Have Dots & Have Nots

The staff at your brick-and-mortar business are jealous of your dotcommers. How can you keep the peace?

Shawn Jenkins could guess what was coming. One of his employees at American Pensions sat across from him with a legal pad full of numbers-and asked for more money. What made this different from other discussions about pay? This brick-and-mortar employee with some database experience had done his research on salaries in the high-tech industry, and he knew how much tech workers earn. He also had an ever-present reminder of this profit potential: the company's new dotcom subsidiary, Benefitfocus.com Inc. "He asked for a raise, and it was due to our dotcom venture," Jenkins says.

Jenkins, 33, president and CEO of Benefitfocus, had watched as two companies-the brick-and-mortar business and the dotcom spinoff-fought to coexist in the same building. On one side was American Pensions Inc., a 30-employee Mount Pleasant, South Carolina, company that services corporate-sponsored retirement plans and where Jenkins is a partner. On the other side of the company's headquarters was the "Green Room," an 850-square-foot room housing 11 programmers. Sales and administrative staff were in a nearby conference room. Both rooms full of people worked for Benefit-focus, a company that lets clients manage the health and retirement benefits of their employees online.

But as Jenkins found out, hiring techies creates a new pay structure-and new problems. Soaring demand has pushed compensation packages for tech workers through the roof. Estimates show that while annual pay for nontechies is increasing 4 percent per year, pay for techies is increasing 10 to 15 percent annually.

The numbers speak for themselves. According to Salary.com, a Web site that lets users view pay scales for almost any type of job, the median base salary of a Web designer with beginner's experience is roughly $51,000. Beginning webmaster? $52,000. Web content engineer? $71,000. The salaries for those jobs can top out at $55,000 to $80,000 annually. And those figures don't include stock options, percentage of company ownership and other benefits. In fact, a September 2000 study conducted by The Standard, an Internet-focused online magazine, found that overall compensation packages for IT workers average $104,000 annually.

The stellar pay of dotcommers makes nontechie pay seem paltry in comparison. Another search of Salary.com shows that a typical office manager earns about $37,000, a data entry supervisor makes about the same, and an administrative assistant pulls in a little less: $33,000. All these salaries tend to top out at $39,000 to $45,000.

Jenkins' American Pensions employees earn base salaries, quarterly incentives and annual bonuses based on the company's performance. But when Jenkins recruited for Benefitfocus, he had to go the extra mile: paying recruiters and offering part ownership and generous salaries to new recruits. Jenkins acknowledges he's paying techies more because of their technical abilities and market demand. "I'm paying people with two years of tech experience more than I'm paying accountants who have been on board for five or six years," he says.

What we're seeing today is a two-tiered pay system that shows no sign of changing any time soon. It doesn't help that the media have made geekdom cool, even glamorous, with technology CEOs as hot as pro athletes or movie stars. Nontechies may feel inadequate in pay and skills-and employers can be put in the awkward position of trying to keep everyone happy with their salaries, their benefits . . . even their line of work.

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Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the January 2001 print edition of Entrepreneur with the headline: Have Dots & Have Nots.

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