Channel Payday

That's the big story from the 2007 CMP Channel Salary Survey. In fact, total pay for all tracked positions in the channel has increased dramatically over the past two years.

The compound annual growth rate for total compensation of executive/corporate managers from 2005 to 2007 was 14.8 percent, for tech managers was 13.7 percent, for tech staff was 16.2 percent and for sales staff was 15 percent. The last time the annual change in pay was measured for these positions, 2004-2005, the numbers were 9.9 percent, 9 percent, 4.8 percent and 11.6 percent, respectively.

Average executive or corporate managers' salaries hit $162,204 in 2007, up from $123,010 in 2005, while average sales staff salaries hit $104,526 in 2007, up from $79,080 in 2005.

On the technical side of the fence, average engineering or consulting practice manager salaries hit $107,403 in 2007, up from $83,150, while average tech engineer or consulting staff hit $84,816 in 2007, up from $62,800.

"Our payroll is our largest expense and the one that is going up the fastest," said Rick Chernick, the CEO of Connecting Point Computers, a Green Bay, Wis.-based solution provider that has been in business for 54 years. "We are paying people more today than we ever have to retain them. We are well aware of what is going on out there in the market in terms of the competition for talent. The bottom line is every reseller has to look at their top people and figure out how to keep them. It costs too much to go out and find new people and bring them up to speed on the business and your go-to-market strategies."

While there's always sampling error to consider, the fairly consistent rise across all four historically tracked roles (executive/corporate managers, tech managers, tech staff and sales staff) confirms that there has been a significant upward trend in pay across the channel. That upward trend was expected to some degree because of forces observed in the general economy. In the fallout of the dot-com bust, worker productivity had steadily risen for a longer than usual period of time before wages began to catch up. Also, business activity in the channel has been increasingly healthy over the past few years, which would tend to further boost total compensation, including commissions and bonuses, which is the measure of income that CMP Channel has been collecting.

Solution providers say the high salaries are the result of the age-old capitalist supply and demand maxim. They said there is simply not enough strong talent to fill open positions at fast-growing solution provider shops. In fact, solution provider executives admit it has never been more difficult to get good people.

Chernick, for his part, said that he was forced to use a headhunter for the first time in 25 years to bring on board a high-end Cisco IP communications support engineer and an inside support rep. "The market was diluted to the point where we needed to hire a headhunter to get fresh blood," he said. "The local talent pool just wasn't we wanted. So we had to pay for it."

To make matters worse, Chernick said that not only are VARs competing against one another for hot talent, but also with vendors, who have deeper pockets. Those vendor partners are even trying to snatch away hot talent from the very VARs who are carrying the vendor torch.

One advantage solution providers have in competing against vendors for talent, Chernick said, is emphasizing workplace flexibility. "We treat our people good," Chernick said. "We're flexible and value the family. If they've got to go to a soccer game, they can go. If you work for a big company how are you going to do that? You are going to be flying all over the country."

Next: Employee Retention—It's Tougher Than Ever To Keep Talent