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A booming job market means headaches for CIOs

New research shows that IT salaries are growing at a faster rate than any time this decade. With a shrinking talent pool and expanding headcounts, CIOs are scrambling to hire new staff and to hold on to those they already have.

The job market for IT pros hasn't been this robust since the dot-com crash in the late 1990s.

Unfortunately for CIOs, this means fierce competition for hiring new staff and holding on to the staff they already have.

CIOs are "definitely starting to see a shift," said Deputy CIO Mary Finlay of Partners HealthCare System Inc. in Wellesley, Mass. "While I don't think we will end up back in the period of the late 1990s, we are moving into another 'in-demand' phase. As IT leaders, we can't ever take our eyes off the ball [around] recruitment or retention, even during the softer times."

As IT leaders, we can't ever take our eyes off the ball [around] recruitment or retention, even during the softer times.
Mary Finlay
Deputy CIOPartners HealthCare System
Finlay is increasing her staff at Partners HealthCare by 4% in 2007. She said she is starting to see challenges with recruiting IT workers, especially project managers and clinical analysts.

The average IT salary will grow by 3.8% in 2007, according to a survey of 160 IT organizations conducted by Mark A. McManus, vice president of IT research at Irvine, Calif.-based research firm Computer Economics Inc. Average salary growth was just 2.5% in 2005 and 3% in 2006, so salaries are clearly accelerating -- although slowly.

McManus said IT workers are looking around to see if they can maximize their earnings. CIOs need to know that rival IT shops are not only hiring but expanding as well. Fifty percent of organizations are increasing their headcount by at least 5% this year, and 25% are growing staff by at least 15%.

"That activity will be most prominent in several key categories: security, networking, development and customer-facing positions that are the coordinators between IT staff and the business," McManus said. In other words, business analysts are a hot commodity.

Jon Payne, vice president of information technology at Wild Oats Markets Inc. in Boulder, Colo., said he is adding staff as well, although he isn't increasing his staff budget.

"The dollars involved are fundamentally flat year to year," Payne said. "We are reducing the use of outside consultants and staffing up more inside. Net more heads, but only because they are cheaper than consultants."

Payne said he is looking for business analysts and project managers, but he said it is difficult to assess these candidates so he is following a temp-to-hire strategy to find the best fit.

Whose salaries are growing the fastest? McManus said IT auditors top the list. Their salaries will grow 5.6% this year. Telecommunications managers will grow by 4.8% and IT security managers will see their salaries grow by 4.7%.

The increase in regulatory requirements is driving the salary of IT auditors, he said.

Clearly the past few years of regulatory issues … "requires [CIOs] to go out and find the talent to make sure they are compliant. So they need an internal auditor or an entire staff of internal auditors. The biggest problem we're facing is that there is a shortage of trained IT audit personnel."

Hang on to your current IT team members

Payne said he is already seeing a difference in the job market between this year and last. In order to counter the growing problem, he is trying to do a better job of matching his employees' work responsibilities with their job interests and career aspirations. He is also trying to enhance their work environment, hourly schedules and equipment. And he's offering training to help develop their careers.

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"Last year there were significant numbers of well-qualified, experienced candidates," Payne said. "We are now seeing more 'window shopping' by currently employed, but dissatisfied, individuals. The candidate experience level and competency is declining based on the number of résumés and interviewing we are having to wade through to find a handful of competent folks."

In fact, the time it takes to fill an open position in IT is getting quite long. Robert Half Technology, an IT staffing firm, surveyed 1,400 CIOs from U.S. companies. It found that CIOs take an average of 56 days to hire a full-time staff-level employee within their departments. Those same CIOs reported that filling manager-level positions takes a full month longer: 87 days.

"In my opinion, the shortage of skilled professionals is a major cause for the long hiring times that companies are experiencing with respect to their IT hiring," said Katherine Spencer Lee, executive director of Robert Half. "There is a shortage of IT workers with the most in-demand skills, and I think that employers are feeling this crunch in many ways."

Lee said the shortage of skilled candidates will only get worse as baby boomers get ready to retire. She added that fewer young people are enrolling in computer science and engineering programs at colleges and universities.

Lee said IT workers are receiving multiple job offers, which just serves to drive up the competition for good talent.

"We've been seeing more [candidates receiving multiple offers] over the past year or so," Lee said. "It means that companies not only need to move quickly to hire qualified candidates, but that they also need to be willing to increase their recruitment and retention efforts."

Let us know what you think about the story; email: Shamus McGillicuddy, News Writer

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