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When Pay for Tech Candidates Exceeds That of Their Managers
Question: Six months ago, I was hired as a director-level technology manager. I am recruiting senior technical professionals but the market is so tight, we need to offer them higher salaries than my own. I am uncomfortable hiring subordinates who make as much or more than me. How should I approach my boss about this?
Answer: It isn't unusual for some corporate professionals to earn more than their managers. Witness the sales department. Many top salespeople who work on commission make more than their bosses. Their annual pay can even exceed that of top executives at their companies, says James J. Pappas, manager of corporate staffing at the Barnes Group Inc., a Bristol, Conn., manufacturing and distribution company.
Mr. Pappas has been in this situation himself. At a former employer, pay for recruiters and relationships managers he directed exceeded his own, he says. "They were really skilled at what they did, and their pay was higher than mine."
In New York, where you say you work, tech pay often exceeds the national average. However, if it's any consolation, tech managers nationwide are facing the same problem as you because of the sector's comeback and resulting shortage of skilled professionals, says Daniel Moynihan, a principal at Compensation Resources Inc., an Upper Saddle River, N.J., consulting firm.
"All over the country, tech managers are finding that talent is scarce and they have to pay people over the desired salary level to hire them," says Mr. Moynihan.
At organizations outside the technology industry, like banks or insurers, hiring technology pros is particularly difficult because candidates prefer working for a company that's a high-tech star. Mr. Moynihan says it took one nontechnology client company seven months to hire a chief information officer because it couldn't afford to pay top dollar for the job. "It's tough if you're battling the Googles of the world for tech people," he says.
To help your company avoid being dismissed out of hand by good candidates, you may need to compile data about market pay rates for your openings and present the information to your superiors. Some companies are adopting separate higher pay structures for technical departments so they can attract and retain staff, says Mr. Moynihan.
"While everyone else in the company is on pay structure A, we will extract the entire technology team and pay them on structure B to recognize that the market has changed," he says.
He suggests speaking with your manager about your own pay, since you told me separately that the market rate for your job also has risen since you were hired. Even though it's only been six months, "if you can demonstrate success since you have been there, it would be hard for the company to fight it, Mr. Moynihan says.
Mr. Pappas is less optimistic about your ability to snag a raise at this point. He notes that you've chosen a management path, which has different responsibilities, knowledge requirements and benefits than a technical professional's. "In the long run, you may rise higher and make more money than those on professional paths, he says. Many managers also are paid annual bonuses of 20% to 40% of their salaries that can lift their pay above the people they supervise.
Moreover, a management role may shield you from the normal hiring turnover that occurs in your sector when new technologies are introduced and older ones are phased out. "When times are good, the tech sector pays very well," says Mr. Pappas, "but when it's bad, there's a lot of downsizing."
Of course, you have the option to look for a new job that will pay better. But if you want to stay with your company, you may have to accept that tech skills are at a premium and you may not qualify for a raise until your annual review. At that time, you can present justification for an increase that exceeds the company average.
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