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Are IT staff overpaid or underpaid?

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Douglas Cohen, Salga, says attracting and retaining ICT staff with scarce skills remains a critical challenge for local government, and hampers its ability to deliver services.
Douglas Cohen, Salga, says attracting and retaining ICT staff with scarce skills remains a critical challenge for local government, and hampers its ability to deliver services.

A recent survey that asked local business owners what they think of the wages earned by other people found the vast majority believe executive salaries are too high.

In fact, 68% of South African business owners think the executives in large public companies are overpaid. That could be jealously talking, of course, but more likely it's a genuine reflection of how executive salaries are completely out of kilter with the wages of the masses.

The survey by Grant Thornton also found that 87% of business owners think companies should disclose the individual remuneration of directors, and, very sensibly, 96% believe executive pay should be directly linked to the quality of their performance.

This inspired Brainstorm to conduct a mini poll of its own, and ask CIOs whether they and their IT staff are overpaid, whether they are adequately rewarded for their skills and contribution to their company's success, or if their rewards are too low. Salaries are a very touchy subject, however, with several companies declining to comment.

Paul Kennedy, CIO of PricewaterhouseCoopers (PWC), says IT professionals are generally remunerated reasonably well. "There will always be some who are paid less, while others earn more. What adds to the premium paid for IT staff is the lack of skilled people available to employ. This is directly related to the lack of maths and science graduates coming out of our schools and tertiary education institutes," he says. "The salary premiums being paid are further exacerbated by the desire by many large companies to transform and appoint a representative staff consisting of African, Coloured and Indian (ACI) candidates. Due to the specific shortage of ACI candidates, they can, in some instances, demand salaries way beyond what would normally be acceptable. This can have the effect of creating unfair salary gaps within salary bands, resulting in a snowball effect that pushes up organisations' salary bills."

The only real solution to ensuring that salaries are fair, reasonable and justified would be to produce more professionals from our learning institutions to reduce the general skills shortage in the IT sector, Kennedy says.

"I don't believe CIOs and their IT staff are generally overpaid," says Len de Villiers, CIO of Bayport Financial Services. Remuneration surveys conducted across SA's technology industry track the compensation levels of technology specialists, and companies use these salary indicators and trend analysis to structure their compensation packages competitively, he says.

Incentive schemes

Yet the significant shortage of IT skills and experienced IT leaders is creating a significant demand for these scarce skills and will put pressure on remuneration packages to remain competitive.

"Companies in South Africa are prepared to pay good remuneration packages to CIOs and IT staff who have a solid and reputable track record and a history of delivery," says De Villiers, who has worked in the IT industry for 25 years.

"Having worked in the banking industry for most of my life, I am aware that the financial services industry and large corporations stay very close to the annual 'Remuneration Surveys' to ensure they pay market-related salaries in the various IT job categories that exist across the technology industry."

Companies that do not keep in line with market trends will very quickly lose their top talent to competitors as the pressure for these scarce skills continues to escalate. Good compensation structures, reward mechanisms and incentive schemes are crucial to retaining IT professionals, and most CIOs have made attracting, developing and hanging on to key talent one of their highest priorities, De Villiers says.

If only this were also true in the government sector. Government bodies regularly complain that they cannot attract the best people because they can't match private sector wages, particularly for IT positions where the scarcer skills already attract a premium even in the private sector.

Douglas Cohen, a specialist in economic development and ICT with the South African Local Government Association (Salga), paints a bleak picture of the career prospects.

Cohen confirms that local government lacks ICT skills, which is worrying because the ability of municipalities to deliver services depends on the quality of their people and other resources.

"Attracting and retaining ICT staff with scarce skills remains a critical challenge," Cohen says. "The municipalities are not only competing with the private sector that offers more lucrative salaries, but also with better opportunities from within central government. "Unfortunately, the reality is that government staff is made up of under-qualified professionals with watered-down skills that are not geared for real-life ICT crises and challenges. This negatively affects the optimal running of ICT departments and delivery of government ICT projects."

A diminishing pool

An index that monitors staff retention shows that local government retains only an average of 30% of key ICT personnel.

Technical skills are in high demand in SA, which is natural given the need to use IT as a differentiator for business today.

"However, technology on its own cannot achieve anything and it must be supported by capable people and tested processes to provide services in which the public can have confidence," Cohen says. Yet there is an ever-diminishing pool of people with the relevant qualifications. Worse, the approach to ICT within municipalities is not strategic, well-resourced, funded, planned or supported, leaving ICT practitioners frustrated and making it difficult to attract or retain skilled people, adds Cohen. CIOs in government are frustrated by only being seen as elevated IT managers and not on a par with business executives.

To address that lowly profile, Salga has developed guidelines on ICT governance to help municipalities understand the concept of good governance and IT governance. The aim is to raise the profile of ICT as an enabler of effective service delivery, and ensure the CIO becomes an integral part of the executive management team.

"Through this approach, we hope more qualified, better-paid and more strategic resources will be attracted into the municipal ICT sector," Cohen concludes.

First published in the November 2012 issue of ITWeb Brainstorm magazine.

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