For the first time in a long time, tech workers are in a funk.
The industry of innovation was long an outlier when it came to employee satisfaction. Sure, the business goals were ambitious and the deadlines were daunting, but the allure of building the future drew eager, educated young people into tech — not to mention the high salaries, potential for stock-market riches, laid-back dress codes, and gleaming offices with meals and gyms. This rare combination of generous compensation and a reasonable work-life balance kept tech workers happier than employees in other industries. Before the pandemic, over 80% of tech workers routinely said they would recommend their company to a friend, according to Glassdoor company reviews, higher than almost every other industry we tracked.
All that changed in 2023: Employee satisfaction among tech workers has plummeted, falling in line with workers in finance and consulting — industries that often compete for the same pool of highly educated and in-demand talent. The growing angst among the tech class is palpable in anonymous online communities like Glassdoor’s Fishbowl, in work-focused social media like Linkedin, and even in internal Slack groups. Reading through the anonymous and semi-anonymous woes and tips from the Glassdoor community, it’s clear that many laid-off techies and new STEM grads are struggling to find work, applying to more open roles, and in some cases, lowering their expectations for pay and job satisfaction.
One data analyst in Glassdoor’s #JobsInTech group recently wrote: “Cannot believe how difficult it has been this year to get a job. Applied for well over 600 jobs since 1st June, had a fair few interviews, but not getting any further. This is killing me.” A project manager expressed similar frustration: “I have been looking for over a year now. 25 years in IT. Sent out more than 900 applications. Reduced my rate in half. Do I just give up at this point and switch professions.” These often raw sentiments stand in sharp contrast to the Goldilocks outlook painted by official labor-market data for the broader economy.
While there are plenty of explanations for this sudden vibe shift — from rising interest rates to stock-market swings — an inconvenient truth is that much of the tech sector’s problems stem from the fact that the industry strayed from its roots of listening to the front lines. The collaborative culture at tech companies not only kept employees happy but also helped create better products for customers. The buildup of layers of management without also adding tech-savvy workers that build core products has resulted in a sclerotic environment that is weighing on employees. If the tech industry wants to get back to the flow zone of innovation, productivity, and workplace happiness, executives must restart conversations with the front-line workers that make their products — or risk losing what made Silicon Valley so desirable.
Big tech, big money, big worries
The easiest way for tech companies to explain away the sudden sentiment shift among tech workers is to place the blame on the curdling of the broader economic climate.
For over a decade, low-interest rates, steady consumer confidence, and an increasingly educated workforce created a business ecosystem that encouraged companies to make bold bets on the future. Tech companies, with visions of new ways of connecting the world and living our lives, were uniquely positioned to take advantage of this appetite for growth. To be credible, these bold bets required a patina of scientific innovation — Silicon Valley needed a phalanx of smart, savvy knowledge workers to deliver on the underlying promise of their new products. To woo these potential employees, tech companies had to lure them with cash or a better quality of life than the grueling but lucrative workplace culture of Wall Street firms. Over the past decade, the influx of investor cash facilitated by the favorable economic environment made those promises easy to keep.
That fertile ground was slowly salted over the past two years as the Federal Reserve pushed interest rates higher. By increasing the cost of borrowing money to fund risky ideas, rate hikes forced businesses across the economy to reevaluate the bets on their balance sheets and cut projects deemed unlikely to bring in profits in the short term. In an industry like tech, where companies regularly make multibillion-dollar bets on emerging technology that may not produce real profits for years, that’s a lot of reevaluation.
Several prominent tech companies have taken an uncompromising stance to limit growth in compensation costs and enforce in-office work mandates: Microsoft announced in May that full-time employees would not receive raises this year, and Amazon has notified employees reluctant to return to the office that their jobs might be at stake. Winter and spring layoffs this year stretched some teams thin, and the looming threat of generative AI is sparking fears of job insecurity among workers who long viewed themselves as the winners in the enduring race between man and machine.
This turn in the economy is starting to weigh on the tech job market. Despite largely pristine headline jobs data, the tech job market has become a distinct pocket of weakness. The labor market has softened sharply in at least two prominent tech communities — the California Bay Area and Austin, Texas — where the local unemployment rate has increased by more than half a percentage point over the past year, a common signal of imminent recession. Unemployment claims from information-sector workers have doubled compared to a year ago — and, pandemic aside, are now on par with the highest levels since 2013.
But the truth is that the pressures of the broader economy are not the main cause of a sag in tech-worker satisfaction. Many other industries have felt the squeeze of higher interest rates and their spillover to consumer spending, but none have seen their employees’ satisfaction dip as significantly as Silicon Valley. The underlying reasons for the unhappiness among tech workers have been building for some time — and they strike at the very heart of the industry’s once-vaunted conventions.
From hoodies to neckties
At the core of the tech industry’s current malaise is an aging corporate culture. Glassdoor employee-satisfaction data reveals two big changes that have been unfolding over the past several years, predating but accelerated by the COVID-19 pandemic.
First, the “managementization” of tech. Over the past five years or so, the ratio of front-line workers to managers has deteriorated — meaning there are more managers for every “maker” in tech than before. Earlier this year, before layoffs aimed to flatten organizational hierarchies, the number of front-line jobs was more or less where it stood on the eve of the pandemic, while the number of managerial jobs was 9% higher. Economy wide, there were on average 6.6 front-line workers per manager in 2018 and 2019, but post-pandemic, the ratio dropped to 6 to 1.
While the trend is not unique to the tech industry — it’s also visible in industries like finance and healthcare — it’s a sharp contrast from the historically flat hierarchies at companies that fueled the 1990s tech boom and a jarring shift for employees who were used to a more direct line to the top. Of course, many tech managers also perform front-line tasks such as coding or data analysis, and some managers manage processes instead of people (for instance, transportation managers). It’s possible that as tech companies have grown into more complex organizations, more management layers are necessary. But the underlying result is the same: The people building the products are increasingly removed from the people making strategic decisions.
Second, it’s an open secret that the best jobs in tech aren’t necessarily technical. The workers at big tech companies who report the highest job satisfaction in Glassdoor reviews aren’t in technical or builder roles like engineering or science. While non-STEM roles — for instance, in human resources and marketing — can and often do contribute to cutting-edge technological innovations, they are more likely to focus on supporting and enabling the core technology.
It’s worth asking why the employees furthest from the technical frontier are happier in their jobs than those making the actual products. Perhaps it’s that they are more grateful for the opportunity, suspecting that their job opportunities might be bleaker in other industries — a sentiment suggested by the writer Kristi Coulter in her recently published memoir about her decade-long career at Amazon. Or perhaps the rankings reflect overextended and under-resourced technical ranks.
The unavoidable truth is that working at the most familiar standard-bearers of tech has become a lot like working elsewhere in the economy: High pay is usually justified by a more demanding schedule and longer workdays (and often “work weekends”). This evolution isn’t unusual — it’s the well-trodden path for past generations of industry innovators. With time, they become bigger, more stable, and more routine. The tech titans of prior generations — from Ford Motor Company in the 1920s to Intel in the 1990s — were once workplace innovators but came to be known as boring, corporate giants as they aged into staples of the global economy.
Can tech turn it around?
All is not lost for the tech industry, however. Recapturing the spark of innovation among employees will require executives to recalibrate their organizational compass: flatten org structures, focus on the long horizon so that employees have the opportunity to feel stable in their roles, and re-prioritize investment in the core technical talent that drives the development of crucial products.
Fundamentally, it’s about listening to and elevating the voices of front-line employees. When the workers directly involved in creating the technology are allowed to speak up, unconventional, bold ideas tend to bubble up. By asking questions beyond the senior management echo chamber, engaging employees one-on-one, and creating spaces for employees to voice their hopes and hunches in psychologically safe forums, tech companies can not only reignite their workplace culture but also better serve customers.
This kind of productive communication has perhaps become harder in an era of remote work — but we shouldn’t pretend that it comes effortlessly in the office either. It’s a starkly different, humbler skill set from the TED Talk theatrics and fundraising prowess that drove tech success over the past decade. To shake tech workers out of their recent funk and get the industry back on a path of innovation, companies need to start listening to their builders again and empower them to do what they do best.
Aaron Terrazas is chief economist at Glassdoor, providing research, analysis and commentary on today’s evolving workplace and fast-changing labor market.
Read the full article here
