Information Week

April 26, 1999

Behind The Numbers:
Some Secrets Of IT Compensation

M ost IT workers have plenty of choices about where they work. The field is growing faster than the supply of skilled employeebzsec1.gif (12962 bytes)s, creating plenty of job openings. Don't believe us? Just glance at the help-wanted ads online or in publications ranging from InformationWeek to the Boston Globe.

So where's the best place to work? Unfortunately, that's not an easy question to answer. As this year's ongoing InformationWeek National IT Salary Survey indicates, the answer depends on what's most important to you. Still, the 21,398 IT professionals who completed the yearlong study tell us they find satisfaction in large numbers.

As you might expect, larger companies generally pay higher salaries than smaller ones. With a couple of exceptions, the larger the company, the higher the pay for most staff and managerial job functions and job titles. Larger companies, as measured by annual revenue, also pay bigger bonuses.

On the other hand, there's something to be said for working at a small company or a startup. For one thing, there's often a better chance to accumulate equity and to take on responsibility sooner than at larger, more bureaucratic companies. Plus, there's the satisfaction of helping a startup or small company reach its potential.

Then again, people are often happier with a sure thing: 65% of IT professionals working for companies with annual revenue greater than $1 billion say they are satisfied or very satisfied with all aspects of their total compensation package. That's well above the 58% who are satisfied at midsize companies and the 52% at smaller companies.

It's rare to feel underpaid in IT. Overall, only 3% of IT professionals say they are very dissatisfied with their total compensation package, which includes salary, bonus, and benefits.

How satisfied are you with your salary this year? Let us know at the address below, or by taking part in the survey at www.informa tionweek.com/salary.

John Eckhouse
Senior Editor/Research
jeckhous@cmp.com

This week in Behind The Numbers:

bar chart Pay Varies By Location

One great thing about the shortage of IT workers-at least for employees-is that you often can pick precisely where you want to live. Tired of the snow? Plenty of jobs are open in sunny climes.

But how does where you work affect what you earn? It depends on your rank. Companies in the West gave managers the biggest raises last year; those in the East, the small-est. Maybe that's because Eastern enterprises put most of their money into IT staff pay, offering staffers

the largest percentage salary raises.

bar chart Degrees Translate Into Dollars

Your parents and guidance counselor were right when whey advised you to stay in school. If you followed their advice, you ought to buy your mom and dad a nice expensive gift. Clearly, the longer you stay in school and the loftier the degree you earn, the more money you'll make in the IT industry.

An average staff professional with an associate of arts degree earns 11% more than someone with a high-school diploma. Add a degree from a four-year college, and the gap grows to 22%. Stick around for an M.B.A., and you'll earn 44% more than a high-school grad.

bar chart Youth Pays A Price

Our letters-to-the-editor column has been inundated recently with missives from older IT workers describing incidents of age discrimination. While the salary survey can't prove whether that's a widespread occurrence in the industry, it does show that older workers aren't being shortchanged at the pay window.

Annual base salary rises with age. The median salary for a staff professional older than 55 is 48% higher than for someone age 25 or younger. But the raises seem to slow the older you get. The median salary for a manager over 55 is just $1,000 higher than for managers between 46 and 55.



 

bar chart Stock Options Aren't Common

Compensation encompasses a lot more than a paycheck. Most IT workers earn many other benefits that raise the value of their overall package. Almost everyone receives health benefits in addition to their base salary, and two-thirds also earn a 401(k) employer contribution plus paid education and training.

But only one in four IT professionals also receives stock options or reimbursement for skills certification. Few companies offer signing bonuses, but they are willing to award other cash bonuses-depending on your position. While 49% of managers say they were given a performance bonus, only 38% of staff professionals were similarly rewarded.