IT Salaries Take a Downturn This Year

 
 
By Matthew Hicks  |  Posted 2001-06-18
 
 
 

Technology manufacturers and service providers are not the only segments of the economy suffering a downturn.

According to a compensation study released last week, average salaries for top-performing CIOs and other IT managers are beginning to fall for the first time since the 1980s.

The study, by Janco Associates Inc., of Park City, Utah, found an overall decrease in the benchmark salaries paid to IT professionals in the first six months of this year compared with the last six months of last year. A benchmark salary is considered the compensation that a company would need to pay to attract the best performers in a given IT position, including base salary along with bonuses and benefits.

Janco CEO M. Victor Janulaitis said this year saw the first widespread drop-off in benchmark salaries since 1985. Dropping corporate profits have eaten away at the performance-related bonuses paid for many top-level IT positions, and the general economic slowdown has led to a slowing demand for IT professionals, Janulaitis said.

"Its not only a hunkering down of IT budgets but the downturn of the economy in general," he said.

Some of the highest paid have been the hardest hit. The five top-paying IT positions at large companies in the study all saw declines in their benchmark salaries of between 0.5 percent and 37 percent during the first six months of this year. Benchmark salaries for CIOs fell the fastest, down 37 percent, to $317,699, from $434,416 during the last half of 2000.

One reason the top positions were hurt the most is because companies increasingly are paying CIOs and other IT vice presidents on executive compensation models, where a large chunk of their compensation is based on company performance, Janulaitis said.

The study covers compensation trends among about 70 IT positions and is based on a survey of 986 large and midsize enterprises along with compilations of other surveys. It is conducted twice each year by Janco, a management consulting company focused on IT.

Beyond the benchmark salaries, which are the highest paid for IT professionals in various positions, Janulaitis has noticed that base salaries have continued to rise even in these tougher times, but overall compensation has remained steady or has fallen for most of the positions. Thats because companies are cutting back on bonuses first while continuing to increase base salaries in what remains a competitive field for IT talent.

The latest study wasnt all bad news. IT positions in e-commerce and security continue to see steep salary increases as those skills remain in high demand, Janulaitis said. The benchmark salary for a data security administrator at a large company was up 14 percent, to $69,681, while the benchmark for an e-commerce specialist at a large company rose 16 percent, to $80,438.

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