower. What's your great thing?"
Carl: But I think we need to realize that we cut off these little streams of revenue, and that's okay. We cut out the losers that have been winners for so long, and that's okay. We've got to focus on where we play the role. Nobody else can play. And that may mean that you change your team. But you know what, your team's changing anyway.
Gene: Yes. That was my point. [crosstalk 00:31:11]. You're going to be looking... Yeah. Just don't take it personal and make it a strategic decision instead of just reacting to it.
Carl: And don't feel like you have to rip a bandaid off or you have to make this sharp left turn. You have time, more than likely, to make smart decisions. But I think in all of this, owners need to realize they did nothing wrong regarding this. We've done a lot of [crosstalk 00:31:39].
Gene: I don't know about that, I've done [crosstalk 00:31:41].
Carl: They didn't do anything wrong, the world just changed. And we need to stop blame ourselves and we need to quit feeling like we're a bunch of sad, sorry, some bitches who can't figure this out.
Gene: That's for the next episode.
Carl: Yeah. You've got other things planned today? I though we were just on and on about this.
Gene: Four hour episode.
Carl: Now, we've got the digital services Outlook report, is coming out soon.
Gene: Cool.
Carl: So that'll be a nice one to put next to this, and take a look at how shops feel like they're doing. But just in saying goodbye, I'm going to do the old Al Franken bit. Everybody listening. You're good enough. You're smart enough. And gosh, darn it. People like you. So stand up. Stop crying. That was every second date for me ever, stand up. Stop crying.
Gene: Stop crying.
Carl: Oh man. I felt bad. Every time a woman realized that she had agreed to go on a second date with me and then remembered who I was in the first date it's like, it never went well.
Gene: Nevermind.
Carl: Gene, did I tell you about my shirt?
Gene: It's a nice shirt.
Carl: 100% cotton.
Gene: 100% cotton.
Carl: All right, brother. I'll talk to you later.
Gene: All right.
Carl: See you, everybody.
