SMBs: Better to be a big fish in a small pond

By Matt Bolch, Contributor 01 Nov 2006 | SearchSMB.com

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IT managers at smaller companies may lack the respect and clout of their enterprise counterparts, but a new salary survey suggests in the long run, there may not be so much to envy.

The Big Package Average salary and bonus compensation by title: Title Avg. Total Compensation CIO $124,370 IT administrator $58,843 IT developer $68,392 IT director $87,598 Nonmanagement $61,997 VP of IT $99,625 Other $43,300 Source: SearchSMB.com 2006 Salary Survey of 461 respondents

Money is good, but it's not everything, say many IT managers at small to midsized firms. In fact, other types of compensation, benefits and work environments play important roles in the loyalty of IT workers to their employees.

Kurt Sundberg is a senior information assurance engineer at Charleston, S.C.-based WareOnEarth Communications Inc., an information assurance company with approximately 120 employees. Before taking his current job, he worked at a small company that was bought by AT&T. He continued working there for seven more years but said he "hated being a number."

Sundberg has worked at WareOnEarth for three years. The company's 401(k) gained 50% in value last year, and he gets a bonus of between 4% and 8% of his salary, depending on the results of his annual evaluation.

"From what I see, the bigger the company, the smaller the salary sometimes," Sundberg said. "The smaller company may not have all the benefits, but there's more profit-sharing in the long run."

Just less than 45% of respondents to a new salary survey conducted by SearchSMB.com received a raise in 2006, and another 39% got their last raise in 2005. For those who received a raise, the amount was between 1% and 3%, according to 38% of respondents. Another 30% got a raise of between 3% and 6%, and 20% got a raise between 6% and 10%.

More than half receive a bonus as part of their total compensation.

Money isn't everything

In order to compete with larger companies for IT talent, Jim Johnson, an analyst at Robert Half Technology, said that hiring executives at smaller companies are increasingly aggressive in the recruitment and retention of employees.

Five-year plan What are your career plans for the next five years? Response % Move up higher in my IT organization 25.1% Move up higher in my overall organization 17.9% Move out of IT into a business role 5% Move to a larger company 17.9% Move to a smaller company 1.7% Continue in my role 20.1% Retire 4.3% Other 4.3% None of the above $43,300 Source: SearchSMB.com 2006 Salary Survey of 461 respondents

While smaller firms can't always pay the higher salaries, they do have the flexibility to be creative (and generous) when it comes to benefits such as flexible hours, telecommuting or bonus packages. And clearly, there are many IT managers who are willing to forfeit the very high salary in order to guarantee they won't miss another school play.

But let's face it, salaries at SMBs aren't anything to sneeze at. While they may not be at the high six figures, it pays the rent. In fact, while lower than enterprise salaries, it's fairly commensurate with many mid- to larger organizations. According to this survey, the average salary of a CIO at an SMB is $124,370; vice president of IT is $99,625; and IT director is $87,598.

Everett Lockhart cashes the bonus checks he receives as lead Web application developer at Blue Cross Blue Shield of Texas, but he said it's not a large retention tool for him. "Good reasons for staying are getting a promotion and interesting technology to work on," Lockhart said. "In the end, a bonus is a spot reward. Taken over a year, it doesn't affect your salary much."

While Lockhart is not actively looking for a job, he said IT professionals should always be open to other opportunities internally and externally that may crop up. He'd especially be interested in leading the IT department of a smaller company rather than working for a larger firm.

"If I got two comparable offers at the same time, I'd pick the smaller company," Lockhart said.

There's no place like home

The perks at smaller companies suggest many IT managers are perfectly content in finishing out their careers just where they are.

In fact, nearly two-thirds of respondents to the SearchSMB Salary Survey expressed a desire to stay at their current companies in some capacity.

More on IT careers at SMBs IT managers at small firms lack clout CIOs use boards to advance careers

One-quarter of respondents want to move up within the IT department, and another 20% expressed a desire to remain in their current role. A similar number (17.9%) want to either move up within the organization outside the IT department or quit to work for a larger company.

Craig Hunter has been IT manager for the city of North Vancouver, British Columbia, for four years. "This move is probably the final step for me," said Hunter, who's been in the tech field for three decades. "In Vancouver, there are not a lot of head offices, and high-level IT jobs are not as numerous." He leads an IT department of 16 and reports to the city's director of corporate services.

He says that municipal government generally doesn't attract budding entrepreneurs or those who use the job as a steppingstone to another position. "Not a lot of them are looking," Hunter said of his staff. "But if the dot-com bubble rises again with $150,000 salaries, it'll be awfully hard to keep pace."

Does size matter? Average total salary and compensation by company revenue: Company annual revenue Avg. total compensation $10 million- $20 million $62,952 $20.1 million-$50 million $66,269 $250.1 million- $500 million $83,186 $50.1 million-$250 million $74,157 $500.1 million-$1 million $77,895 Total average $43,300 Source: SearchSMB.com 2006 Salary Survey of 461 respondents

Still, North Vancouver offers good salaries and the ability to see an entire project through from idea to implementation, he said. "If you're a super-small company, you are the IT department, and in a larger company, you're just a small part of a big department," Hunter said. "This strikes a happy balance between the two."

Smaller companies may lack high-profile, high-dollar software and hardware implementations, but every day is a learning experience, said Brent Carey, technology director for the Otis School District R-3 in Otis, Colo. Good tech jobs are hard to come by in this rural area of eastern Colorado near the border of Kansas and Nebraska, Carey said. "But schools are a great place to learn," he said. "There's a lot of opportunity for experimentation, and you get direct feedback from teachers and students on what works and what doesn't."

Troubleshooting in a one-man department can be a hassle, Carey said, recalling a four-week bandwidth problem that still was unresolved after 30 hours of Microsoft tech support, but overall, being the only IT person fits the job and his lifestyle.

"I choose to live in rural Colorado, where good jobs are few and far between," Carey said. "The joy here is that you're your own boss."

Matt Bolch is a freelance writer based out of Atlanta.

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