More Firms Using Short-Term Comp for IT

July 10, 2003 ( - More companies than ever before are turning to short-term incentives, such as bonuses and other reward programs, to compensate technology workers versus a long-term approach, such as stock options, a study has found.

The survey, 2003 IT Market Compensation Study, found that 39% of companies are using short-term compensation tied to business performance. That compares with 31% who went in that direction in 2002, according to a CNET report. The study was conducted by People3, which is owned by the research firm Gartner.

Meanwhile, companies are migrating away from long-term incentives for IT workers. Some 61% of respondents said they didn’t offer long-term rewards like stock options to employees in 2003, a dramatic increase over the 38% last year. “The drop in the depth of broad-based, long-term incentive programs can be further seen in the decreasing number of companies offering stock options programs in general,” the study’s authors wrote. For example, Microsoft announced this week that it would give employees actual stock shares instead of options (See Microsoft Wants to Give Workers a Real Stock “Option” ).

Also on the IT pay front, the survey found that the base salary for IT jobs increased an average of 2.9% from 2002 to 2003.

The study said companies found expertise in enterprise resource management software the most difficult skill to recruit. Positions requiring knowledge of Oracle administration were especially hard to fill, followed by those requiring PeopleSoft and Unix knowledge. The most difficult position to hire for was a database administrator, followed by Internet/Web architect, network architect, network engineer and security analyst, the study found.

Fewer than 34% of companies had a documented recruitment strategy to help them hire IT workers. Companies said the most effective method for filling new positions was hiring internally from another IT position within the company, followed by employee referrals and converting contractors to employees. Internet recruiting was rated the third most successful hiring practice, and using an internal IT recruiter ranked fourth.

The study was based on information submitted by 151 organizations in March 2003.