Entrepreneurial Spirit Lifts Top-End Salaries

In those three categories, compensation rose faster last year than the average 8.6 percent reported by all employees in the 2006 CRN Channel Compensation Survey.

"We're back in the entrepreneurial growth model," said Robert Whiton, president of Net Solutions, Tustin, Calif. "We're looking for leadership, technical leadership and extraordinary competence."

While typically employees at the lower end of the pay scale tended to get the largest percentage pay bumps, that has not been the case recently at Net Solutions. Whiton said his network integration firm has been getting more projects—bigger projects—and has been staffing up its growing managed services business, including hiring a CTO. For the first time in his company's history, he turned to head hunters for help.

Michael Kogon, CEO of Definition 6, Atlanta, said global outsourcing and managed services were reducing the need for entry-level people and increasing the need for customer-facing talent.

"Managed services is a labor-reducing solution," he said. "You don't have the demand to find cheap labor to do lots of activities. You need higher-end people ... the high-end, domestic-based leaders. And you bring in your SWAT team to smother a customer for transformation."

Other solution providers pushing into managed services similarly reported difficulty finding high-level technical and managerial talent. "There's plenty of referrals, but for certain positions there's less availability," said Laurie Benson, CEO of Inacom Information Systems, Madison, Wis. "I think a lot of the people that were out looking for jobs have landed somewhere. We're talking about the higher-level people."

Salary levels last year also may have been buoyed by the strength of the economy, which rendered the prior-year's start-and-stop recovery in IT spending a somewhat distant memory. "I think confidence is coming back in the economy," Benson said. "I think it's more upbeat."

The rate of increases in solution provider compensation did cool somewhat from 2004, when salaries rebounded 9.1 percent after several years of relatively sluggish growth. But the average 8.6 percent bump last year to $93,230, as reported by 596 survey respondents nationwide, was only slightly below the prior year's pace.

"We've been paying more in compensation across the board because we're committed to hiring the right people," said Stephen Myers, president of InfiNetworks, Naples, Fla. "We're not just buying skill sets anymore. You can buy those by the pound. It's important you hire the right people who understand business processes."

The survey defined compensation as the sum of salary, bonus and commission. In a continuation of last year's trend, solution providers said they have been altering compensation packages to tie more of their employees' compensation to various forms of performance-based incentives. This is true not only for sales and management, but also for technicians.

"We've always compensated salespeople based on performance. We've taken that to everybody in the company now. Everybody shares in the performance of the company," said Joe Oster, president of Structured Technologies, Rochester, N.Y. "And our company did very well, so people are making more money."

The performance measures are no longer based on just margin, but factors such as customer satisfaction, utilization, overall company performance and various other metrics that align with company objectives. While solution providers said they having been moving in this direction in their project-based business anyway, the transformation toward managed services also is driving a need to find different ways to compensate people.