IT pay cuts: Are you next?

By , Network World |  Career, salary

"It's a cost/benefit analysis," Mitchell says, adding that instituting a 5% pay cut is huge boon to a company's bottom line. "You're going to risk losing people, but it's worth the risk because of the broader morale drop you would see if different groups of employees were treated differently."

Another suggestion from Mitchell: "Commit to your team that you will make up the pay eventually or try to get them whole by a certain point in time."

Cutting the pay of IT professionals is risky, agrees David Foote, CEO of Foote Partners, an IT compensation research firm in Vero Beach, Fla.

"I've heard of it, but it's not widespread," Foote says. "Retention is a huge problem in IT, and [companies] need to start realizing that. If you make across-the-board pay cuts, the best people will leave."

Foote says that layoffs are more common than pay cuts for IT professionals.

"What companies are doing is firing people and putting the work on the backs of other people," Foote says. "We see a lot of highly paid but burned out people in IT."

Foote says IT department pay cuts are more common in small and midsized firms where employees have an equity stake in the business.

"My advice to CIOs is -- without a doubt -- don't cut pay unless you're a small company and you have other avenues of rewarding employees," Foote says.

Some organizations are instituting pay cuts in the form of unpaid furloughs. National Public Radio is requiring all of its employees to take five days of unpaid leave, which equates to a 2% pay cut. Of NPR's 840 employees, 72 are IT professionals, including 45 in Information Services, 17 in Distribution and 10 in Digital Media.

NPR spokeswoman Danielle Deabler says all of the steps that NPR has taken to limit employee compensation – including eliminating NPR's contributions to retirement accounts, eliminating its "flex" credit, implementing the five-day furlough, changing three NPR-paid holidays into unpaid holidays, and eliminating pay increases for 2010 -- apply to all of its union and non-union employees, including IT staff.

Dennis Haarsager, NPR's senior vice president for systems resources and technology, apparently fared worse.

"While employees [faced] these cuts effective May 1, these cuts were already implemented with NPR leadership at the VP level or above effective April 1," Deabler says. "Additionally, NPR leadership did not receive the annual increases given to staff in January 2009 and [worked] the final two weeks of fiscal year 2009 without pay."

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