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Survey says IT pay up, stock options down

Information technology companies are abandoning long-term incentives such as stock options, a survey finds. They now spur workers with bonuses and other short-term rewards.

Information technology workers got a slight pay raise in 2003, but long-term employee incentives such as stock options declined, according to a new survey by Gartner.

The survey, "2003 IT Market Compensation Study," found that the base salary for IT jobs increased an average of 2.9 percent from 2002 to 2003. The study was conducted by People3, which is owned by the research firm Gartner.

Based on information submitted by 151 organizations in March 2003, the study found that more and more companies consider short-term incentives tied to business unit performance the best way to motivate IT employees. This year, about 39 percent of companies are using this method--which involves bonuses and other reward programs--compared with just 31 percent in 2002.

By contrast, long-term incentives are on the decline. A full 61 percent of respondents said they didn't offer long-term rewards like stock options to employees in 2003, compared with just 38 percent last year.

"The drop in the depth of broad-based, long-term incentive programs can be further seen in the decreasing number of companies offering stock options programs in general," the study's authors wrote.

In one of the most high-profile examples of a company that is spurning options, Microsoft announced on Tuesday that it would no longer offer employees stock options, preferring to give them actual stock instead.

The Gartner study also said companies found expertise in enterprise resource management software the most difficult skill to recruit. Positions requiring knowledge of Oracle administration were especially hard to fill, followed by those requiring PeopleSoft and Unix knowledge.

The most difficult position to hire for was a database administrator, followed by Internet/Web architect, network architect, network engineer and security analyst, the study found.

The study also said that fewer than 34 percent of companies had a documented recruitment strategy to help them hire IT workers. Companies said the most effective method for filling new positions was hiring internally from another IT position within the company, followed by employee referrals and converting contractors to employees. Internet recruiting was rated the third most successful hiring practice, and using an internal IT recruiter ranked fourth.