Pay Rises Fastest In Southeast, Upper Midwest

CRN broke out compensation data based on seven different regions of the country (See chart below). The results show compensation actually declined in 2002 in both the New England and Far West regions, while the Mid-Atlantic, Southeast and Upper Midwest regions saw significant pay increases.

In New England, for example, the average level of compensation for all 160 respondents as a group declined 1 percent last year to $90,100. Less than half said they received salary increases, and about one-third said their bonuses increased. New England was the only region surveyed where the average levels of all three components of compensation,salary, bonus and commission,declined.

Solution provider personnel working west of the Mississippi River said they also felt the pinch.

In California, the level of compensation remained quite high, but increases averaged an anemic 1.5 percent, with higher salaries once again offset by lower bonuses.

In the Far West, average compensation declined nearly 1 percent to $76,800, with lower bonuses more than offsetting a slight increase in salaries.

"Our salaries were flat; our growth was flat," said Glen Jones, president and CEO of solution provider TechPower Solutions, Redmond, Wash.

But Jones said he sees a turnaround for 2003.

"Business is up 15 percent to 20 percent so far this year," he said.

California, the Far West and New England were at the heart of the technology boom in the 1990s, when compensation was increasing rapidly, so it is not that surprising that pay gains slowed drastically when boom turned to bust.

Personnel located in other areas of the country fared better. For example, average compensation increased a healthy 5.9 percent in the Upper Midwest, the largest percentage gain among the seven regions surveyed. Higher salaries and bonuses drove the increase, and commission levels also rose. Fifty-six percent of respondents received a salary increase in 2002, the highest percentage for any region of the country. Fifty-seven percent said their bonus increased last year, compared with 44 percent in the Far West and only 38 percent in New England.

John Sheaffer, president and CEO of Sysix Technologies, a solution provider with offices nationwide, said the Oakbrook, Ill.-based company's sales in the Upper Midwest were the strongest of any region last year. "We saw more consistent sales in Wisconsin, Northern Illinois and Michigan than in any other region last year," he said.

But he said that the rest of the country is starting to turn around. "Now all regions are reporting an increase this year," he said. "We're not seeing much fallout on the coasts."

Similar results were reported for solution provider personnel in the Mid-Atlantic and Southeast regions. Along with the Upper Midwest region, these were the only three regions where the average increase in compensation outstripped the rate of inflation in 2002, according to the data.

Not surprisingly, the survey data reveals a strong degree of correlation between the size of compensation increases and the level of satisfaction with compensation. For example, 57 percent of survey respondents in the Upper Midwest were satisfied with their overall compensation package last year, compared with only 44 percent in California. The percentage of dissatisfied respondents was highest (22 percent) in New England, one of the regions where compensation declined.

Two factors seemed to make a difference in compensation last year: working in the right part of the country and the size of the company itself.

Larger solution providers (those companies with at least $5 million in annual revenue) paid their personnel an average compensation of $93,000 last year, 32 percent more than the comparable figure of $70,400 for those at smaller solution providers (those companies with less than $5 million in revenue).

Moreover, personnel working at larger solution providers enjoyed bigger pay increases in 2002 compared with their counterparts at smaller solution providers. In both cases, however, the size of these increases were considerably smaller than those seen in previous years, showing the pressure on solution providers to control the growth of compensation costs was felt by all of the companies, regardless of size.

Given these trends, it is not surprising that a significantly higher percentage of personnel at larger solution providers (54 percent) expressed satisfaction with compensation packages in 2002, compared with those at smaller solution providers (45 percent).

The opposite was true, however, when it came to non-compensation-based factors, with 62 percent of smaller solution provider personnel expressing satisfaction, compared with 54 percent of larger solution provider personnel. Lacking the ability to offer much in the way of pay increases, smaller solution providers could be trying to make up the difference by offering better non-compensation-based perquisites.