InformationWeek

May 18, 1998

High Demand, Soaring Pay

Illustration by Bill Mayer

The only things rivaling the demand for IT workers are the salaries and perks they can command

By Marianne Kolbasuk McGee

More Salary Survey Results::

Middle Managers

IT Admins

ow does your salary compare with that of other IT professionals? To find out, InformationWeek Research established its first online survey of IT professionals. We've received 11,000 responses at www.informationweek.com/salary since February, and found that salaries are soaring to record levels. Over the past 12 mont hs, respondents said they have seen their salaries climb by an average of 11%, a rate well above the average of other professions.

That's quite amazing, considering that inflation is low and typical workers in other fields have seen their paychecks increase by a paltry 3% to 4% this past year--a quarter of what IT professionals received. "Until there is a greater supply of IT people, the demand will continue to drive up competition for talent, compensation, and other perks," says Harris Miller, president of the Information Technology Association of America, an industry trade group.

Other key findings of the InformationWeek online survey:

Programmers claim the biggest annual percentage gain in base annual salary, 14.3%. The smallest increase, 7.6%, is going to operations managers. CIOs' salaries are 10.1% ahead of where they were a year ago.
IT professionals at all levels earn, on average, an additional 18% of their salaries in benefits.
Atmosphere (90%) just barely beats challenge (89%) in what matters most to IT professionals about their jobs.
IT workers are in big demand. Three of four IT professionals have received calls from headhunters in the past year. Those IT professionals solicited by employment recruiters received an average of seven calls in the past 12 months.
Overwhelmingly, IT professionals feel secure in their jobs. Nearly two-thirds rate their job security above-average or very good.
Flexible work schedules are more important to IT staffers (67%) than to IT executives (51%).
One-third of IT staffers consider telecommuting an attractive option, though only one of five IT executives feel that way.
More IT executives (48%) believe building shareholder value is far more important than IT staffers (25%) do.

(Constantly updated salary survey results can be found on the Web at http://cmpweb-media0.web.cerf.net/ibi_html/salaries/ .)

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Supply And Demand
Demand for people to fix the year 2000 problem as well as to develop client-server applications such as enterprise resource planning have made the past year a lucrative one for programmers. They experienced the biggest pay gains among IT professionals. The average annual salary of a programmer now approaches $58,000, 14% higher than it was a year ago (see story, " Programmers Catch Up ").

In contrast, CIOs receive 10% more in salary than they did a year ago, with salaries rising to an average of $121,000. Yet it's not uncommon for some CIOs, especially at some large companies, to command salaries of $400,000 to $500,000. "A financial services firm will pay a few million dollars to get star CIO talent," says Kurt Wilkinson, president of Wilkinson SoftSearch, an IT recruitment firm.

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Job titles figure greatly in the salaries paid. There's an average salary gap of $12,000 between CIOs and VPs of IS, who earn $108,000. Substitute the title "director" for "VP" and you'll see even greater disparity: Salaries of directors of IS or IT average $79,000--which means people having the CIO title earn about $40,000 more. Yet at smaller companies, directors of IS or IT have job duties similar to those of CIOs at larger companies.

IT professionals also get an additional 18% of compensation from nonsalary perks, including bonuses. Positions with the biggest non-salary perks include top executives, who get 26% of their compensation from other benefits, such as stock. Lower-ranking IT staffers receive 15% of their compensation through perks. Some of the more unusual perks to keep IT people happy include long weekends, extra vacation time, and free trips.

An overwhelming number of IT pros find the combination of pay and perks pleasin g. Nearly seven in 10 say they're satisfied or very satisfied with their compensation.

But salary alone doesn't determine IT job satisfaction. Indeed, when respondents were asked what matters most to them about their work, job challenge (90%) and atmosphere (89%) rated higher--No. 1 and No. 2--than total compensation (83%), which ranked third.

"Many IT people get calls from recruiters all the time but won't make a move based on the salary alone--it's a question of the job challenge and potential growth opportunities," Wilkinson says. Adds Debra Speight, VP and CIO of Harvard Pilgrim Health Care, a health maintenance organization: "IS people value a challenge, and they want to be recognized."

That should come as a relief to some IT employers, such as Harvard Pilgrim, that can't afford to pay the big bucks offered to IT workers in other sectors. "We clearly cannot compete with sign-on bonuses or tremendous salary increases," Speight says. "We tell our people that we will work with the m to make them productive and happy."

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More Latitude
The intimacy of a small workgroup is an attraction that the head of ABG Financial Services in Atlanta, which has an IT staff of six, sees as a counter to the high salaries paid by larger competitors. "Because we are a smaller company, we give our people a lot of latitude; it's a very entrepreneurial environment," ABG Financial president William Parker explains. "We look for computer people who can think outside the box. That can be very exciting for the right person."

Likewise, Harvard Pilgrim gives IT people whatever training they think they need to perform their jobs. "We tell our workers, 'You know best what you need to do your job,' and we tell them, 'Be proactive in the training you seek--we will support you,'" Speight says.

That's what IT professionals want to hear. The potential to build one's career through promo tions (70%) and enrich one's skills through training (67%) rank fourth and fifth in the InformationWeek Research survey. That's because many IT professionals realize that technology's fast pace of change can quickly turn some hands-on skills obsolete and reduce their marketability elsewhere. Yet the downside for companies that do invest heavily in training is the greater chance newly skilled employees will become hot job prospects for other employers.

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Job experts say it's probably better to risk the chance that a newly trained employee will jump to a new job than to neglect training needs. An employee who feels that he or she has a growth path within a company is more likely to stay than one who doesn't. Also, even companies that don't provide training aren't guaranteed to keep staffers: Competitors frequently recruit workers who lack the hottest skills but have an eagerness and the aptitude to learn . In other words, if you won't train your IT professionals, someone else will.

Among the professional training that IS people say will enhance their careers most are technology skills (65%), followed by business skills (49%), communications skills (31%), and management skills (3%).

Training opportunities, job challenges, and work environment are not just differentiating factors for companies trying to compensate for less-than-top salaries; they're also important to companies that can afford to offer the biggest bucks."When it comes down to it," says a systems analyst at Ace Hardware Corp. who asked not to be named, "when salaries are similar among employers, flexibility and challenge are what can really shape the job."

IT people say that despite the heavy recruiting, the decision to stay or to go is often rooted more in their current overall job contentment than by offers of more money. Not surprisingly, two-thirds of IT professionals feel secure or very secure in their jobs. "Anyth ing IS is in demand," notes Larry Baldwin, a telecommunications supervisor at Mobil Corp. "It's nice to know you have the skills that are in demand, and it's nice to know you can easily find another well-paying job, but it's more about keeping a happy medium between the challenge of the job, development of a career, hours worked, and the pay."

Harvard Pilgrim tries to retain IT staffers by encouraging them to be creative on the job. Harvard Pilgrim has two laboratories where IT workers can create solutions, even if the end product is not earmarked for use by the company. "We recognize that IT people are creative people," Speight says. "We give them an outlet for their creativity."

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Flexible work schedules are another factor that can keep an IT worker happy and willing to stick around. Indeed, survey respondents rate a flexible work schedule (61%) as a more important job feature than vacation ( 51%), prestige (50%), or stock options (32%). However, a flexible schedule is more important to IT staffers (67%) than to IT executives (51%). Also, telecommuting is important to one-third of IT staff, but is important to only about 20% of IT executives.

"We try to be highly flexible with our people--we acknowledge that everyone's life situation is different and try to bend to their needs," says Steve Curd, CIO of the strategic business service unit at United HealthCare Corp., a $10.5 billion health-services provider in Minneapolis. "Some have difficult circumstances, like being a single parent or taking care of an infirm parent," he says. Whether it's letting programmers work at home or offering flexible hours, "we try to accommodate employees' needs."

Geography can also affect the ability to find IT talent. As with other professions, IT pros command bigger paychecks along the two coasts than in the Midwest and the South. And because companies in some regions have an especially difficult ti me attracting workers from elsewhere in the United States, they give special attention to cultivating their own talent.

"It's not easy to get people from outside the area to move here to northwest Arkansas," says Gary Copper, VP of IS at chicken processor Tyson Foods Inc. "That means we have to grow our own talent by offering our people lots of training and keeping them motivated with interesting work. Fortunately, many people who come from Arkansas like to stay in Arkansas."

Tyson Foods has ramped up recruiting efforts at area colleges in order to bring new blood into the company. It also has a "gentleman's agreement" with another big Arkansas IT user--retail giant Wal-Mart Stores Inc.--not to steal each other's IS talent. "Naturally, people do change jobs to work for the other company, but we don't target each other's staff," Copper says.

Such agreements notwithstanding, hiring executives agree that filling IT employment rosters is a tough task, even with hi gh salaries and plentiful perks. Says United HealthCare's Curd, "There is universal difficulty in finding IS people--the appetite for such talent is insatiable."

Read story, " Programmers Catch Up ."

Illustration by Bill Mayer