No Need to Pay More: It's Not Always About Price

Thursday, January 22, 2015

I was talking to a senior manager for a mid-sized software development shop. The firm had a healthy pipeline of contracts to keep the money flowing in, but there was just one problem - the management couldn't attract good developers. As if that weren't bad enough, they had no idea why.

As a former developer, I was curious. I asked a few probing questions and found out some interesting information:

• The firm paid above market salaries.
• The firm gave every developer an office.
• The firm had strict limits on overtime.
• The firm allowed flexible schedules.
• The firm worked on particularly interesting projects.

A paradox appeared. If the firm was such a great employer, why couldn't it attract great developers?

They say that if you want top talent in any field, you have to pay. But they were willing to pay! Not only that, but work conditions were significantly better than in most shops and the work was far more intellectually stimulating than the typical CRUD applications that most developers worked on.

I was initially confused. There was clearly something that I didn't understand, so I asked to take a look at the job advertisement. I immediately understood what was going on. The product being sold (a good job) should have dominated the market and attracted all of the best buyers (software engineers), but the signaling by the seller was completely wrong.

The ad mentioned nothing of the high pay, nor the excellent conditions or fascinating subject matter. The ad consisted of nothing but a list of required skills and a link to a complicated form for candidates to hand-enter their information.

Buyers are not mind-readers. They can't be expected to know more than the information that the sellers provide. If companies offer something noteworthy and desirable, they should not hide that fact; they should advertise it as a competitive advantage!

It took little time for us to come up with a better job ad that uniquely identified the firm's selling points. It was open and honest. It set the company apart from the masses and really made it look like a great place to work (which it was).

Ultimately our revised version was vetoed by the HR department (our version broke the rules and went against the industry-standard). Not to worry though. I've heard rumors that after months of an expensive and exhausting search, the firm has finally received its first handful of applicants. Nothing stood out on their resumes, however, so while there is a possibility that they might be qualified, they likely don't understand signaling either.

Don't make these kinds of mistakes! Learn how to make sure that you understand how to price and position your products with the best software pricing book on the market!