As seen in the December, 2003 issue of ...

Our annual survey reveals that while the tech salaries have held steady, some IT staffers are looking to switch jobs in an improving economy. By Phil Albinus

Good economic news might be uplifting music to the ears of CEOs and the bean-counting CFOs, but it might be the blues for CIOs who want to retain their staff next year. According to the respondents of our annual Waters salary survey, financial IT salaries overall remain roughly the same as last year, but the improving market might set off a round of job-hopping. The documents in your firm’s printer tray might be the résumés of the mid-tier technology director or information manager you once counted as your most loyal employee.

In our Waters annual salary survey, we asked our financial technology readers to tell us where they work, how much they’re earning in base salary and bonuses and whether or not they are thinking about looking for greener pastures. This year’s salary results closely resemble last year’s--salaries and bonuses have remained steady if limp compared to the go-go ‘90s and in keeping with Wall Street’s sober economic outlook--but a sizable proportion of readers are looking for work either inside or outside of their current places of employment.

Let’s start with the money. The plurality of respondents answered that they were earning between $100,000 and $124,999 annually. According to the spokespeople from the IT recruitment firms we spoke with, these figures mark our respondents as middle managers and mid-tier technology information workers. The second-largest group reported that they earned $75,000 to $99,999 per year. The grass on the other side of the conference table, to mix metaphors, was much greener, as we expected. Of the CIOs and CTOs who responded to our survey, approximately 40 percent said that their base salary was between $150,000 and $199,999. Nearly thirty percent of CIOs and CTOs responding said their pay was a notch lower at $125,000 to $149,999, while 21 percent said they took home $200,000 to $300,000. One respondent reported earnings from $300,000 to $400,000 per annum.

These numbers don’t surprise the IT headhunters who place CIOs in their corner offices for a living. According to Judy Homer, president of JB Homer Associates, the CIO or CTO for a medium-sized investment firm can still easily make anywhere from $150,000 to $300,000 annually, plus bonuses. "It depends on cash versus equity because there are far fewer stock options these days," she says. "I think people are taking a look at packages that are better suited to them. The days of making huge demands are gone."

Bonuses are still strong, thanks to what appears to be the slow and steady uptick in the stock market. Nearly one fifth of the CIOs who answered our survey responded that they expect to receive a bonus of $150,000 to $199,999 this year. Likewise, close to 15 percent expected to receive a bonus ranging from $50,000 to $74,999; and the same amount expected to see a bonus check in the amount of $75,000 to $99,999 at the end of this year. On the high end, another 15 percent expects a bonus between $300,000 and $399,999. One respondent expects to see a bonus of anywhere between $400,000 and $499,999.

But the bonuses may have a down side. Although any financial perks remain impressive for an industry still feeling the effects of the terror attacks of Sept. 11, 2001; the collapse of companies like Enron, WorldCom and Global Crossing; the burst Internet bubble; and the assorted high finance scandals, the bonuses could mark the start of a new round of job hopping.

"I’m already hearing about people who are setting up their [job switching] for January and February," says Homer. "Once they get their bonuses, they’ll be hitting the ground running."

Although Homer says she doesn’t have hard numbers to back up her projections, she has grim news for any CIO or CTO who expects to see the same faces at next year’s Christmas party. "I am predicting a mass exodus of anywhere from ten to fifteen percent and maybe even twenty-five percent," she says. "People who used to be terrified to be on the phone at work are now calling me."

Kristin Wait, a headhunter with Spencer Stuart in Manhattan agrees. Although she says that the mindset of the last two years still encourages people to feel grateful that they have a job, if the economy revives strongly, people will feel that they can safely move on. "People may have been in a job that they didn’t like and they may be looking for their next challenge and next opportunity. As soon as those opportunities arise, they will take a s at them," says Wait.

"The financial aspect is a relatively small portion of employee satisfaction from where I sit," says J.P. Rangaswami, global CIO for Dresdner Kleinwort Wasserstein (DrKW), who oversees roughly 1,000 staffers. "It’s the freedom, the involvement and the fact that they get a feedback loop from their peer group that drives people today." Rangaswami acknowledges that there’s been quite a bit of attrition, but he attributes it to the folks who entered the industry at the peak of the boom. "That’s only because they’ve been priced out of the market," he says.

Our survey appears to back that up that notion. Of the CIOs and CTOs who responded, half said that they are staying put, while slightly less than half overall said the same thing. Those loyal responses aside, they also said they are willing to entertain offers and many said they are actively looking for a new title. Of the CIOs, 64 percent responded that they are happy with their current job but would "entertain offers," while 61 percent of our overall survey said the same thing. Of our responding CIOs, 14 percent said they are either in contact with a headhunter or actively sending out résumés--or both. Only one CIO said not to bother calling with a job offer, he or she was staying put.

Investment banks don’t appear to be totally in denial that staff retention will be a real issue in the coming year. Says Homer, "I think they are letting go on one end and are hiring quietly on the other end. Banks that are taking a serious look at retention are saying that they are worried. They’re taking a solid look at this because they don’t want to lose their ‘A’ players."

One continuing challenge facing the prospective job hunter is the lack of new financial IT jobs compared to the number of résumés floating around Wall Street and beyond. One major reason for this, of course, is outsourcing, which usually climbs up from the lower ranks and stops well before the CIO’s doorstep. "Most of the outsourced jobs at the senior level are those that help with the transition over to the outsourcer," says Wait. "What happens a year or two after that becomes the question mark. Do they remain on the outsourcer’s payroll? The reality is these outsourcers can’t augment these jobs with their own people so they have to utilize the staff from their clients."

In other words, she adds, "The former bank employees become IBM employees. They did so at JPMorgan Chase, and I think they’re doing it at Merrill," Wait says.

With the good economic news comes some cautiously optimistic news at best. The headhunters we spoke with foresee some IT hiring in the coming years even after the past staff reductions and outsourcing initiatives.

"People are hiring for Q1 of next year. I’ve seen a little bit more interest in senior-level opportunities in the retail, the asset management and brokerage side of the business," says Wait. Wait said she and colleague tried to determine the last major CIO move in the past year or so. "When did the last major CIO position change? I can recall only a few. Other than that, there’s been very little movement in the past a two to three years." She did acknowledge that Nick Themelis’ exit from and Nancy Gloor’s entrance count as significant moves.

This doesn’t surprise veteran headhunters who often fill the top tech position at major investment firms. One career path is to avoid being outsourced or commoditized, say the experts. "Programming has become a commodity. As soon as what you do for a living is commoditized, you risk being eliminated," says Homer.

One area in which managers may have a tough time in 2004 is employee retention. Wall Street has not instilled much good will or loyalty in its employees after rounds of severe layoffs, budget cuts and outsourcing to countries where mid-tier technical staffers saw their jobs done by someone who earns the equivalent of a Starbucks barista’s salary.

"I think the days of the salary bargains where we can get someone on the cheap are over. The fear here is retention. The people who have accepted positions in the last two years at a lower salary than they were earning in the past are now seriously thinking about taking a different, higher paying position," says Homer. "There’s no real loyalty because they feel that they’ve been burned."

That said, one CIO from a major Wall Street firm who wished to remain anonymous said he doesn’t foresee a mass exodus of his staff. "I haven’t seen very many people leaving and starting the farm in Vermont or traveling in New Zealand for six months the way they used to," chuckles the CIO. "I worry, though, about the psychology. I don’t know if they’re getting burned out to the farms of Vermont, but there has been a general bit of goodwill burnt because people’s expectations were set on a different track during the Internet bubble. That creates a certain wear and tear on how people feel about where they work. The odds are that we will navigate through that okay, but it’s definitely a point of concern."