No Pay Raise This Year.
In 2010, for the first time in the last 11 years of InformationWeek's annual U.S. IT Salary Survey, the median raise for IT professionals is 0%, according to the 20,492 IT pros who responded between November and January. That flat pay holds true for IT managers and staffers, for both their base salaries and total compensation, which includes bonuses. It holds true for IT consultants and contractors, too. If stock options were the sign of the economic times at the start of the last decade, the salary freeze is the symbol for the start of this one.
The fallout of a long, deep recession is obvious in the data:
- 40% of IT pros report a pay freeze, compared with 26% in 2009.
- 15% have had their pay cut, compared with 6% in 2009.
- 29% have had their benefits scaled back, up from 17% in 2009.
- Only 23% say the economy has not impacted them professionally, compared with 34% in 2009.
IT remains a well-paying profession. For managers, median base salary is $103,000 and total compensation is $111,000. For staffers, median base salary is $81,000 and total compensation is $85,000. There continues to be huge pay differences by skill and industry. In fact, the survey has some positive signs for the most highly skilled IT pros. This year, 10 IT staff job functions earn $90,000 or more in median total compensation, up from seven last year. Ten IT management job functions earn $120,000 or more in median total compensation, up from two last year.
By title, the best-paid staffers continue to be IT architects, whose median total pay tops $100,000. Project management cracked the six-figure mark for the first time, at $105,000 median total compensation. We often hear CIOs talk about the importance of project managers, but we haven't always seen that respect reflected in paychecks. Perhaps that's changing.
Industries also matter a lot in determining IT pay. Have you heard that investment banking bonuses are back? It's true in IT as well. The securities and investments segment of financial services tops the industry pay scale for both managers and staffers, with managers earning median compensation of $156,000, including $28,000 in bonus pay. Compare that manager pay with four other sectors--local and state governments, nonprofits, and education--which make $90,000 or less, with bonuses of a few thousand dollars.
For IT leaders, stagnant pay and job security concerns raise strategic staffing issues. Do they have the right people and skills if they have to grow? Can they hold on to people once the hiring starts, or have their hiring freezes, pay cuts, and layoffs taken too big a toll on morale? If the economy shifts gears, IT leaders must be ready with a staffing and salary strategy.
Bill Yearous, CIO of the Seattle Times, knows the term "pay freeze" all too well. With the newspaper industry double-whammied by the recession and a huge business model shift brought on by the Internet, the Times had a pay freeze in 2009 and it continues into 2010. That comes after a layoff of about a third of the newspaper company's IT staff in 2008, as part of company-wide staff cuts. On top of that, employees had to take about eight furlough days--unpaid time off--as the company tried to ride out the recession without losing more people it would need in a recovery.
Yearous hasn't been hit by high staff turnover--almost zero--but he knows that's largely because there's so little hiring around Seattle or elsewhere. But he has also tried to keep morale up. He's allowing a lot more telecommuting and flexible schedules for IT workers, working to craft options that work for the person and the job.
And he's increasing training budgets. (About half of IT pros got company-paid training this past year, our survey finds.) Mobile development skills are the company's biggest priority and also the skills IT pros are hungry for, and the nearby University of Washington has a program to teach iPhone development. It's that kind of specific training that IT staffers value most, cited by 72% of staffers, compared with 42% who cited certification training. Yearous' concern is that once companies do start hiring again in the area, that "we'll all play musical chairs" as people hop to the first new opportunities that come along.
IT Pay By Skills
The gap between median compensation for the highest-paid IT pros and the lowest got larger this year. For staffers, Web infrastructure and enterprise applications are among the highest-paying fields, areas where median compensation is up from last year. In the three lowest-paid areas--general IT, training, and help desk--total pay languishes, with median help desk compensation at $54,000, while training and general IT is in the low $70,000s.
Jorg Heinemann, CIO of solar panel maker SunPower, which had $1.5 billion in revenue last year, sees the high demand for project leaders that our survey shows. These are people who can analyze a business process, design and spec IT systems to solve a problem, and then drive a project home.
Heinemann has a litmus test: Does the person have great career prospects in an IT role or could just as easily hop into a business unit role? For example, Heinemann has someone leading a CRM effort whose next role could easily land inside IT or on the marketing team. "That's the kind of leader we need and is the hardest to find," he says.
Being in alternative energy, SunPower is a growth company in a trendy industry, so it gets plenty of applicants. But it's also a fiercely competitive market with tight profit margins, so Heinemann runs a very lean IT shop. The company expects $2 billion or more in revenue this fiscal year but has only about 100 IT staff, with a heavy emphasis on software as a service and other cloud computing options where the economics work. That means he hires fewer lower-level, hands-on IT pros--database administrators, developers, and system administrators--than companies with more on-premises systems.Worried Workers Want Recognition
Today's rotten job market has made employees more risk averse. The flip side: They're less concerned than they once were about their pay and more focused on whether they are recognized for their work, have the right tools to do their jobs, and are gaining the right skills.
The layoff fear factor remains high, even if it's not as intense as in 2009. Just 42% of IT managers and 34% of staffers feel very secure in their jobs, which is up a few points from 2009 but still down 9 points from 2008. These levels are similar to what IT pros reported in 2004, at the end of the last recession.
That fear could keep IT pros from taking a chance on emerging IT roles or moving into other disciplines, even though those are exactly the kinds of moves they need to consider to advance their careers. For example, Mark Settle, CIO of software maker BMC, says we'll see more CIOs valuing what he calls "process managers" in IT.
These are people with expertise in how to fine tune and automate IT processes, just as there are IT experts who specialize in helping marketing or finance or HR run better. Most IT shops have gone through the standard cost-cutting playbook--they've cut IT suppliers, renegotiated prices, done layoffs, outsourced what makes sense. "The only way to get more productivity is to improve IT processes," Settle says.
But getting talented people to embrace a job like IT process manager could be tough in this economy. Settle fears a talented person might steer clear of a such a role, which is harder to connect to a customer or revenue outcome. "In an organization where there are job security concerns, everybody wants to feel like they're tied to a business project that the business executives will point at and say, 'That was a good job. The people who did that did a good thing for the company--implemented that system or put the hardware in place to scale the Web site that allowed us to triple transactions per day,'" Settle says.
If your job is to worry about the process by which incidents are resolved, rather than being the person on the help desk actually fixing them, "in a downsizing situation, people start to say, 'Can we really afford those jobs that are dedicated to process only?'" he says.
CIOs must tackle this fear of risk taking. Settle is a big believer in rotating people among jobs, whether in new tech disciplines or business segments. Here, IT chiefs must lead by example. Group leaders need to rotate their roles, so a networking manager works in applications, if they expect staffers to do it. Leaders also can't hoard head count--if an app dev exec cuts staff through process efficiency, the leaders must collectively figure out where best to redeploy that money, not guard their turf.
And when a talented staffer does take a chance and moves to a new discipline or takes on a one-time project, IT leaders better know that everyone's watching what happens. "When you get the first couple of people to raise their hands, you want to make sure those people get rewarded," Settle says.
What matters most to people about their jobs? Base pay is still No. 1, though it's cited by just 49% of staffers, compared with 60% last year. Most interesting is to see which job criteria moved the most since 2008, when times were better. Base pay, benefits, and the ability to work on "new" IT initiatives dropped the most in 2010. Recognition for work well done, having the tools and support to do the job well, and skill development moved up the most since 2008. (Those three categories are cited by around 30% of IT staffers, though all rose about 10 points from 2008.)
It doesn't take a psychoanalyst to see that people are worried about their jobs and want to know they're appreciated. They get that there aren't big pay raises to be had. For IT managers trying to keep morale up in tough times, recognition can be a cash-free way to do so.
At the Seattle Times, Yearous hopes that an economic upturn will let him create new opportunities. As the newspaper organization focused on keep-the-lights-on infrastructure roles, it now has fewer project managers and application builders, precisely the skills Yearous will need if growth brings new projects. However, the people he has on staff have been forced to become generalists and now understand much more of the IT operation and the business. So if the business starts growing, Yearous hopes they can step up into business analysts and project leaders, and if hiring opens up, he can bring in some more entry-level people in support roles.
IT pros are often criticized for a lack of this kind of business knowledge, but our data shows most aren't one-trick ponies. A bit over half say they've held jobs outside of IT, with a heavy concentration in operations or marketing. About two-fifths say their current roles include non-IT responsibilities, most often product development (17%) and marketing (15%).
Industry And Location Matter
Investment banking is back on top of the IT pay scale--not that it ever fell too far. Even in 2009, the height of the financial crisis, it was No. 2 on the compensation list, with a typical managerial bonus of $16,000, or 12% of pay. This year's $28,000 is about 18% of pay. Biotech, last year's top-paying industry for IT managers, holds fairly pretty steady at No. 2, with $142,000 median compensation for managers and $100,000 for staff.
State and local government, education, and nonprofit IT jobs are at the bottom of compensation. Federal government IT staffers, on the other hand, do well--at $90,000 base salary, they're tied for No. 6 on our list of 29 industries. State and local government managers are tied for No. 7, with $115,000 median base salary. However, government IT pros slip down the list in terms of total compensation, as they get smaller bonuses than private sector staffers and, especially, managers.
Regionally, the Washington, D.C., area is the place to be. It's the only one of 13 metro areas we track that shows a median IT pay increase in 2010, with a 1.8% raise for managers and 1.6% for staff. In 2009, it also far outperformed other regions. And in 2007, when the economy was in better shape, Washington also was among the regions with the highest raises.
One thing hasn't changed in our Salary Survey: Women make less than men, a data point consistent in every one of our surveys. Male IT managers make $9,000 more in total compensation than female managers, about the same gap as between male and female staffers. Women earn about 90% of what men make in IT.
The recession has shaken IT pros' confidence and weakened their faith in the IT career path--to the point that they aren't likely to be advocates for the profession if young people come to them for career advice. A majority (62% of staff and 57% of managers) think IT's not as promising a career path as it was five years ago. Two years ago, a minority (49% and 42%, respectively) took that dim view.
For business technology leaders, though, the most urgent priority is to make sure their teams are ready for growth. Many have spent the past year or more squeezing their operations to the bare minimum, often emphasizing skills for optimizing infrastructure and neglecting those for building applications and launching new projects. "We're all staffed only to support the business, and now we're asked to grow the business," warns Yearous of the Seattle Times.
Business technology leaders may yet face the challenge of a double-dip economic downturn, in which case they'll again be asked to find cost savings. They'll need a plan for that. Or they may endure a prolonged period of more-of-the-same and have to keep digging for ways to motivate employees when cash rewards aren't an option for all but the very best performers.
Just as challenging, though, could be a return to growth. That could seriously strain many IT teams, by quickly changing the most-important skills inside the organization as well as straining capacity. It could also quickly change the competition for talent, as employees who've lived under pay freezes and layoff threats leap at any new opportunities with a whiff of a raise.
SunPower's Heinemann didn't wait for an economic recovery to see if his IT team is properly paid. SunPower did a company-wide employee engagement survey, which typically would show about half of people feel they're well-compensated. IT came in dramatically below that, prompting Heinemann and the HR team to benchmark each person by skills.
It found about a third were significantly below their market value, leading to raises on top of the single-digit merit raises the company already gave out. Often those were long-time employees whose skills had grown but whose pay had fallen behind, or people who had been promoted quickly but whose compensation hadn't kept up with responsibilities--exactly the people a company can't afford to lose, no matter what the economy holds.