Heres how they work. Companies do job evaluations to distinguish between people with the same (or similar) job titles. This is particularly important in IT, because the underlying skill sets change so often. In contrast to, for example, a financial analyst, whos doing what he did eight years go, a sys-admins job has change dramatically requiring many new skills.
David Foote, CEO of Foote Partners, a firm that tracks IT compensation trends, explains that these ever-evolving skills complicate IT pays levels. IT is crazy its changing all the time, he says. And HR departments have never been set up to keep up with this.
Companies, of course, need to compensate workers for their key subsets of skills its essential for retention. But throughout industry, pay is based on job titles, which in IT are impossibly broad. For example, the skill levels of project managers are wildly varied. Do they know Java? Do they have a background in IT architecture? Are they business savvy?
A lot of companies just have six levels of application developers, and they mix .NET people in their with COBOL people, Foote says. While these professionals share a title, companies need to pay them far differently to retain them.
Consequently, in the mid 1990s companies starting paying skills pay, which are bonuses in the range of an extra 5 or 7 percent of base pay. (Or far more in some cases and far less in others).
Notes Foote: Employers have become comfortable using skills pay as a work around solution for differentiating pay for IT workers who, though they may share the same job titles, do not necessarily share the same job content.
So, when looking at the chart below (or the charts on the next page), realize a key fact: the listed increases or decreases affect only the skills pay bonus NOT the base pay. So, for example, the hefty 25 percent increase for the Network Security Management is a 25 increase of the jobs skills pay, not (unfortunately) a 25 percent increase in their overall base pay.
Chart courtesy Foote Partners