While few iSeries professionals will receive blockbuster salary increases in 2003, their compensation levels will grow a little faster than they did last year. This is one of the key findings of the latest quarterly compensation survey from Nate Viall & Associates, a Midwestern iSeries recruiting company and national compensation research firm.
According to figures released by Nate Viall earlier this month, salaries for AS/400 and iSeries managers in the United States are now 5.4% higher than they were one year ago, while those for AS/400-iSeries programmers are up 4.4%. This is considerably better than the 2.9% and 2.3% increases for managers and programmers, respectively, that companies reported in the fall of 2002. Those figures reflect the economic pressures that most companies experienced when the recession hit in 2001.
While compensation increases are inching back toward long-term averages, there is something you should know before you discuss a pay increase with your manager. According to Viall, salary averages are experiencing what he calls an "artificial lift" due to the hiring and firing practices of many companies. At this point, few companies are hiring additional IT staff, while many more are laying off employees. When they do so, many companies are laying off the less-talented employees, who are typically paid less than top performers. This increases average IT salaries in the company even if actual compensation levels do not increase.
To illustrate this effect, consider the example of a company that has five iSeries programmers on staff who receive a total of $300,000 per year for an average of $60,000 per person. Because of tough economic times, the company decides to lay off one of its developers and picks a less-talented individual who earns $56,400 a year. This reduces the total programmer payroll to $243,600 which, when divided among the four remaining developers, results in an average compensation level of $60,900. Unless the layoff is taken into account, the averages would indicate that salaries were increased by 1.5% (the difference between $60,900 and $60,000) when nobody received a raise.
According to Viall's estimates, layoffs such as the one just described are lifting most of his average compensation increases by between 1.0% and 1.5%. One way he has arrived at this estimate is by studying average pay increases for "matched pairs" within his database. These are individuals who took part in previous surveys as well as the present one, allowing Viall to track their compensation histories over time. Such studies indicate that average compensation increases for most positions are in the 3% to 4% range rather than the higher ranges shown in the following table.
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Average Annual Salary Increases for
AS/400-iSeries Professionals in the United States |
|
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% Increase*
|
|
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Managers (all categories)
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5.4%
|
|
Large urban areas
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7.0%
|
|
Rural areas
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4.8%
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|
Programmers (all categories)
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4.4%
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|
Large urban areas
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3.4%
|
|
Rural areas
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5.3%
|
|
*Estimated "artificial lift" in reported increases due to layoffs of employees with lower compensation levels
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1% to 1.5%
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Hiring Trends--On the Verge of a Reversal?
As this discussion indicates, times are tough for iSeries professionals who are looking for work. Many companies have gone through one or two rounds of layoffs, while others have instituted hiring freezes. This does not mean that unemployed iSeries professionals cannot find work. It does mean, however, that the companies that are hiring can choose from a larger pool of candidates.
In such a market, most companies are awarding jobs to professionals with the greatest experience. This makes sense because hiring managers can pay about the same money for someone with 10 or more years of experience as they can for someone with three years of experience. Viall's data indicates that as a result of this hiring practice, the average programmer experience level within iSeries shops now stands at 15 years. On the flip side, Viall reports that hiring levels for junior programmers are one-fifth of what they were back in 1998. That's when many companies, faced with the enormous challenge of preparing their systems for the Year 2000 conversion, hired thousands of young programmers to tackle the task.
While hiring levels may be low right now, there is hope that the job market will improve during 2003. As Viall notes, the demand for iSeries professionals has historically depended on increases in orders for new iSeries servers. Now that IBM is shipping new iSeries models and executing on expanded sales and marketing campaigns for the server, we may be on the verge of such an increase. If that does occur, both hiring and compensation levels could gradually return to the levels we experienced before the Y2K and Internet bubbles of the late 1990s.
To purchase complete salary studies or to receive a free personal salary analysis, click here to access the Nate Viall & Associates Web site.
Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at
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