In any market that is ‘candidate short’, retaining staff who bring ‘zing’ is challenging. With the demand for skilled engineers outstripping supply (even in these tougher market conditions), one or two firms (to remain un-named) have turned to a tactic that on face value, seems effective: overpaying engineers and inflating titles.  

While it offers immediate benefits to the individuals on inflated wages, this practice is ultimately a misguided strategy. And it’s back-firing.  

The Immediate appeal of overpaying

The concept is simple - offer your staff more money than others. By doing this, consultancies attract talent, increase retention, and reduce the costs of recruiting and training new employees. It's a quick fix and the company keeps its hand close to its chest.

The irony, is that it is visible internally and externally (humans are human, they socialise, they talk) and it gives a really bad perception of that company’s ethics.  

For any employee, especially those in their developing years, the idea of a high-paying job can be irresistible. It provides immediate financial security and often outweighs other considerations, such as job satisfaction or career development. As an employee, you’d almost undoubtedly accept the offering. At what risk is this to your learning?  

The Problem with Overpaying

While it may seem like an attractive solution, overpaying employees is more harmful than it appears. The expectation internally, as you also promote them with a great title, offer them a path-way upwards to (cue shining lights) a ‘Team Lead’ role, suggests to others that they are ‘beyond their years’ in ability. This makes it much harder for them to learn the critical pieces of information that they genuinely need, that they rely on, in their engineering story and later in their career.  

They may be able to use 12D and liaise with council, but are they getting the time, the duration, in design (nitty, gritty, everyday design) enough to start to understand a masterplan for a drainage strategy upwards of 500 lots? Are they really learning what this skill looks like, what the questions are that need to be asked, the subtleties of communication and engaging a client, mitigating an inter-team incident, managing a stubborn sub-consult with grace and dignity?   If you’re giving them the opportunity to ‘breeze’ over some of their learning, fast-forwarding them, there’s going to be gaps later down the track. You are doing them an injustice.  

1. Unsustainable financial pressure: Paying employees above-market salaries can quickly cripple a business’s finances. Eventually, the firm will have to make tough choices, such as cutting benefits or reducing headcount.  

2. Employees expect more: When employees are paid well above market rates, they begin to expect this level of compensation as the norm, not a special perk. This breeds entitlement, where salary increases are expected every year without any corresponding increase in responsibility or additional learned skills / value add. When that expectation isn't met, employees become disgruntled, and the cycle of dissatisfaction begins. This leads to employees constantly looking for the next best offer, setting up a revolving door of talent that’s hard to manage.

3. Job Satisfaction Plummets: When financial incentives are the only reason engineers stay, their job satisfaction will eventually take a nosedive. Instead of being driven by the projects or the company’s mission, they are working only for the fortnightly pay-slip.  

4. Tension and discontent among staff: When some engineers are paid significantly more than others, it creates an atmosphere of resentment and frustration. When all are paid more than the market, it creates an unspoken feeling of being deceptively tied down, I’m advised.  

5. It dishonours our elders: Those with grey hair are wise. They have seen things those with less experience have not. They have resilience, knowledge and focus beyond our younger engineers. They know what to do when ‘s***’ hit the fan and it’s fore-fighting time. They face these consulting challenges with grace and compassion. They stay back, they get the job done.   Over-paying those who have not yet worn out of their second pair of steel-capped boots, reduces the respect we have for our elders.  

You’d be surprised how often a younger engineer asks for more mentorship. They ask me who is in the team who can support my journey, who can guide me, who can advise me and correct me when I make mistakes. Promoting the up-and-comers and thereby under-valuing those who have been around for 30 years is not the way to build a resilient business.  

6. Distorting the Market: When employers offer inflated salaries, they contribute to an distortion of the Victorian job market. In buoyant conditions, this can result in a salary race, where competitors feel forced to offer similarly inflated salaries to secure a staff member with a particular skill. In a market more like today’s, most don’t do this. However, industry leaders see what’s being done at company X and Y and the impression this leaves of that group is poor.  

The long-term damage

While overpaying engineers offers short-term relief, the long-term impact is damaging.

I’m finding that when these candidates look for work elsewhere, the market struggles to match their salary (and sometimes, they have skill gaps which are hard to recover from). One can feel ‘stuck’ in a current role, tied to the pay-check but not enjoying the day-to-day and not able to move. Surely this isn’t productive for the company.  

The need for a balanced approach

The key to retaining top talent isn’t to inflate salaries, but rather to build a work environment where employees feel valued, engaged, and motivated. It always has been. At the moment, this does not mean free beer on tap on a Friday or a table-tennis table, although it did ten years ago.  

Let’s start at the top – give newer engineers someone to look up to. I don’t mean someone who is 5 years’ their senior either, I mean someone who is 20 years’ their senior (in engineering experience, not age). Offer them a journey, show them their story, demonstrate that as an industry, we uphold those have bring clear thought, well-developed engineering skills and who are excellent communicators. If you need to offer something else as an incentive, why not offer flexibility (which is what most people want). Work is done? Feel free to leave. You may be a gen X managing staff but understand that those who aren’t gen X, don’t always strive for ‘bigger is better’, they don’t always chase the title.  

When employees feel connected, valued, they’re much more likely to stay — without needing to be lured by high salaries.  

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