Techies work harder as benefits go bust

"Richard," a 40-year-old IT architect, felt like his career path had reached its end at the financial services company where he'd worked for seven years. In a shaky economy, he was grateful to have a job at all, but when his employer eliminated matching funds in his 401(k) plan, as well as its profit-sharing program -- which usually put an extra $1,000 in his pocket each year -- he knew he had to go.

"Benefits were the straw that broke the camel's back," says Richard, who, like several other IT pros interviewed, was wary of revealing his real name, given the sensitivity of the topic. He is now a director of IT security at a media company where his salary and benefits are both "a bit better" and healthcare is less expensive.

Like rubbing salt in a wound, more than a quarter of the respondents to Computerworld's Salary Survey 2012 reported that their benefits had been cut in the past 12 months as a result of the slower economy. At the same time, even though average salaries were up 2.1% for 2012, average bonuses dropped by 1.1%, creating a drag on what would otherwise feel like forward motion for many workers.

The double whammy of smaller bonuses and fewer benefits could explain why more than one-third of the 4,337 IT professionals who responded to the survey said they stayed flat financially over the past two years, with another third saying they lost ground in the same time period. Only 29% reported gaining ground.

The survey data shows that healthcare benefits, tuition reimbursements and 401(k) plans were hit the hardest. These types of benefits "tend to roll around depending on the economy," says Dallas L. Salisbury, president and CEO of the Employee Benefit Research Institute in Washington.

Jeffrey L. Martineau hasn't had a raise in 30 months or a benefits boost in 10 years. Now his employer has cut the annual lump sum payment into his retirement plan from between 3% and 5% down to 1% -- a $2,000 shortfall each year.

"Cutting back on my retirement funds is significant to me at this point," says Martineau, 53, director of automated information systems at Harc, a nonprofit in Hartford, Conn., that provides services for people with disabilities. "It will cause me to work longer, and when I do retire, it's not going to be as comfortable of a life as I would like."

Even so, the situation isn't dire enough to cause the 25-year Harc veteran to switch to a new employer. For him to consider moving, "it would have to be a really good package, and there would have to be some longevity built in," says Martineau. Besides, he adds, "I get the feeling from [Harc executives] that they would really like to bring back a higher benefit for retirement, but they just financially can't this year."

For the most part, employees have been understanding of their companies' struggles with the economy and rising healthcare costs, observers say. "They're happy to get any kind of healthcare, even if they have to pay for it. People do not want to be without healthcare," says David Foote, CEO and chief research officer at IT HR consultancy Foote Partners in Vero Beach, Fla. "Benefits matter a lot to people."

ROI of perks

Penn benefits keep IT staffers engaged

The economy has taken a toll on many companies' benefits programs, but some employers say offering perks is worth the cost. At the University of Pennsylvania -- one of the top benefits providers on Computerworld's Best Places to Work in IT 2011 list -- benefits not only keep employees from moving on, but also keep them engaged, according to Jack Heuer, vice president for human resources.

The university has managed to maintain its healthcare, 403(b) and professional development benefits over the past few years, and it has added a $5,000 adoption benefit and "a substantial subsidy" for third-party child care or adult care for up to 10 calendar days a year -- all while keeping undergraduate tuition at its lowest percentage increase in 40 years.

Heuer credits Penn's ability to increase benefits to a "strong management philosophy" that was established before the economic downturn. "We need to attract and retain employees," he says. "We recognize that our IT staff could work anywhere."

"We're doing this because of employee engagement, which helps build the university and its academic mission," he adds. "Engaged employees make the university a better place."

— Stacy Collett

The average benefits package can account for 30% of a worker's total pay package, according to the U.S. Bureau of Labor Statistics. And while base pay mattered most to this year's Salary Survey respondents -- 73% ranked it as their top priority -- benefits were No. 2, mentioned by 59% of survey-takers.

Can benefits, or lack thereof, cause IT workers to change jobs? That depends largely on what stage of life they're in. According to a 2011 MetLife study of employee benefit trends, Generation Y employees (ages 21 to 31) generally don't feel as strongly as those in other age groups that benefits are a reason to stay at a job. In comparison, Gen Xers (ages 32 to 47), who are likely to be grappling with the costs of raising children, say workplace benefits are a strong reason to stay with their current employers.

Charging more, paying less

"Patrick," a data security specialist in Iowa and a father of three, would put himself in the latter camp. "The benefits just slowly get tighter and tighter on what they allow and what the exclusions are," he says. "When you look at salary raise versus insurance price hikes, your net gain is minimal. Trying to maintain all things related to a home life becomes difficult when a company is charging you more and paying you less."

Tuition reimbursement tops the list of preferred benefits for "Daniel," a 35-year-old customer support specialist at a financial services firm in Pennsylvania who is working toward a bachelor's degree in business management. The cost of his tuition has jumped 35% in the past three years. At first, his company covered all costs for 10 to 12 credits per year, but that has been reduced to a $5,200 flat fee.

Nonetheless, neither Gen Xer plans to leave his job solely for better perks. Likewise, young baby boomers (ages 46 to 54) don't appear to be a serious flight risk either, but job dissatisfaction could lead them to be less engaged and a potential threat to productivity, according to the MetLife study.

As for older boomers, many are finding they're financially unprepared for retirement. Derick Moore, 68, a senior staff programmer at LSI, a semiconductor and software design firm in Milpitas, Calif., is facing rising healthcare costs and contemplating what that will mean after retirement.

For doctor visits, he pays "a couple thousand [dollars] a year" out of pocket, and his health insurance premiums have risen from $80 per paycheck in 2009 to $115 in 2012. Overall, Moore insists he's "a happy camper" at his company of almost 16 years. He's just wary of the rising percentages he's being asked to pay.

Tech employees who are frustrated enough to consider switching jobs may want to look for a new employer that approaches benefits from a generational perspective and with more choices, flexibility and customization, say HR professionals.

Employees should check out whatever voluntary benefits their companies offer -- including accident insurance, additional life insurance or customized retirement plans -- and take advantage of those that fit their current lifestyles. On the healthcare side, high-deductible/lower-cost plans and health savings accounts can take some pressure off employees' paychecks.

Those concerns notwithstanding, Foote says the benefit that employees should seek out most is career advancement. He reports that most IT professionals he has surveyed "would work for lower pay if they could get somewhere in their careers."

Honing skills that are in demand and taking on new responsibilities are the best ways to insure against an uncertain job market. If you have those goods, Foote says, you'll be well positioned to bargain for a bigger salary and better benefits.

This story, "Techies work harder as benefits go bust" was originally published by Computerworld.

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