Risk and reward in IT

IT PAY

Recent research undertaken by Diaz among ten large IT employers shows that employees are now carrying an unprecedented level of pay risk - based on performance pay linked to company results. Or put another way, employees are set to receive substantial bonuses when their employers have good years.

The study found that six of the ten large companies now have very strong links between company performance and bonuses - pay-outs will hit 7% or more in very good years. In three out of ten organisations, bonuses for mainstream IT staff in very good years will be 15% or better.

Says Iain Smith of Diaz: "Moves like this has led to the phenomenon whereby employees are unconsciously adopting the mind-sets of financial business analysts in thinking about employers or potential employers."

Reward management lessons

Diaz suggests that there are three main lessons for those managing IT organisations:

Employees' perceptions of risk matter, and risky enterprises have to pay more: communicate in such a way as to provide as much reassurance as you fairly can - it might save you money in the years ahead.
Design your bonus schemes to rebalance risk, communicating that such schemes can save jobs.
Remember that how you treat those who leave will influence the perceptions of others about how much their income stream is "at risk" in your hands. An employer with generous exit terms may be regarded as safer that those who have fewer, but harsher, redundancies.

Want to know more?

Diaz Research offers consulting and best practice research on IT and telecoms people and organisation issues. It numbers many FTSE 100 companies among its customer base. To find out more visit www.diazresearch.com.

Posted 2 January 2003