IT wages rise, but with a price

IT professionals in Toronto can expect at least a 3.9 per cent increase in base salaries next year, but not without paying a price of longer hours, according to a recent survey.

The Toronto Board of Trade’s annual Executive Compensation survey for the Information Technology industry shows that five per cent of employers report a longer work week for IT professionals, while 10 per cent of employers report a trend toward flexible hours.

Joanne Brady, senior vice-president of operations for Toronto-based Oasis Technologies and a Toronto Board of Trade survey committee member, doesn’t believe there is a real change in work hours.

Brady said she thinks in past years, employers underestimated, and underreported, the number of hours worked by their IT professionals. She said this year’s survey showed a more accurate picture with IT employers reporting numbers much closer to the actual amount of hours put in by their IT employees.

The results also showed that almost half of the surveyed participants, including such companies as Symantec Corp., Ericsson Canada, Estee Lauder Cosmetics Ltd. and Rogers Communications, outsourced some of their IT functions this year, which Brady said reflects a couple of things.

“I believe people are realizing IT can be very distracting to a core business if your core business is not related to technology. It’s very effective and efficient to outsource it,” she said. “On the other hand, if your business is technology, it can reduce employee satisfaction if (employees) are spending a lot of time on maintenance of IT rather than creation of new IT functions.”

Craig Kams, senior consultant of the UNIFI network for PricewaterhouseCoopers in Boston, explained companies outsource IT function in order to cut costs.

“When (companies) outsource services, they are paying a price so they don’t have to keep these (IT) individuals on salary 365 days a year,” Kams said.

Brady also said there was a significant reduction in the granting of stock options to IT employees, a result, she said, that came as a surprise.

Kams said the trend in the U.S. is the complete opposite, with an increase in the amount of shares distributed. He said a reduction in the granting of stock options in Toronto is cause for concern because there is a lack of IT professionals available.

“We are a global market,” he said. “If Canada is not competitive, people could easily go over the border into the U.S. What we are seeing is the U.S. tends to be more aggressive when it comes to compensation packages.”

This seems to be the case in Western Canada as well. According to Gail Evans, president of Calgary-based The Wynford Group, a national consulting firm focused mainly on strategy development performance and rewards, Calgary and Vancouver continue to see the use of stock options as attraction and retention strategies for IT professionals on the rise.

“(Alberta’s) salary increases are leading the country,” Evans said, quoting from an IT compensation survey conducted by The Wynford Group in September of this year. The survey showed that Alberta IT professionals can expect at least a 5.3 per cent increase in base salaries in 2001.

“The economic growth in Alberta is the highest in Canada, particularly in Calgary,” Evans said. “This is the hottest market in the country.”

The Toronto Board of Trade study found another significant reduction in the area of team bonuses, Brady said.

“In the past in this sector, the (mentality) of employers has been that if the team doesn’t succeed, we don’t have success,” she said. “They would bonus the team rather than the individual. There is a notable move away from team bonuses to individual incentives, rewarding the individuals for their contribution rather than the team.”

Wynford Group’s Evans offered a possible explanation, saying there is a greater focus on individual skills and abilities rather than on team efforts.

“Because of the shortage of technically skilled employees, employers have to work much harder (in order to) retain employees,” she said. “Because it’s not the employers’ market, it’s the employees’ market, if you have highly desired skills, then you have your choice of employers. I think smart employers are starting to recognize that they have to provide a variety of different kinds of strategies that will suit the individual needs of employees.”

Brady said that on the plus side, the survey reported a fairly low turnover rate for IT professionals.

“Surprisingly, the turnover rate in the industry was nine per cent. Historically it has been up as high as 20 per cent on average,” she said. “This demonstrates IT professionals are becoming more satisfied in their positions.”

Brady said that with some companies offering compensation packages far over the market average, many employees are left with the question of, “Is my employer paying me less than market rate?”

“What these surveys have done is demonstrate that employers are in fact paying market rate, and though there are some opportunities that pay over market, that’s not the general condition,” she said.