E-PAY
Salaries in internet economy forecast to rise by "twice the national average"
All is not doom and gloom in Britain’s fledgling internet economy. Despite a wave of closures, pay packets in e-businesses are forecast to rise sharply as employers come under pressure to beat the competition by offering better salaries, according to a new survey by Hay Management Consultants.
The Hay report found that Britain's e-businesses are planning pay rises more than twice the national average to give them the edge in the recruitment and retention battle.
Among the 71 e-businesses surveyed — covering everything from in-house departments, business units within larger organisations and internet start-ups — base salary increases are projected to average 9.7% when next reviewed, compared with an average across the industrial and service sector of 3.6%. The average increase for e-people over the 12 months to July 2000 was 7.2%.
And there is even better news for the CEOs and heads of e-businesses. Base pay is predicted to jump sharply, with increases expected to average 13.6% at next review.
Widening gap
Iain Smith, the management consultant at Hay who led the research, thinks these rises will serve to widen an already substantial gap in pay between business chiefs in internet companies and their counterparts in traditional industry.
"The greater risk of working for a dot.com was already resulting in much higher pay for the vast majority of roles, compared with their old economy equivalents, when we conducted our first e-people survey in January of this year. Since then, people have become more aware of the risks involved in dot.com companies."
What’s more, with stocks sliding the allure of share options — long regarded as the defining feature of reward packages in internet companies — may have dimmed somewhat. Says Smith: "As a result, e-businesses are being forced to increase base salaries by percentages well above the national average in order to remain competitive in the war for talent."
Staff earn more in "standalone dot-coms"
Employees in "standalone dot-coms" are actually paid higher salaries than staff in other e-businesses, notes the Hay report. These pure-web staff are also "more incentivised", with base salary representing a smaller percentage of total remuneration.
The Hay figures show that the:
CEO of a standalone internet company receives total cash averaging £180,000 — 25% of which is short-term incentives and bonuses.
head of an internal department specialising in e-business earns on average a total cash salary of £103,711 — only 12% of which is incentives and bonuses.
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Title: e-people survey, Hay Management Consultants.
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