Going up? Senior tech pay trends – and how to influence them

The last few years have seen a boom in demand for technology services as businesses digitised and transformed following the pandemic. But last year, this began to level out in a tough economic climate. As evidenced in the 2023 Digital Leadership Report, technology budget and headcount growth expectations dropped back from the highs of 2021 and 2022.

Pay growth

Despite this backdrop, we did see senior-level pay growth, in fact 65% of CIOs reported a boost to their earnings. That said, the typical increase was 5-10% which kept pay broadly in line with inflation. Above inflation, rises were focused in areas where technology is having a particularly strong impact on business performance. So salary-wise it was a good year to be leading transformation in the manufacturing / automotive sector, less good to be leading tech in advertising / PR.

We’ve included this data, as well as salary benchmarks at the end of this article.

Tech leader pay trends

Technology is a well-paid discipline. As part of the Digital Leadership Report research, we collected information from respondents about their levels of pay. What is very clear is that there is a wide range of environments in which you can be a technology leader – and a similarly wide range of compensation. 

We found that, unsurprisingly, rates of reward increase the larger the organisation’s technology budget is. Amongst the smallest businesses (budgets of less than $1m), average total packages are $157,000 and upper quartile $200,000+. This rises to $456,000 average and upper quartile $700,000+ packages at businesses with tech spends in excess of $250m.

It is important to understand both averages and upper quartiles. The average will include everyone in the sector, including all overperformers, all underperformers, people being paid too little and – whisper it quietly - people who are being paid too much. The upper quartile is more reflective of the salary that would attract someone into a new role, so is often the benchmark head-hunters use. 

Clearly, there is a lot of subjectivity here, and setting salaries rarely comes down to simply looking up benchmarks on tables. In fact when you do, as is sometimes the case in the public sector, the resulting salary might do a good job of keeping HR happy, but can do a less good job of putting a smile of the face of a high calibre candidate.

That said, comprehensively sampled data is always a good place to start, and we’re pleased to share it here.

One trend that comes through clearly in our data is that the larger the organisation’s technology budget (and the higher the compensation), the greater the proportion of reward in benefits or bonuses. Whereas at the smaller end of businesses with budgets below $1m, benefits are worth about a quarter of the total package, this climbs to approaching two-thirds at the top end.

There are also marked differences and variations by sector. The lowest paying sectors (in terms of base salary) according to our research are Government (21% below the average), Charity/Non-Profit (-19%) and Education (-18%). The highest paying are Financial Services (+17%), Construction/Engineering (+17%) and Transport/Logistics (+13%). Interestingly, Technology itself sits broadly in the middle (-5%).

The outlook for 2024

So, where does this leave expectations for 2024 – and what can individuals do to maximise their chances of securing higher rates of reward?

The signs are that the recruitment market will strengthen as 2024 goes on, holding out the likelihood of rising reward packages. At Harvey Nash, we saw an encouraging pick-up in senior recruitment activity in the last quarter of 2023 which continued through the normally quiet month of December. On the current trajectory, I would expect this to build through 2024 with a consequent uplift in tech leader packages despite falling rates of inflation.

A trend we saw emerging last year, which I expect to continue in 2024, is that businesses are prepared to pay a premium for candidates who combine leadership and business change experience (a hygiene factor) with deep technical expertise in specific priority areas such as data, security and cloud, along with outstanding soft skills.

Engineers and developers who can lead complex projects, inspire teams and successfully get the best out of people are in huge demand. Last year, I worked with a VP-level candidate with a superb track record in product and engineering who also had impeccable people skills – this combination of skills meant he could have walked into any one of a number of roles and received five attractive job offers.

Maximising your value

How can individuals maximise their potential reward? Here are five tips based on what I’m seeing in the market.

1. Technical skills making a comeback. A few years ago, it was transformation and business change experience that really held sway. While these are still crucial, the rapid emergence of new technologies relating to data and automation means digital leaders need deep technical skills to lead or advise on their implementation in the business. Otherwise, what is the difference between the CIO and, for example, the CMO who is also a major user of technology platforms? 

That is why we’ve been seeing a renewed emphasis on securing technology leaders who really understand the technology, not just how it can be used. However, it is worth noting here that, while AI and in particular generative AI are hot topics that everyone is talking about, relatively few businesses are actually making large scale implementations of them as yet – so it may be another year or two before AI experience translates into a pay premium.

2. Good career moves favour the patient. It is likely to take anywhere from 3-6 months to find a suitable senior role in most cases, so be prepared to wait. Timing is important too. The market will move when it moves and this will dictate when rates really start to rise. So, know your sector and align your efforts when demand will be highest.

3. To go up, sometimes you need to move across. Astute career builders often look several moves ahead – they can see where they want to get to, but know they won’t get there all at once. Be prepared to consider a sideways move that will bring new experience, knowledge and skills. Develop a track record of successful project and people management. It’s the practical achievements that you can show that will ultimately help you reach a leadership or C-suite position. 

4. Some sectors can favour their own. Remember that some sectors generally ‘favour their own’ and it’s hard to break into them without prior experience. Financial Services and Oil & Gas, for example, tend to look for individuals with an existing track record in their sector. Other sectors might be more open, particularly where there is a natural degree of overlap (Construction/Engineering and Transport/Logistics or Manufacturing for example).

5. Practical experience trumps qualifications. Qualifications, accreditations and certifications are certainly important – but practical experience and achievements generally carry more weight. In my experience, many employers show little interest in the technical qualifications a candidate has amassed. A certain level of technical rigour is regarded as a hygiene factor, after all. That said, other businesses will pore over a candidate’s professional qualifications very closely. 

My advice would be – if you’re passionate about gaining new qualifications and certifications, do it. It can’t hold you back and sometimes will work in your favour.

A field of possibility

One of the great strengths of working in technology is that it’s an exciting sector where new things come along all the time. It’s a sector that “comes to you” in terms of developments and opportunities. So, for many, there may be no need to move jobs as their role will naturally expand and evolve, with the reward package growing with it. However, if you’re in a role without much exposure to areas like AI and data which are evolving so rapidly, then it may especially be worth considering your options and exploring a move.

Now is a good time to do so – the tech market in 2024 is set to be more positive than in 2023, something that we’re already seeing evidence of.