Spotty Recovery, Budding Raises

In a sign that the technology industry has moved toward recovery, solution providers began handing out solid pay raises in 2003, according to data from the 2004 CRN Salary Survey.

That’s not to say that pay raises were as generous as those granted during the boom times. But the overall average increase for all 1,774 respondents was 5.9 percent last year, more than double the rate of inflation.

Solution providers were not handing out across-the-board raises, though. Many said they increased incentive-based plans to reward top-performing sales and technical personnel, as well as to provide top executives with an extra boost after several lean years.

“Nobody gave out general raises because 2003 was a good year,” said Laurie Benson, CEO of Inacom Information Systems, Madison, Wis. “From talking to my peers in the industry, you might pay your top few employees a little bit more, but certainly across the board they were still in the 3 percent range.”

The annual CRN Salary Survey, though, indicated that average compensation was rising a bit faster than the previous few years amid the budding recovery, but the size of average increases varied widely by job classification, as well as other factors.

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As has been in the case in previous years, top executives received the largest pay hikes. This year, those respondents classifying themselves as executive managers reported that their compensation rose, on average, a substantial 11.5 percent to $116,600.

“The guys low on the totem pole for the next couple of years will not be getting the 5 percent to 10 percent raises,” said John Riddle, president of Information Networking, Irvine, Calif. “Senior management are the guys that are going to be reaping the benefits, and the star salespeople and superstar technicians. The others are going to be pretty stagnated.”

Next to executive managers, technical managers received the next largest boost, reporting increases in the 5 percent range to an average $87,700.

Sales and marketing managers, meanwhile, reported a six-tenths of a percent decline in compensation. Nonmanagerial salespeople also were low on the totem pole. Their earnings as a group rose 1.2 percent to $72,550.

That was still better than 2002, when salespeople’s commission-driven compensation declined amid the downturn. The survey also indicated that senior salespeople, catering mostly to larger corporate accounts where technology spending growth lagged, did not fare as well as their junior counterparts, who dealt mostly with small and midsize accounts where spending growth was much faster.

At Network Solutions, a Tustin, Calif.-based solution provider serving small and midsize businesses, salespeople made 10 percent to 15 percent more in 2003 than the prior year, but only because sales were up 50 percent. “They’re just making a little more money because they’re selling more,” said Robert Whiton, president of the Southern California solution provider. “They’re doing better again, but we haven’t changed their plan in any significant way.”

Technicians fared better than salespeople, earning average raises of 4.1 percent to $60,450. Solution providers said that with technicians still in ample supply and with the continued downward pressure on billable hours and many veterans carrying above-market salaries from the dot-com boom, only top performers with well-rounded experience and good communications skills were getting the raises.

The survey, conducted between February and March, received 969 responses from managers, 128 from salespeople and 677 from technical personnel. It defined total compensation as the the sum of salary, bonus and commissions.

In addition to job classification, the survey found other factors at work in determining compensation, examined in more detail in other stories in this report. Smaller companies were handing out the largest raises, salaries were rising faster in the Southeast than elsewhere, and the pay gap between men and women grew slightly larger in the spotty recovery.

The survey also found that experience and certification levels counted for less last year in a surprising reversal of previous trends. This special report also explores rising concerns among technicians that outsourcing is dampening their earning power and among managers that it is depressing their ability to raise rates.