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Home > Browse Topics > Careers > Story

Salary Survey: The Luck of the Draw

By KATHLEEN MELYMUKA

OCTOBER 28, 2002

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For the past year, Bank One Corp. in Chicago has been steeped in a massive project to consolidate disparate financial systems added through acquisitions. The bank has taken advantage of the flush market in IT workers to hire more than 1,000 people with expertise in networking, telecommunications, data center operations, management, business analysis, Cobol and PCs, making technology one of the busiest areas of the company.

Quite the opposite is true at a major national insurance company in the Midwest. There, the picture could hardly be bleaker. "We're under a ton of expense pressure," says the vice president of IT, who asked not to be identified for fear of embarrassing his company. His budget is flat, and he's cutting back everywhere. There's no money for new hires, and, with management weeding out subpar performers, no one feels secure. "Going into 2002, we were somewhat optimistic," the vice president says. Not so today. "We're just trying to hold the line," he says.

The sharply contrasting experiences of the IT departments at these two companies sum up Computerworld's 16th Annual Salary Survey quite well. Although IT professionals on average saw an increase in pay, the bottom line for workers is influenced today more by where they work than what they do.

Our 2002 survey of IT professionals shows more than half (59.7%) of the 9,138 respondents had an average 6% uptick in their salaries, although more than 70% of respondents were flatlined on bonuses. Conversely, the average increase in pay for U.S. workers was just 4% this year, according to the U.S. Department of Labor's Bureau of Labor Statistics.

A much smaller percentage of Computerworld's survey-takers took pay cuts: 9.5% said their salaries dipped an average of 13.1%. Roughly 30% reported no change in their salaries.

The fact that the average raise was 6% surprises Kazim Isfahani, an analyst at Robert Frances Group Inc., a consulting firm in Westport, Conn. He speculates that workers delivering bottom-line results may be getting most of the money in the salary pool, while others are being let go or retrained.

Isfahani says he expects no change in the salary picture during the next six months and adds that unlike 24 months ago, IT workers are staying put because of the economic uncertainty. But he suggests that CIOs think beyond that. "Once the economy improves, more [workers] will get up and leave, especially if they've been unhappy," he says. "And from an organizational perspective, companies have to think about what they need to do to make sure key jobs are backfilled."

One Step Forward, Two Back

This year's raises were modest in comparison with those of recent years and were rendered even more so by bonus cuts. Pay increases for the majority averaged 6%, but the 9.5% who took a cut in salary lost twice that much. Moreover, while 12% took home bigger bonuses this year, 18% received smaller ones.

Some companies are rolling bonus money into base pay to subsidize higher salaries, making the net effect of those 6% raises even less. Just over three-quarters of the information security managers who responded to our survey, for example, lost more than 40% of their bonus this year, but some of that might have gone into their above-average 8% salary hike. The good news is that while bonuses are generally given at a manager's discretion, making them easy targets when a budget needs to be trimmed, salary increases are less likely to be taken away once given.

In previous years, certain IT skills just about guaranteed the good life, particularly in high-flying industries. Not this year. For example, 11% of communications managers saw their bonuses grow while 27% watched them shrink. Nineteen percent of Internet architects reported bonus gains averaging nearly 52%, but 21% reported bonus cuts of nearly 60%. These findings illustrate that when it comes to pay the company you work for may be more important than the job you do.

Keeping the Recession at Bay

The contrast in IT environments at three companies in the same region and same sector illustrates that point as well. At Bank One (www.bankone.com), IT's overriding goal, the systems consolidation, has pushed back the recession in the IT department. "For this and next year, our goals are very similar" because the project will continue full steam, says applications development manager Connie Melnek in the company's Columbus, Ohio, office.

Shawn D. King, a programmer/analyst working on Bank One's systems consolidation, has had a good year in every way in this environment. "If the company does well and you've contributed, you do better, too," he says. He's seen no belt-tightening in IT. In fact, there's an initiative to increase training this year.

Compensation packages currently include merit bonuses and stock options. Recruitment hasn't been as challenging as in the past, Melnek says. The bank has converted many contract workers to permanent status and has borrowed some talent from remote offices, in both cases saving on recruiting overhead. Salary ranges for IT skills continue to rise every year, she says, so staying within budget hasn't been a problem. And turnover has been low. "The economic situation plays into that," she says. "There aren't as many headhunters trying to recruit our folks."

King says he feels "very certain" that his job is at least as secure as last year. "We're very, very busy, and I'm involved in a lot of really important projects," he says. "As long as I keep getting these challenging projects to work on, I'm satisfied."

Bank One's project-based hiring is typical these days. "Companies are hiring only very specifically in areas like infrastructure, e-commerce infrastructure and Web development," says David Foote, president of Foote Partners LLC in New Canaan, Conn., and a Computerworld columnist. Because of the focus on projects, the highest skill premiums in the market are being paid to rapid application development/extreme programmers, he says.

But companies that aren't developing big projects can be tough places to work these days.

The insurance company vice president has had to cut back on training, travel and maintenance services. His budget is flat, but with life insurance sales down 28%, intense competition requires that his group continue to churn out products to make transactions quicker and easier for its sales channels. "We've got a full project plate through next year, but we're not staffing up for anything," he says. Instead, he's "trying to strike some balance" among competing needs of various projects, borrowing from some to staff others. Raises have been "pretty thin," he says. "A good raise here is 3%." Turnover of 8% includes "managing out [meaning firing] bad performers."

Struggling companies had better be careful which workers they "manage out," Foote warns. "Companies have laid off incredibly good people and are going to regret it. People are really disenchanted, and management has no idea how much morale has suffered," he says, adding that some of the most skilled IT people from all over the country have told him they plan to quit as soon as the economy turns.

Fighting Back

Household International Inc. (www.household.com) is using IT as a tool to overcome the tough economic environment. That makes the financial services company in Prospect Heights, Ill., a good place for an IT worker to be. "Technology is a strategic advantage for us," says Al Crook, group director for human resources. "It becomes all the more critical in times where there is more pressure to produce results because the climate and economy are more challenging."

The challenge is to roll out initiatives such as simplified online account access to woo credit card customers. Crook says he expects to see project activity and hiring continue to increase next year. He says the size and complexity of systems and networks at Household requires hiring workers "in almost every technology that exists" including wireless, satellite, mainframe, client/server, Unix, Sun, Lotus, PeopleSoft, Novell and all the major databases.

The downturn has enabled him to hire more economically, relying largely on his recruitment database rather than using agencies or ads. "Where it took us three to six months to find the right people in years before, now we find them on our database and hire them in three to six weeks," he says.

Despite all this activity, pay scales have been pretty flat. "In the past, no one would accept an offer for less than a 10% increase; now people are out of work or willing to come at lateral pay," he says. But more than 80% of IT workers at Household have some compensation beyond base salary, such as semiannual incentive programs with cash bonuses.

Turnover is a little more than 5%, and the lack of layoffs has been a morale booster, he says. "The minute you start [layoffs], the best people get a little skittish and start to take calls from headhunters," he says.

Looking ahead, Crook is guardedly optimistic about the IT environment in general, and he's already preparing his managers to face a tighter job market in the future. "We're making sure our managers will be good leaders in good times and bad," he says. "Ours are well tooled and schooled about how to lead, whether their people are getting zero offers from competitors or 15."

Melymuka is a contributing writer in Duxbury, Mass. Contact her at [email-masked].

Source: Computerworld

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