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September 28, 1998

Skills Demand Drives Pay Up

Competition for top IT executives is key to rise in top execs' salaries

By Jennifer Mateyaschuk

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alaries for IT executives are on the rise. And simple economics explains why: More companies are pursuing execs with both business and IT credentials, yet the experience and talent is in short supply.

One-third of the 2,023 CIOs, VPs of IS, and directors of IS responding online to an InformationWeek Research survey say they earn $100,000 or more annually, up from one in four a year earlier. The average senior IT executive earns $94,750 in salary.

Competition for savvy executives who couple technology know-how with solid business achievements comes not only from other IT organizations searching for top managers but also from systems integrators, vendors, and consulting firms. But the salaries of CIOs and other top IT executives pale compared to those offered by integrators, vendors, and consulting firms. A partner at a major consulting firm can start at $600,000 a year, compared with $350,000 for a CIO at a major corporation, according to Dudley Brown, managing director for BridgeGate LLC, an executive recruiting firm.

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The current crop of top IT executives got there without the advanced academic credentials held by non-IT senior executives. Only 35% of those surveyed hold any type of advanced degree, with a mere 14% earning a master's of business administration. In fact, one in five top IT executives never earned a bachelor's degree. "What public company would hire a CFO without a degree but with just experience?" Brown asks. "Yet, for top IT positions, there are an enormous number of people who don't have degrees, let alone advanced degrees. It's shocking."

Last spring, InformationWeek Research set up a Web site to survey readers on their salaries and other workplace matters. Through August, nearly 13,000 people had responded, including the 2,023 IT executives used for this survey. Among the survey's findings:

The company tenure of a top IT executive stands at 6-1/2 years; the average respondent has been an IT professional for 16 years.
34% of the respondents work at companies with revenue of less than $50 million, 38% at companies with revenue between $50 million and $500 million, 9% at companies with $501 million to $1 billion, and 19% at companies with more than $1 billion.
22% of the respondents live in the West, 21% in the Midwest, 24% in the East, 31% in the South, and 2% in Canada.
9% of the respondents are women.

It's Good To Be CIO

s a CIO's influence within a company increases, so do the perks. Nonsalary benefits for all senior IT executives averaged 25% of total compensation, according to the survey.

It's not unheard of for CIOs at the largest companies to receive health-club memberships, company cars, special insurance coverage, financial advice, estate planning, legal services, as well as stock ownership plans. "Participating in the success of a business via stock options lets an IT executive align his own initiatives with those of the business," says BridgeGate's Brown.

IT executives seem pleased with the pay and benefits they receive. Half of the respondents termed their total compensation package either excellent or good. Only one-quarter said their compensation is below average or poor. Yet more than half of the IT executives ranked the challenges and responsibilities of their jobs, and the atmosphere in the office, as far more important work issues than compensation.

CIOs Feel Secure

T executives, for the most part, feel secure in their jobs. Twenty-nine percent of the respondents ranked their job security as good, 34% as above average, and just 3% as poor, down from 5% last year. "Job security is high because companies don't want to lose their talent," says Mark Lewis, a partner with Christian & Timbers, an executive recruitment firm.

Such contentment makes it harder for recruiters to entice CIOs and other IT executives to switch jobs. But the headhunters persist. Nearly eight in 10 top IT executives have been contacted by an executive recruiter this past year, and 36% of those contacted received such calls six or more times during the previous 12 months.

The hardest CIOs to raid, Lewis says, work for high-paying Wall Street firms; the easiest, from telecommunications companies weathering industry consolidation and from the relatively low-paying retail sector.