Salaries and benefits required to attract and retain top CIO talent are continuing to trend downward, according to M. Victor Janulaitis, CEO of management consulting firm Janco Associates. Average compensation for CIOs made small gains over the first eight months of the year, according to a recent survey, but the salary spectrum for exceptional performers took a hit as companies continue to tighten their belts.
“The recession has had a significant impact in that bonuses have gone away almost completely for most CIOs, and company performance bonuses are nonexistent,” Janulaitis said.
In its 2002 Mid-year Information Technology Compensation Study, Janco found that benchmark compensation for CIOs of large enterprises in August 2002 was down nearly 11 percent, to $358,000, when compared to January 2002 levels. (Janco bases its benchmarks on what it considers to be competitive salaries for high-end performers.) Benchmark compensation for CIOs in medium-size enterprises was down nearly 19 percent, to $367,466. You can download a 39-page excerpt from the survey here.
Actual average compensation levels for most IT jobs are trending lower, although they have not dropped as dramatically as Janco's topflight benchmarks. In fact, mean compensation for CIOs is slightly higher in August than in January. For CIOs of medium-size companies, mean compensation has increased nearly 5 percent, to $170,148. In large companies, mean CIO compensation is up 1 percent, to $174,504.
The survey found that the downward trend in benchmark compensation extends to many areas of IT and has lasted well over a year. Janulaitis, who has followed IT compensation since 1981, said he’s also seen a downward trend in demand for H-1B visas, which allow professionals from other countries to work in the United States. With an IT labor surplus, Janulaitis said companies don’t need to look to outside markets to fill the fewer available jobs.
“The impact of this recession is greater than the impact back in the ‘70s,” Janulaitis said. “It’s deeper, it’s harder, and people are now starting to look for real productivity improvements in IT.”
Doing more with less
Many CIOs have eliminated a layer of management in an effort to control costs and boost productivity, which has caused a surplus of medium- to upper-level IT professionals in the job market. Janulaitis said the “process infrastructure”—which usually supports legacy systems and includes project management, project forecasting, and quality assurance functions—has been a frequent target for downsizing.
CIOs also are looking at application generators to boost productivity. For example, Janulaitis said, a CIO might ask, “Why should we go off and write our own code for an Internet Web site when we can go to Macromedia and use one of the standard templates?” Three or four years ago, companies may have spent $2 million to $3 million to develop a site, according to Janulaitis. With templates and other tools, they may get the job done on a budget of a few hundred thousand dollars.
The downward trend may persist and get sharper as CIOs continue to choose less labor-intensive options, Janulaitis said. For example, the Janco survey found a decrease in benchmark compensation of nearly 40 percent, to $88,165, for Web analysts in medium-size companies.
Most staying put—for now
With their jobs threatened by efforts to increase productivity and economic uncertainty, many IT workers are staying put. “It’s a marketplace where, if I’m a senior IT professional, I’ve got a job, and my company’s still in existence, I’m not going to go off and look for another job,” Janulaitis said.
A number of older IT professionals whom Janulaitis has spoken to are putting off retirement because of declines in the value of their 401(k) plans. “That would keep salaries down because those people have a lot of experience, and some of them will actually take positions just to have something, because they don’t have any other income stream,” he said.
Some workers who have lost their jobs or who are uncertain about their careers are leaving the IT profession entirely. Janulaitis found this trend particularly noticeable in San Francisco, where the IT market is extremely depressed. Janulaitis spoke to one CIO from San Francisco who left to pursue a dream in Phoenix. “He just said, ‘I’m done with the hassle, I don’t want to deal with it,’ took what money he had, and opened a floral shop,” Janulaitis said.
Some specialties defy the trend
Although some coding positions may be cut as companies use productivity-boosting tools, Janulaitis said other positions, such as those in wireless technology, are faring better. The survey found a 27 percent increase in benchmark compensation for voice/wireless communications coordinator positions at large companies, for example. Janulaitis said upper-level security and disaster-recovery experts also are in high demand, a trend that he attributed to the lingering effects of last year’s terrorist attacks in the United States.
The effects of the Enron scandal and financial irregularities at other companies may also have an impact in IT. Janulaitis said he’s just beginning to see an upward trend in demand for IT professionals with experience in financial controls and internal audit functions, although it didn’t have much impact on his firm's midyear survey.
Retaining top performers
Janulaitis said it’s critical for IT leaders to identify and retain key players because, in this economic environment, companies may decide to leave positions unfilled when people leave.
“If you lose a second- or third-tier performer, it doesn’t hurt too much,” Janulaitis said. But losing a top performer in a department that may already be understaffed can be disastrous. Janulaitis suggested that CIOs check benchmark salary figures to ensure that they’re paying top performers enough to keep them from leaving.
Check out the salary survey
Download this excerpt from Janco’s midyear compensation survey. The 39-page document includes a summary of the results, plus charts that show salary ranges for many executive, management, and staff positions.