IT Pay Cuts and Attrition Worries

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With IT positions prominently featured on CNNMoney's list of 50 best jobs in America and IT job listings on the rise at sites like Dice.com, folks with IT skills are on the road to Easy Street, right?


Not necessarily. IT personnel may still find themselves on Uncertainty Drive.


IT staff may not be excluded from the pay freezes, pay cuts and unpaid furloughs that some companies are using to avoid layoffs. According to Network World, its parent company IDG instituted across-the-board pay cuts in May. The company's Technology Support Services group lost one of its five analysts since then, and pay cuts led to staffing changes in IDG's other IT groups. The article also mentions an unnamed Indiana company that reportedly lost two IT managers following 10 percent salary reductions.


Other organizations cited in the article, including the Georgia Technology Authority (GTA), haven't lost any IT employees after introducing cost-cutting measures such as furloughs. Michael Clark, director of the GTA's Office of Communications said:

I haven't heard any griping about the furloughs. People understand what's going on in the economy. State revenues have declined. What I'm hearing from people is that they don't mind taking a furlough day if it means no more layoffs.

Several surveys released over the summer showed IT executives were considering shrinking employee pay and benefits as a way to save money. But is doing so a good idea with the economy showing signs of recovery and IT skills seemingly in demand? The folks interviewed by Network World disagree.


Excluding certain workers from pay cuts would hurt overall company morale, said Sarah Mitchell, associate director of San Francisco recruiting company The Alexander Group, which instituted pay cuts for all of its employees. Her suggestion: Promise to cancel out the pay cuts when the economy improves.


David Foote, CEO of Foote Partners, a provider of IT compensation research, said retaining IT talent is "a huge problem," and companies that cut salaries risk losing their best staffers. Laying off staff and adding their duties to the jobs of those who remain is more common than pay cuts in IT, which results in "a lot of highly paid but burned-out people." This can be a risky strategy, as both morale and productivity can take hits following layoffs. If you find you have to cut some jobs, a layoff checklist and reduction-in-force calculator from IT Business Edge's Knowledge Network might help.


Foote suggests not cutting pay without "other avenues of rewarding employees." In a post about staff retention I wrote last summer, I mentionedoffering more flexible schedules or added vacation days in lieu of financial compensation. It's important for companies to be willing to cut expenses as much as possible in areas other than salaries, advised a consultant I cited in the post, and also to conduct market research to ensure they are paying salaries that are in line with market rates. A Framework for Setting IT Salaries by Info-Tech Research Group, found in ITBE's Knowledge Network, is a good starting point for such research.