For many years, it has been widely assumed that the larger the company, the higher the salaries of its employees. Is there any empirical evidence to back up this theory? Is the situation the same in all sectors and departments?

This article will investigate whether or not that is true, as well as the reasoning behind it.

The theoretical background behind this phenomenon

Another important fact is that large corporations have more market power. So, when hiring, they can choose highly skilled employees, who must be compensated for the quality of their work.

Do European salaries follow this rule?

The same research was conducted across multiple departments, and all of them adhere to the rule. The larger the company, regardless of position, the higher the salary.

Deeper analysis for IT positions

The recent TalentUp study examines European salaries to determine which variables influence them, as well as the size of companies. The investigation focuses on the IT department.

The graph below depicts how salaries for IT employees differ depending on the size of their company.

The coloured areas at each level cover salaries ranging from the 25th to the 75th percentile. The lines and dots outside of the coloured areas represent outliers. It’s interesting to see how the majority of salaries are distributed.

How can small businesses compensate for the wage gap?

Federico D’Alessio, the Head of Talent Acquisition at Nextail shares his thoughts and arguments on the subject so that we may receive an expert’s perspective.

He advocates creating a strong culture and a positive work atmosphere rather than overselling job descriptions. Some advantages become less significant if employees care about the company’s values, such as philanthropy, sustainability, and pride in being a part of the project.

Federico states that “Offering flexible working hours helps to reconcile work and family life. Also, offering training allowances increases employees’ personal development and pride in belonging to the company.”

Conclusion

Having said that, it is still key to keep an eye on compensation trends. Salary benchmarking reports or salary platforms, such as the ones offered by TalentUp, are crucial to be aware of which salaries are being offered in the market. Once everyone is aware of the wages that other businesses are paying, you can decide whether bonuses or benefits make the difference.

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