IT pay is still crazy after all these years

A funny thing happened to IT organizations 20 years ago: They started leaking people. The business units began attracting a migration of workers with tech smarts, business savvy, "soft" skills and a grasp of what customers wanted and how to deliver it to them.

What began as a trickle of business application developers and support personnel became a torrent accelerated by demand for ERP, CRM, e-commerce, data warehousing and a hundred other technologies. Suddenly every enterprise function, product and service team, and project group wanted these multiskilled IT-business specialists. The definition of "IT professional" changed forever.

The unenviable task of defining the roles of these IT migrants and then figuring out how to compensate them fell to frazzled HR departments. Were they IT workers, or were they sales engineers, marketing consultants, logistics engineers or operations specialists? Or were they both? With salary surveys, which are organized by job title, you can't comfortably have it both ways.

The problem was complicated by the relentless adoption rate of new technologies, globalization and senior management's demands for fast and flawless execution. Compensation specialists were in over their heads as the war for IT talent, until then outwardly facing, turned inward.

So, how are things today? Better, but not great. I'm shocked that so many HR departments still struggle with chaos in the axis of IT job titles and salary surveys, and the countless new combinations of technical skills and subject matter expertise. Many can barely handle the demands for talent that arise as new ideas gain traction.

I'm also astounded that WorldatWork, the world's largest professional organization educating and certifying compensation professionals, hasn't yet grasped the differences in pay practices that separate the two groups of IT workers in the U.S.: the 4 million who work in more traditional IT jobs, and the 16 million IT-business hybrids who don't. Specialized compensation training unique to this fast-growing hybrid segment is scarce.

But are job titles really the most important thing to consider when we think about IT compensation? I don't think so. Titles can't be ignored, but specialized skills are what's really in demand in today's IT talent marketplace of contractors, consultants, managed services, cloud computing, outsourcing and offshoring, and full- and part-time employees. And without pay premiums awarded for specialized skills, it's nearly impossible to accurately calculate the true market value of many of today's IT professionals. Moreover, without paying skills premiums, the ability to use compensation to attract and retain talent is undermined.

Skills pay premiums allow employers to differentiate pay for people who have identical job titles but considerably different job descriptions and responsibilities -- a widespread problem not likely to disappear soon. Likewise, avoiding the addition of a zillion new job titles makes HR administration simpler and cheaper. And skills premiums can be applied to consulting rates or full-time pay, adjustable up or down at any time according to market forces and internal skill demands. Fortunately, there are reliable, frequently updated surveys on skills and certification compensation available.

Keep this in mind when you hire your next expert in social media, mobile computing, data analytics, collaboration technology, SAP -- or any of a few hundred other hot specialties.

David Foote has been analyzing trends and publishing benchmark research about the human side of IT value creation for several analyst firms, including Foote Partners, where he is co-founder and CEO. Contact him at dfoote@footepartners.com, follow him on Twitter at @FPview, or join his IT Skills & Certifications Forum on LinkedIn.

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David Foote

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