Pay for IT certifications continued its rocky year-long performance, plunging an average 2 percent in value during the 3rd quarter ending October 1, 2006, the largest quarterly decline since 2004, according to IT workforce benchmarking firm Foote Partners. For the year, 129 surveyed certifications dropped an average 1.2 percent in value according to the latest quarterly edition of the analysts' "Hot Technical Skills and Certifications Pay Index".

In stark contrast, pay for noncertified IT skills increased 1.4% on average for the quarter and 4.8% in the past six months, contributing to a skyrocketing 7% value increase over the last twelve months.

"Certifications are becoming the Rodney Dangerfield of the IT world," notes David Foote, CEO and Chief Research Officer for Foote Partners. "It’s not that employers aren’t willing to pay a premium for them. What’s happening is that for a great many certifications, the market price is nowhere near the levels of just one year ago. That kind of respect is now reserved for a broad variety of noncertified skills. In particular, enterprise business software, applications development, Web/e-commerce development skills which are up an average 9% to 13% in value since this time last year."

Across all 253 skills surveyed by Foote Partners, the value of noncertified IT skills is growing at a rate 5 times greater than certification pay. The analysts see no sign that this going to change any time soon. This is about increasing niche demand for skills and the reality that there isn't enough specialized talent to meet this demand.

"It's about declining 'bench strength' and the steep price employers are starting to pay for not growing their skills inhouse. Expect to see a worsening of this condition over the next year, and more employer panic as products and services are not delivered on time to impatient customers," predicts Foote.

Shifting Demands

The IT workforce is rapidly changing due to shifting demand. “Employers are desperate for IT professionals who can get things done, who can delivery results again and again,” says Foote, whose firm regularly monitors IT workforce management trends in more than 1800 North American employers. "Technical skills are without a doubt critical for many IT jobs, but there’s much more. Being a desirable ‘impact’ worker means getting along with people, keeping an eye on IT’s role in business execution and quickly delivering what customers want, which is a moving target. It is about understanding the industry you’re working in and focusing on solutions. And you’ve got to be able to operate under deadlines and pressure and withstand a certain amount of organizational discomfort because, fair or unfair, IT/business disconnects are part of the profession. If you’re that kind of person, not being certified in your technical skills is not going to matter in many cases as long as you demonstrate that you present a full complement of business, interpersonal and technical skills in the right proportions for the job."

Attracting and Retaining Hot IT Talent

Pay for skills has become a common solution for getting workers to true market pay levels -- a practice that has become increasingly difficult to accomplish in a world where IT job titles often do not match up well with actual on-the-job responsibilities. Since salary surveys are traditionally tied to job titles, serious worker morale and retention problems are occurring when surveyed salaries, matched to job titles, are clearly too low for what the worker actually does.

"When IT professionals are underpaid, there is tension and resentment, and they’re ripe for picking by executive recruiters," said Foote. "It is a nightmare to go through the process of reclassifying and re-titling IT workers and few employers want to tackle it. Even worse, IT jobs are changing so rapidly nowadays that you’d have to repeat this process regularly. The reality is that many employers haven’t updated IT job descriptions in years or have only done a few at time."

Salary-based Tech Skills Pay

Several Foote Partners research studies this year have found that employers are preferring salary-based tech skills pay practices to paying skills bonuses. Employers are declaring specific tech skills as dominant or unique to a job, then incorporating pay for specific certified and noncertified IT skills key to performing the job while keeping titles unchanged.

"The beauty of this approach is its flexibility," said Foote. "Each time you make a new hire or promote someone, it’s a lot easier to use this method to recognize the unique combination of skills, aptitudes, and experience they bring to their job and match their pay to their true market value. That’s a huge advantage to employers who need to get the right people in place for critical projects and keep them there. For example, you may have systems administrators with a Unix or Linux specializations working on critical customer-facing systems. You don't want to end up lumping them in with, say, MVS administrators when it comes to salary benchmarking. It’s the same thing with ABAP and .Net Developers, Java Programmers, and Oracle DBAs who get thrown in with all the other developers, programmers, and DBAs pay-wise," added Foote.

Foote says the threat posed by recruiters cannot be overestimated today. His research finds that the salary-based approach helps reduce the leverage recruiters enjoy with employers that are underpaying their IT workers.

"Employers don’t want to over-pay: they want to re-price skills periodically while also addressing their internal skills requirements," concluded Foote.

About the market research study

The Foote Partners’ "Hot Technical Skills and Certifications Pay Index" is a primary research report for technical skills and professional certifications pay. It has been published quarterly since 1999. 55,000 IT professionals in the U.S. and Canada are surveyed for IT skills pay they are earning for 253 certified and noncertified technical and management skills and certifications. The Q3 2006 edition has been compiled from data surveyed July 1, 2006 to October 1, 2006 and includes data from 28,100 workers for whom IT skills pay has been verified.

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