Assessing Your IT Salary & Compensation Structure
Updated: June 27, 2023
Top tech talent understands that their skills are in high demand, and the IT salary ranges they are seeking should align with those abilities. The competitive nature of hiring IT talent makes it critical to fully understand what compensation the market demands before extending an offer. Traditional salary structures in tech aren’t always attractive to today’s candidates. Do you know if the salaries you’re providing are up to par? If you’re not sure, it’s time to reassess your IT compensation structure. After all, you need to ensure that your organization is offering both the salary ranges and benefits necessary to attract and retain the top technology talent you need.
Why IT Salaries Are Increasing
As the importance of technology grows far beyond the tech sector, IT job openings are becoming harder to fill. At the same time, the supply of skilled candidates hasn’t kept pace. This trend is positioned to continue, as employment for computer and IT occupations is projected to rise 15% between 2021 and 2031, which is faster than the average for all occupations.
If these projections are realized, the Bureau of Labor Statistics states that this would result in more than 682,800 new jobs. According to CompTIA, in 2023, there will be 272,323 net new tech jobs that will need to be filled. The addition of these new jobs, combined with the existing and projected IT talent shortage, will likely make it even more difficult to fill tech openings.
As organizations struggle to fill their open IT positions, the median salary ranges for many roles have risen. Because tech professionals have so many opportunities, pay has risen across IT fields at a rapid rate. According to a recent survey by CompTIA, the median tech wage in the United States is 103% higher than the national median wage. A Dice report shares that in 2022, the average tech salary saw a year-over-year increase of 2.3%, reaching $111,348, as compared to the previous year’s figure of $108,857. For any business looking to hire in tech, it’s crucial to evaluate your IT compensation structure and consider a wider salary range. For that reason, it is important to determine if the salaries and benefits you offer will meet candidate expectations.
The Importance of Finding and Meeting Market Rates
Putting together a competitive tech compensation package starts with determining the average annual salaries in your area for the roles you’re seeking to fill. Resources like salary.com and payscale.com make it easy to research the average salaries. Each professional is different, and compensation can fluctuate with experience and education levels. Therefore, looking up the average in your city is a good place to start.
Why is it so important to know the market? Because an offer that isn’t competitive encourages candidates to join a different company. A low offer says that your business is out of touch and doesn’t know what top talent is worth. One survey revealed that 35% of workers say the salary is the most important factor in accepting a new job. While salary isn’t everything, it does tell a candidate that you’re serious about hiring them and value their skills.
Your IT compensation structure can also have a large influence on retention. If raises fail to keep up with rising salaries, current employees are incentivized to search for other opportunities. The cost of hiring new employees can be staggering. Likewise, it’s worthwhile to keep up with rising rates in order to retain your best people. A well-designed salary structure can help ensure your retention stays high.
Other Compensation Perks Matter
Though compensation is important to a salary structure, it is not the only factor in a candidate’s decision to accept or reject your offer. In fact, nearly 60% of respondents in a recent Glassdoor survey reported that perks and benefits are strongly considered before making a decision. Top technology professionals are looking for a great internal culture and companies with values that match their own, as well as opportunities for development and training to further their careers — not only good IT salaries. Check out our 2023 Salary and Hiring Guide for up-to-date talent acquisition and retention insights.
One of the benefits that routinely tops lists is flexibility. When given the choice between a high-paying job and a lower-paying one with better benefits, 34% of workers surveyed said flexible hours would make them consider the job with a lower salary range. In the tech world specifically, 23% of IT pros said they’d take a pay cut to be able to work from home half of the time. Compensation is clearly a significant part of a candidate’s decision. However, these other perks can help your organization compete if your IT salary structure isn’t able to keep up with the market average for salary increases.
Evaluating IT Salary and Compensation Structures
For companies who aren’t yet ready to sign on full-time specialized talent for highly competitive salaries, consultants can be an effective way to fill immediate needs and get critical projects done. As you evaluate how your organization can secure the best talent within your budget, consider partnering with a staffing firm that understands the market. A true IT talent partner can provide deep industry knowledge and connections to help you meet your business objectives. With this in mind, they can assist you in determining the right salary range to offer. In addition, they can help you secure the right consultant to help your company continue moving towards your goals.
How To Assess IT Compensation Packages
You won’t have much luck hiring tech talent if your compensation packages aren’t competitive. However, there’s more to sizing up your offer than a quick Google search. Doing a thorough IT company salary structure comparison using market data and analyzing other metrics associated with attracting and retaining talent can help you make a competitive offer.
Compare With Your Competitors
Look into what your competitors are offering similar roles in the same pay grade. Websites like Payscale and Glassdoor can help you research what companies similar to yours are paying in salaries and benefits. You can search for a salary report by role and job function, company, or geographic location to see minimum and maximum salary averages.
Look at National Average IT Salaries
Another useful benchmark is the national average salary for a particular IT role. With more companies offering the option of remote work, employees can choose to live wherever they want. The Bureau of Labor Statistics is a good source of national IT salary data.
Consider Your Current Employees & Retention Rates
If your current retention rate is 90 percent or better, it’s a good sign that your employees are happy with their salary and benefits. However, your compensation package may not be high enough if you have a high turnover rate.
Hold Reviews With Current and Future Employees
Being underpaid is the top reason people leave their jobs. One way to avoid having your employees leave for a better offer is to review their compensation on a regular basis in career planning meetings. It’s a good idea to review an employee’s compensation and pay scale as part of annual or biannual performance reviews.
Average IT Salaries
If you’re wondering how your current salaries stack up — according to the Benchmark IT 2023 Salary Guide, the average salaries for some common mid-level IT roles are as follows:
Software engineer: $149,750
Data analyst: $131,145
IT manager: $152,775
Security/compliance analyst: $115,570
Web developer: $135,350
DevOps engineer: $148,350
Or feel free to read our full 2023 Salary and Hiring Guide!
How To Improve Your IT Company Salary Structure
Evaluating your IT company salary structure is an essential step in attracting and retaining the top tech talent for your organization. Whether you use a traditional salary structure, a market-based salary structure, or even a broadband structure, there are probably some areas that can be improved. In addition, to ensure your compensation is in line with industry standards, here are some other steps for improving your existing salary structure.
Ensure Equal Pay
Women in tech are paid less than men in the same role at the same company 59% of the time. Needless to say, people should be fairly compensated for their work, regardless of gender, race, ethnicity, sexual orientation, or other demographic differences.
Ensuring pay equity is not only a moral good, but it’s also good for your bottom line. You’ll attract more diverse candidates when you’re committed to equality. Diverse tech teams are more innovative, more productive, and more successful across metrics. Companies with the most diversity are also the most profitable. According to an analysis of 366 public companies by McKinsey & Company, those in the top 25% in terms of diversity outearn industry benchmarks 36% of the time.
Work With a Quality IT Recruiter
Benchmark IT recruiters work with the most qualified tech talent every day. We know what the industry trends and averages are. Benchmark IT can help you create competitive compensation packages that will keep your current and future employees happy.
About Benchmark IT –Technology Talent
Benchmark IT offers technology consulting, executive search, and direct hire recruitment and staffing services. We service a wide range of clients and industries throughout the metro New York area and beyond. Our proprietary recruitment process and dedication to precision, ethics, and personalized service set us apart from other recruiting firms. As a result, Benchmark IT has become a trusted partner among Fortune-ranked companies and mid-market, start-up, and growth-phase firms since 2007. For additional information, visit www.bmarkits.com.
Do you know what it takes to hire the tech pros you need? Benchmark IT can help.