You are lucky to have a job. Have you heard this lately? I bet if you have, you don’t feel particularly lucky. If you are working, chances are you’re working harder than ever. Still, you probably also have friends, relatives, or neighbours who are pounding the pavement with few prospects. Lucky to be working? You bet. Lucky to be in IT? You bet.
Even in this recession, many IT executives report giving small raises (perhaps 3 per cent to 5 per cent) in 2001, although many are eliminating the lucrative bonuses that were common during the boom times. Training budgets have also been hard hit, so many IT professionals are losing that perk. Many organizations have had layoffs or have not replaced IT professionals who have left so they find themselves extremely shorthanded, and workers who remain must pick up the slack. Finally, because many companies have pulled back on development, snazzy new projects are a thing of the past. In many cases, the opportunity to work on the latest and greatest technology dried up along with the bonuses.
Many IT professionals are in line to make less money in 2002 than they did last year, are working harder on less interesting projects, and are enjoying fewer perks. These changes in compensation are not great news for IT professionals, but most people will accept that “market-based pay” is just that. In a downturn that may mean the same, or even less, money.
Still, some companies seem to be smarter about holding payroll in line than others. If a company has to keep payroll flat, why not reward the top 5 per cent of the performers with a raise and at the same time balance that with deeper bonus cuts for underperforming staff? At least the best people would have some incentive to continue their excellent work. By saying no to raises for anyone, I believe there is a high risk of alienating the best people – the very ones a company wants to hold on to.
More troubling than the pay issue, in my opinion, is the overwork issue and the fact that budget managers don’t anticipate adding much new staff in 2002, even though many believe demand for IT services is likely to pick up significantly by summer or the third quarter of this year. A survey of more than 1,000 IT managers at Gartner U.S. Symposium in October 2001 showed that in 67 per cent of organizations’ labour budgets have been affected either at the same rate or more so than capital budgets. IT professionals will hold the line during a downturn, but they won’t take too kindly if things improve and companies continue to exploit their people.
Obviously, it is not practical for companies to continue giving big raises to IT professionals in an economic downturn. They have to keep expenses, including salaries, on the same trajectory as revenues. But companies need to balance these cuts carefully when it comes to people, or they risk a mass exodus when economic conditions improve. Across-the-board cuts in bonuses are a short-term tactic, but the effects of such moves last indefinitely.
Barb Gomolski is a research director at Gartner, a research firm in Stamford, Conn. Contact her at[email protected].