In 2015 the average IT salary rose 7.7 percent, the largest leap ever. But that large leap begs the question; is this growth sustainable?
In the last five years the average IT salary in the U.S. has risen dramatically. Since 2011 the average has gone up by 19.9%, with 7.7% of that increase having taken place in 2015 alone. In addition to the base salary, bonuses and contract rates are also on the rise, and in some metro areas salaries have reached six figures for the first time. With the ever increasing salary, how long can companies afford to pay these increases?
Rather than implying the starting wage of IT employees have risen, these wage hikes indicate that the environment for technology professionals is simply becoming more solid. Many of the wage increases are due to full time employees reporting salary increases as a result of promotions, raises, or merits. Other salary increases came about as a result of a change of employers.
The salary increase due to employer changes, and even the necessity of current companies to increase their employees’ wages speaks directly to the Talent War problem. The competition between companies for IT talent is undeniable and for many companies finding and retaining top talent means competitive pay and benefits.
Not only have many companies found it necessary to increase base salary, but they have also found that benefits and bonuses need to be competitive as well. Bonuses are a great way to recognize and reward talent and keep them engaged with the company.
In 2015 the average bonus of IT professionals went up by 7%. Professionals that had been with the company for more than 2 years were more likely to receive a bonus, compared to those who had been there for less. However, newer technology workers saw the greatest increase in their salaries, indicating wage pressure for entry level jobs.
Unfortunately, it can be hard to retain IT talent and keep them satisfied. The short term solution of pay increases and enticing benefits, can’t work forever. Even with the nearly 20% increase in salary since 2011 only a little over half (53%) of the respondents in the Dice.com survey reported that they are satisfied with their pay. Additionally 67% of these respondents claimed that they could find a favorable new position if they wanted to.
As the pay increases seem to do little to help appease the top talent in IT, CIOs should look at other ways to keep their talent engaged, productive, and happy with their work, or risk losing them to their competitors.
Many of the talents in the IT market are new to the market, and thus don’t have the necessary skills to fit the position well. Instead of looking for talent with the skills you need already in their repertoire, it may be a good strategy to hire newer talent and increase their companies skill development department in order to help their company grow from within to meet business needs, rather than looking for talent that is at risk of high turnover.
The key to building a team of highly qualified professionals is by creating detailed succession plans and emphasizing continued skills. It’s not only a great idea to hire new talent and teach them the skills they need to succeed, but it’s imperative that CIOs look at the team they already have and increase the skills of current talent.
Skill development, and succession plans are a great way to find and retain the top IT talent, and when combined with competitive pay and bonuses, could be the solution to the talent war. But, how high can the wages go before they become unsustainable? That question is impossible to answer, but without a doubt, CIOs are going to have to keep looking for ways to attract new talent and retain the old.