Building a theory of IT compensation

Abstract

IT compensation is acknowledged as a critical lever to attract and retain IT professionals, as well as to reduce IT turnover. IT compensation planning is also recognized as a viable vehicle for organizations to cope with uncertainty at different levels. Therefore, understanding how to compensate IT professionals leads to effectiveness of managerial decision-making in compensation planning and strategic management of IT human capital. This paper reports the preliminary findings of the first case of a cross-nation multi-case research project whose aims is to build a theoretical framework of IT compensation theory. This case extends a priori theoretical framework developed from cumulative literature by Wang and Kaarst-Brown. Five novel factors that influence IT compensation, but that are not well addressed in research, were found in this case study: (1) immigrant status of IT personnel, (2) types of contracts, (3) status of IT division, (4) managerial discretion/formality of compensation rules, and (5) flexible working hours.