Entrepreneurial Spirit Lifts Top-End Salaries

Biggest gains go to those who lead managed services charge

By John Longwell, John Roberts, ChannelWeb

1:00 PM EDT Fri. Jun. 16, 2006
From the June 19, 2006 issue of CRN
Page 2 of 2

"It's been quite a challenge for us to figure out how to compensate people. If managed services people are doing their job, they're not doing anything," Oster said. "Billable hours is a concept that goes away. We're actuaries in this business. The whole point is not to granularize it as we did."

InfiNetwork likewise has pushed incentive-based pay down to everyone. Engineers can make as much as 20 percent over their base salary, Myers said. "We made the change when we made the conversion to managed services," he said. "We wanted to be able to reward the people that are working harder."

Among all the job categories, salespeople once again received the largest raises, reporting an average 11.6 percent increase. This was the second straight double-digit increase, but down from the average 15 percent increase in 2004. Sales compensation, which would be expected to trend up or down with technology spending, continued to show a strong recovery from the bottom of the cycle in 2002 and 2003. In those two years, compensation for salespeople either declined or rose only minimally.

"Good salespeople are hard to find—salespeople that can sell services rather than product," said Alan McDonald, president of All Connected, a solution provider in Simi Valley, Calif. "I generally do all my sales owner-to-owner, and finding a salesperson that can engage at the CEO level is relatively difficult."

Next in line were executive managers, whose compensation rose an average 9.9 percent. Executive pay raises, though, moderated a bit from the prior year when compensation climbed 11.1 percent.

The reverse was true for technical managers, whose 9.1 percent increase was up significantly from a 5.4 percent raise in 2004. Over the past two years, technical managers' compensation has shown accelerating growth. In 2003, for example, technical managers received an average increase of less than 1 percent.

Meanwhile, sales and marketing managers and technicians received below-average raises of 6.9 percent and 4.8 percent, respectively.

The data also reveals that experience is a critical factor when it comes to pay levels. Solution provider personnel with at least five years of experience were paid an average of $98,650 in 2005, compared with $83,820 for those with less than five years of experience. This is an 18 percent gap, similar to the figure in last year's survey.

Experience also makes a difference when it comes to the size of pay raises. This was a shift from last year's survey, where experience made little difference in the size of pay raises. Individuals with less than five years of experience received an average 13.7 percent increase in compensation in 2005, more than double the figure of 6 percent for personnel with five or more years of experience.

Finally, CRN also broke out compensation data on the basis of the size of the solution provider in terms of annual revenue. Here, too, the results were telling. The average level of compensation in 2005 for people working at solution providers with more than $10 million in annual revenue was $110,280, compared with $79,760 for individuals working for solution providers with less than $10 million in annual revenue.

This represents a 38 percent difference in pay levels, considerably larger than the 21 percent figure in last year's survey, showing that the size of the solution provider is an increasingly important factor in determining pay levels.

When it comes to pay raises, the differences between larger and smaller VARs was once again evident. In 2005, individuals working at solution providers with at least $10 million in annual revenue received an average 11.2 percent pay raise in 2005, nearly twice as large as the figure for solution providers with less than $10 million in revenue.

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