Are Big Paychecks For IT a Thing of The Past?

Kathryn Mackenzie, for HealthLeaders Media, November 18, 2008

If you thought all your hard work and extra hours in at the office would pay off with a bigger paycheck and a fat bonus, you may be in for a nasty surprise. The mess in the economy has reached the technology sector, forcing many organizations to take steps to remain financially viable.

For weeks now, employers in the financial and housing sectors have been restricting bonuses, offering minimal raises, and imposing hiring freezes (not to mention the layoffs) in an attempt to rein in costs, while those in the IT field have enjoyed relative stability. Unfortunately it seems those days have ended, even within health information technology, which typically enjoys an extra layer of protection against hard times.

"The days of special treatment for the IT function are over. Ten years ago about half of organizations had a formal program to provide premium pay for IT. Today it is less than 10%," says David Van De Voort, a principal and information technology workforce strategist at Mercer.

Computerworld's 22nd annual Salary Survey of 6,801 U.S. IT workers shows that salaries in 2008 increased an average of about 3.5%, compared to a 3.7% average increase reported in 2007. Meanwhile, bonuses for IT professionals were nearly flat at a paltry 0.2% increase in 2008, compared with 3.4% in 2007. According to the survey, the average salary of a healthcare CIO is about $150,000. The biennial HIMSS Compensation Survey puts the average salary for senior management at $160,000, with 80% of survey respondents saying they received a salary increase over the past two years of an average of about 5% each year.

Of course, given the current economic circumstances, it's doubtful that number will be as high when HIMSS publishes its next survey in 2010, and while the HIT profession does enjoy a certain amount of security, it would be a mistake to think it is immune from the same salary caps and hiring freezes that others in the IT world are facing.

Already this month the number of hospital systems announcing plans to lay off non-clinical employees (including systems services) and employ hiring freezes has ballooned into the dozens. Lest you think I'm engaging in a bit of hyperbole, type the words "hospital" and "layoff" into Google. Hospitals from every corner of the country are shedding workers: Hawaii, California, Florida, Texas, Arkansas, Missouri, and New York, to name a few. And it's not just hospitals. The tech companies who supply hospitals are also being hit hard.

According to Challenger, Gray and Christmas, an outplacement firm that tracks layoff announcements, the technology sector has already lost 140,000 jobs in 2008 and is on track to lose another 40,000 jobs by the end of the year. In one of the most dramatic examples of how the sector is being hit, Sun Microsystems—a major provider of information technology for providers and payers—announced that it would lay off 5,000 to 6,000 workers, more than 15% of its total workforce, over the next year.

The best thing any IT worker (executive or otherwise) can do right now is become an integral piece of every part of the organization, says Van De Voort. "The days of the purely tech staff are numbered. It's the IT person who is able to work with business side to realize opportunities and solve problems that is going to last," he says.

And CIOs, the good news is that this is a "buyer's market." If you have been looking for an opportunity to perform some upgrades on your team, now is the time, says Van De Voort. "There is going to be a whole lot of good talent out on the street. It's a tough thing to say, but this is the time to remove everyone questionable, and trade up to a higher level of talent," he says.

But, Van De Voort notes, don't forget to recognize and reward your current top performers. "It doesn't have to be financial. Give visible promotions for those who are highly meritorious so everyone sees that individuals of quality are advancing, even when times are tough."

Though you may not receive the bonus you expected or the salary increase you hoped for in the near future, you can bet your hard work is being noticed. As employers reevaluate the size of their IT departments with an eye toward cutting costs, they will pay particular attention to those on both ends of the spectrum, and with U.S. unemployment rates forecast to reach a 25-year high in the next year at nearly 8%, perhaps just having a job can be reward enough for now.

Kathryn Mackenzie is technology editor of HealthLeaders magazine. She can be reached at
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