CIO bonuses make a comeback

Average salaries for information technology staff slipped slightly in 2004, but bonuses for chief information officers began reappearing after a four-year absence, according to a recent survey.

Janco Associates Inc., a Park

City, Utah, consulting firm, said data for the survey came from its database covering 180 large and 285 mid-sized organizations in the U.S. and Canada, for 72 IT positions. The firm said its national statistics are valid to plus or minus 1.2 per cent.

It found mean total compensation for all positions was US$75,406, down three quarters of one per cent from six months earlier. The decline did not result from pay cuts but from turnover with new employees starting at lower average salaries than those who left, Janco said.

Victor Janulaitis, Janco’s president, said the return of year-end bonuses for senior IT staff signals better times ahead. “”We’re looking at the fact that bonuses did appear for CIOs as a leading indicator,”” he said.

Janco also said demand for IT professionals fell slightly. The trend towards outsourcing is one reason, the firm reported, and some employers are also cutting costs by eliminating IT infrastructure positions in areas like training and planning. Some are also merging separate IT organizations into larger units, resulting in some job losses, Janulaitis said.

Janulaitis said bonuses for senior IT people are generally tied to profitability, and “”they disappeared fairly consistently across the board”” in 2001 and 2002. Now, he said, “”the economy is beginning to turn around a little bit,”” and top-level IT executives have started receiving bonuses again, though most of the bonuses were fairly small in 2004.

There were exceptions, he added, such as one New York banking company that paid its CIO a bonus in the $800,000 range. More typical bonuses in most industries are 10 to 25 per cent of compensation, Janulaitis added. Janco found mean total compensation for CIOs up 4.16 per cent at US$169.601 in its most recent survey.

By this time next year, Janulaitis said, bonuses will probably start reaching at least the next level down in many IT organizations. He also predicted salaries will increase slightly in 2005.

Richard Houle, Toronto-based CIO for North America and the United Kingdom at engineered products company Weir Services-Peacock, a unit of Weir Group PLC, said bonuses at Peacock are tied to projects and achievement. “”I’m seeing (bonuses) in my organization,”” he said. “”I’m seeing it also for my staff — I’m doing it for them.””

Mike Cuddy, CIO of Toromont Industries Ltd. in Concord, Ont., said bonuses are an important part of IT compensation. Toromont’s bonus program is meant to motivate and reward above-average performance, he said, with a bonus pool depending on the company’s profits. Toromont’s earnings have risen for the past few years, he said, so that pool has grown too.

Cuddy also said variations in IT pay are not necessarily because money is tight, but because of fluctuations in demand for specific skills. “”This affects the amount we have to pay for certain expertise,”” he said.

Houle said pay for senior IT executives is growing slightly, but the skills most in demand are also changing, with a growing emphasis on business rather than technical experience. Pay for middle managers in IT is likely to remain flat for now, he added.

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Grant Buckler
Grant Buckler
Freelance journalist specializing in information technology, telecommunications, energy & clean tech. Theatre-lover & trainee hobby farmer.

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