What is the potential earning power of senior IT executives? The answer, of course, is, "It depends." According...
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to our 2013 TechTarget IT Salary and Careers Survey, some of the most important factors that set compensation levels are company revenue, company size, length of career and, to a lesser degree, industry.
More than half of high earners (54%) received bonuses in 2013 compared with just 32% of low earners, and the average bonus of high earners was nearly four times higher than that of low earners -- $41,960 versus $11,447.
One clear conclusion: Senior IT executives looking for higher pay should consider moving to a bigger company.
Similar to last year's respondents, the IT Salary Survey 2013's pool of 464 senior IT executive respondents revealed that pay for the people in charge of IT operations can differ substantially. Total compensation for our 2013 group ranged from $30,000 for the lowest earners to almost $1.5 million for the highest earner. Senior IT executives were defined as CIOs, chief technology officers, executive vice presidents, and directors of IT, MIS and IS.
The top one-third of this pool -- defined in this survey as high earners -- received more than the median compensation of $140,000. For this elite group, the average total compensation was $225,301, more than double the $101,562 average total compensation for low earners, or IT senior executives earning less than the median.
What separates the high earners from the pack? While their raises as a percentage of salary were only slightly higher in 2013 than those of low earners (6.2% versus 5.4%), more high earners received raises than low earners (58% to 51%).
On the issue of bonuses, the differences were more striking: More than half of high earners (54%) received bonuses in 2013 compared with just 32% of low earners, and the average bonus of high earners was nearly four times higher than that of low earners -- $41,960 versus $11,447. For IT executives earning below the $140,000 median, pay was also more likely to be stagnant in 2013, with 28% of low earners reporting "no change from the previous year" in total compensation compared with 18% of high earners.
Time on job, satisfaction, industry make little difference for many
Experience plays a role in senior IT executive pay, at least in one respect. More high earners (43%) have worked in the IT field between 21 years and 30 years than low earners (32%) for the same period. When it comes to the duration of their current positions, however, there is no appreciable difference between the two groups. The majority (54% for both high and low earners) have been in their current position between one and five years.
Likewise, job satisfaction was similar between the two groups. A slightly higher number of low earners (26%) plan to stay in their current roles compared with high earners (20%), but an equal number of high and low earners (45% and 46%, respectively) characterize themselves as "open to new opportunities but not actively seeking" a new job.
Industry, for the most part, was also not a deciding factor in pay. While more high earners (8%) than low earners (2%) worked in the legal field, and more low earners (7%) than high earners (0%) worked in the nonprofit sector, the top three industries for high earners and low earners were the same:
- Financial/banking: high earners (19%); low earners (18%)
- IT-related services/consulting: high earners (13%); low earners (8%)
- Medical/healthcare/pharmaceutical/biotech: high earners (10%); low earners (16%)
IT Salary Survey 2013: CIO pay and company size, revenue
So what accounts for a twofold difference in salary and four-fold discrepancy in bonus pay between high earners and low earners?
Size matters: A higher percentage of low earners (63%) than high earners (35%) work in companies with fewer than 500 employees. The gap is even starker at the other end of the spectrum: Only 5% of low earners work for companies with 10,000 or more employees, compared with 21% of high earners. The difference holds true for company revenue, as well, with nearly half of high earners (48%) working for companies with revenue between $500 million to more than $10 billion, compared with only 4% of low earners. The majority of low earners (54%) work for companies with less than $50 million in revenue.
That company size factors heavily into IT leader compensation did not surprise the IT director of a medical school at a large university, whose pay is just above the $140,000 median compensation for high earners but below the average total compensation of $225,301. Pay for his IT group of 10 is set by a salary matrix, with directors at one end of the classification scale and help desk technicians at the other end. Points are awarded for education, certifications and years of experience.
"There is also a subjective component," where hiring managers can make a case for paying a person more, he said. And, yes, the size of the organization does matter. IT directors at the larger schools and departments of the university make more money than those in charge of small organizations or organizations that, unlike the medical school, do not bring in large research grants, he said.
At the university for just a year, he has spent most of his energy implementing ITIL standards in an effort to make IT services consistently reliable. "You can't innovate unless the basic services are up and running," he said. Until that happens, the more strategic research initiatives at the medical school are being handled by a separate informatics group.
Back office versus strategic CIOs
Lily Mok, a vice president at IT consultancy Gartner Inc. whose research focuses on CIOs, said that compensation strategies at organizations are shaped by economics, by the maturity of the industry and by culture, with "financial affordability" ultimately determining pay.
"No matter how much you value people, there is only a certain amount of money you have available to reward and pay them," Mok said. The Stamford, Conn.-based consultancy partners with Mercer on CIO compensation research.
She has seen a move away from pegging compensation strictly to job position in recent years -- at least for roles a company considers critical. "They adjust the pay to have the flexibility to attract the most qualified candidates for that position," she said. "If you put in the wrong person, over time you may not get a return on value."
That trend applies to CIOs, resulting in a disjunction in pay between "traditional CIOs with back-office, operational roles" and CIOs who help set business strategy. The latter deliver operational excellence but also take a leadership role outside of IT to impact product development, customer experience or generate revenue in other ways. "These are truly business executives, and their compensation looks like everyone else's in the C-level suite,"Mok said.
Anthony Peters, who leads IT at Burr Pilger Mayer, a 400-person San Francisco-based accounting and consulting firm with six offices in the United States and one in Hong Kong, has experienced the trend firsthand. Based on salary, bonus and profit-sharing, his compensation falls into the high earners' cohort, the firm's employee count notwithstanding. An integral member of the firm's management team, Peters also has an MBA, an attribute the survey did not ask for this year. He is at the table when business strategy is set.
"The expectation is that whatever information comes out of those meetings, I am able to take that information and translate it into technology, in some format," he said. If the company is trying to acquire a new firm or build a new product or take its customer service up a notch, Peter's team creates a solution that either "solves the problem or meets the need."
As for the standard metrics often used to gauge IT's performance -- reliability of services, completing projects on time, cost -- those are "table stakes," Peters said. "That's IT's job, and my firm doesn't measure me on that. They want to know how IT can take them to the next level."