Experts foresee changes in compensation and management

WILL THE DAWN of a new century be accompanied by the birth of radical new perks for IT professionals or a leveling off of compensation as the stock market stumbles?

And how will trends such as the increasing use of telecommuting and the elimination of middle management affect IT professionals' careers?

It depends on whom you ask.

Some industry observers believe rising IT compensation may force companies to offer novel forms of noncash compensation to retain workers.

James Canton, president of the San Francisco-based consultancy Institute for Global Futures and author of the book Technofutures, sees IT workers as having the leverage to demand even more money and perks from employers in the future. Among the likely perks: demanding where you want to live and in what country you will be paid.

"Today there is a big shortage of IT talent, and I see that increasing dramatically in the next three to five years, so that competition for IT talent becomes even more fierce," Canton says. "That means IT folks will be paid more, will get more stock, and will have a lot more advantages in terms of lifestyle and work style."

For example, in order to retain workers, management may be forced to let them operate their own small companies on the side, or to offer them perks "like allowing them to live next year in Singapore or Italy, or giving them an opportunity to learn about sales and marketing even though they are working in IT," Canton says. Workers also might be able to demand that they be paid in a country that has no taxes or be paid barter-style, with company resources such as supercomputing power that can be used for an employee's personal business projects.


Others are betting on more mundane noncash incentives. IT will move away from throwing money at people and will concentrate on creating an engaging workplace with personalized financial rewards, according to Jay Schuster and Patricia Zingheim, partners at the Los Angeles-based compensation consulting company Schuster Zingheim and Associates, as well as co-authors of the books The New Pay and Pay People Right.

"You'll see more project and team incentives that have more to do with what employees directly affect in IT. It's much more meaningful than the same amount of money based on company performance," Zingheim says.

But some observers believe that IT pay won't continue to go up indefinitely.

"The equity markets have been strong for a number of years, and that's been driving up management compensation levels in IT," says Jeff Leon, managing director of the information officers practice at Russell Reynolds Associates, an executive search company in New York. "But the boom in the equity markets won't last, particularly for the dot-coms. At some point, those stock values will have to deflate, and that will throw some water on the fire of rising compensation."


IT manageers can expect to be forced to deal with more alternative work styles in the future, including telecommuting, says Fred Niederman, Shaughnessy Associate Professor of MIS at Saint Louis University, in St. Louis, and chair of the Association for Computing Machinery's special interest group on computer personnel research.

"While workers who are telecommuting sometimes feel as if they are out of the loop at work, telecommuting is likely to be more stressful for IT managers than it is for workers," Niederman says. "If you are an IT manager and you have 20 percent of your staff working at home for three to five days a week, how do you know they've done their jobs? And how do you break their work into pieces so people can work at home part of the time and get a piece of a project done? How are you going to arrange to get them into a meeting to make sure they are all on the same page? Also, how are you going to make sure the IT person who is working at home has the opportunity to grow and develop?"


Another management change on the horizon is that companies may continue to remove layers of management in their IT departments to save money. But not all companies will do that because of the perceived risk, Niederman says.

The theory of removing management layers is sound enough; technologies such as e- mail and databases have consolidated scattered pieces of information and thus enabled managers to have a broader span of control within the corporation, Niederman says. In practical terms, this means that managers whose primary job was to consolidate information from lower in the organization and present it to the next level of management won't be needed any longer, he says.

The trouble is that some companies that have reduced the levels of management have found out that those people were performing other valuable tasks, such as mentoring and initiating new projects, Niederman says.

"Some companies that have reduced levels of management have gotten big gaps in the organization. So the results have been mixed," Niederman says. "What will happen is that some firms will say the success rate has been fifty-fifty, and that's too much risk. But other companies will say they've got to do it anyway to save money."

Michael Nieset, executive director of the CEO and board practice at search company Christian & Timbers, in Cleveland, is betting that more IT departments will remove layers of management in the future.

"Technology will continue to push the effectiveness of managers to manage larger groups of people and larger projects. We don't know where it will end," Nieset says.

The bottom line, of course, is that no one can be sure how IT compensation and management structures will change. But no one is predicting that they will stay the same.

This story, "Experts foresee changes in compensation and management" was originally published by InfoWorld.

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