Paying the New Breed 
New-breed pay plans are generally more attractive than traditional IS compensation,
but that alone will not ensure staff retention. Changes in compensation
require comprehensive changes in corporate culture, and considerable resistance
to cultural change exists at most companies within both IS and the corporate
power structure. Natural and expected, resistance can be neutralized with
education, persuasion and perseverance. Two of the most surprising cultural
barriers to the compensation question, according to Meta Group, have been
the lack of understanding and the absence of perspective about IS evolution.
Most compensation consulting firms concede that their comprehension of
the new IS roles and responsibilities is incomplete.
While companies are in fact augmenting base salary with cash incentives
to help keep their workers, they are also retaining them with the lure
of advanced technologies, self-directed and well-funded educational and
skill development opportunities, stock options, attractive career development
potential, flexible work hours and work life (e.g., telecommuting), and
other noncash incentives.
A larger issue for CIOs to recognize is that many corporate compensation
programs, designed for stable business environments and hierarchical organizations,
are not linked to business strategy. Originally developed as "one size
fits all" programs to support long-term career development in vertical
career paths, they have evolved into centralized control mechanisms that
emphasize promotions and benefits programs, especially pensions.
Changes in the business environment have forced changes in the management
of human resources. One of the most significant trends in compensation
strategies is the shift
in the "ownership" of the compensation system from HR to managers.
As key business goals are increasingly linked to pay plans, the focus is
more on external competitiveness and less on internal equity. Rewards for
the right skills, knowledge and experience are more common, as are team
performance bonuses and competency-based pay components.
For many CIOs, that trend means greater organizational responsiveness
in supplying what's needed. Among the new trends indicated in Meta Group
research, 70 percent of surveyed companies are paying premiums for "hot"
IS skills, and more than 80 percent are providing some form of cash bonus
or incentive plan for their IS workers, though less than 20 percent offer
team incentive plans and even less give discretionary bonuses. Our research
indicates that the use of formal job-evaluation systems for IS is declining,
with nearly 80 percent of companies now making market adjustments to salaries
to attract or retain the new breed, mostly on a case-by-case basis.
Meta Group is seeing traditional job hierarchies phased out as broadbanding
and ceilingless salary-range structures have gained in popularity, both
of which reward the IS professional who acquires the new skills and wants
to try new jobs. Other popular compensation trends such as pay-for-performance
and variable pay (e.g., cash profit sharing, results sharing, gain sharing)
offer significant advantages for those companies able to make the difficult
cultural adjustments necessary to become truly customer-focused and performance
based.
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