Just Exactly How Much Should You Be Paying Your Workers?

by drjim on September 27, 2017

The question is are you paying too much or too little?

The question is are you paying too much or too little?
Image Credit: Refracted Moments™

As the person at your company who has the CIO job and who understands the importance of information technology, it turns out that you have an additional job. This is building the best IT team possible. In order to do this, you are going to have to hire some people and when you do this the odds are that you are going to have to end up paying them. This is where things start to get interesting: just exactly how much should you be paying them?

What’s A Fair Way To Determine How Much To Pay?

If you are like most CIOs, you want to pay your workers what’s fair. This means that you pay then enough to get them to stick around, but not so much that the company goes out of business. At a lot of firms, how they determine how much they pay their workers is undergoing an overhaul. There are a lot of different reasons for these changes but many firms are trying to stay ahead of changes like performance-based compensation and gender pay gaps.

Once upon a time, a company could reasonably assume that its workers didn’t know what other workers made. That is no longer the case. It has never been easier to share information with coworkers and websites like Glassdoor.com provide a wealth of information on what companies pay for different jobs. The old ways of setting salaries that included matching competing offers and basing it on the budget that a department got from their remote finance department just don’t seem to do it anymore.

What IT departments want to do going forward is to create compensation programs that will allow them to minimize discrimination. There are a lot of motivations for doing this: the federal government’s Equal Employment Opportunity Commission is creating stricter equal pay rules and states like California and Massachusetts are making it illegal to pay men and women differently for jobs that are basically the same. One way to address this problem is to start to pay for roles, not people.

How Should An IT Department Go About Setting Salaries?

Given all of the complexities associated with creating salaries the right way, just exactly how is the person in the CIO position supposed to go about doing this correctly? The first thing that you are going to want to do is for each job to benchmark it regarding its value to the company and what the local market is paying for that job.

At a lot of firms that are trying to get their salary system straightened out, the first step that they take is to create a compensation philosophy. This can then be used to help the company’s employees to understand how the company sees each job and what it values the most. In order to determine how much to pay for each position, most companies try to used market-based pay. This requires collecting a great deal of data from a number of different vendors.

The collection of salary data from other firms allows the data to be clustered by either job title or duties. Once this has been done, additional variables can be taken into account based on location, industry, and experience. The ultimate result of all of this will be a range of salaries for each position. Once this is known, then the IT department can target the median salary from the data that has been collected and create a spread of acceptable pay around that number. IT departments need to remember that salary benchmarking data does become stale very quickly.

What All Of This Means For You

In addition to worrying about moving applications into “the cloud”, purchasing more servers, and securing the company’s networks, it turns out that CIOs have another job. They need to determine what the correct salaries for each of the positions in the IT department are.

Due to a lot of changes in the market, providing your workers with fair pay is becoming more and more important. The federal government is taking steps to ensure equal pay as well as a number of different states. Firms need to realize that the information age has made it much easier for workers to find out how much other people in the company are making. Firms need to create compensation programs. CIOs need to start the process of creating fair salaries by benchmarking each job with what the local market is paying for it. Next they need to create a compensation philosophy so that they can explain to their workers what they are doing. Collecting data from other companies will allow medians to be set for each position.

The ultimate goal for each CIO needs to be to create an IT department that will be filled with happy, satisfied workers. Part of this process is making sure that you are paying them fair salaries. This is going to require some homework on your part. However, if you can get it right, then your workers will realize that their pay is fair and they won’t leave you thus making your CIO job just a little bit easier!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World IT Department Leadership Skills™

Question For You: What the best way to make sure that you are paying boys and girls the same amount for the same job?

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What We’ll Be Talking About Next Time

Just in case you don’t remember, the U.S. carrier, Delta airlines, suffered a major melt down when their headquarters experienced a power outage. This outage crippled their IT systems and the result of this was that they could not fly their planes. Planes were stuck on the ground, flights were cancelled, and Delta was even unable to get the word out to flyers that their flights had been cancelled. This mess up was based in Delta’s IT department because of the importance of information technology and at the end of the day that means that it was the person with the CIO job’s responsibility.

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