Customer Satisfaction Playing Role in IT Compensation

ClickZ Stats

Updated · Feb 04, 2002

A survey of IT executives and human resource managers found that most IT companies believe employee compensation should be tied to specific customer satisfaction and loyalty criteria, and companies are driving toward linking compensation to such parameters.

Nearly 93 percent of information technology companies believe in tying compensation to customer satisfaction and loyalty, according to the survey by NFO Prognostics, an NFO WorldGroup company.

Among the key benefits of making the correlation of salary or bonus pay to customer/satisfaction loyalty reported by the survey, were “motivating employees” and “increasing company's responsiveness to customers.” On a scale of one to 10, with 10 being very important, these two benefits received importance ratings of 8.3 and 8.8, respectively. Whether paid out quarterly or at a less frequent interval, these rewards encourage and reinforce customer-focused behavior among employees, the survey found.

“Perhaps at no time in the history of the IT sector have issues related to customer satisfaction reached such a high level of importance,” said Tina Weinfurther, president of NFO Prognostics. “Seeking to build strong customer-centric organizations, IT companies believe that linking compensation to customer satisfaction improves financial performance and retains customers in a competitive market.”

About one-third of the 145 respondents to the survey indicated that their companies currently compensate based on customer satisfaction at some level. Among companies in the survey not currently having a customer satisfaction/loyalty based compensation scheme, nearly 70 percent stated that they felt that there was “no good formula” for compensating based on customer satisfaction. Nearly 60 percent cited the absence of “accurate, reliable data measures” to apply to the compensation method.

The study found that, overall, IT companies are not questioning whether they could be compensating employees based on customer satisfaction but how they should be doing it.

“We have noted a major surge in questions from our IT clients on how to manage this across an organization,” Weinfurther said. “And from what we have been told, 2002 should see major growth in customer-satisfaction based compensation plans.”

According to a study by e-learning company Brainbench, IT salaries have been a big victim of the recession. More than half (52 percent) of the respondents to the survey received salary increases of less than 3 percent in 2001. In 2000, 62 percent of the respondents received pay increases of more than 3 percent. The respondents expect to make up lost ground in 2002, with salary increase expectations by the majority of respondents in the range of 3 percent to 8 percent.

Females appear to be closing the IT salary gap with males in many categories, especially in larger companies with sales in excess of $1 billion. The percentage of females earning more than $150,000 outpaced that of males by almost double in companies with sales of more than $1 billion.

The Brainbench 2001-2002 IT Salary Survey is based on the responses of more than 6,000 IT professionals from across the nation who are register Brainbench users.

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