I’ve never met a CEO who didn’t think that they were paying their staff too much!
Curiously, in IT Project Management talent terms, they may be right as some salaries on offer are exceeding average expectation. Perceptions of talent shortages, greater demand for project leadership skills and increasingly complex, business case aligned projects are all driving some organisations to over budget for talent.
This is great for individual Project Managers (who doesn’t enjoy above-average remuneration?) but it is also causing avoidable pain for many project teams and the businesses that they serve.
BUT DON’T OFFER TOO LITTLE!
At the other end of the scale, many organisations are struggling to recruit IT Project talent because they are offering a below-average salary for their region. A London based firm offering a salary of £52,000 last year found that the candidates responding lacked the experience needed for the complexity of the projects in their portfolio. £52,000 is about 9.5% above the UK average Project Manager salary but falls short of the average salary for the capital.
Knowing these averages, knowing where to pitch your offer to get the right talent, while not overpaying is one of the greatest challenges for IT project hirers.
RIGHT TALENT, RIGHT PRICE. IT MATTERS.
IT projects fail between 5% and 15% of the time, and one of the main catalysts for failure, of course, is cost! Failed IT projects have the potential to bring down your company. I’d say, over the past five years, as many as one in five of the large-scale IT Projects that I’ve worked on or with would threaten the company’s very existence if they failed. This is inevitable, as more businesses become IT centred, of course, the consequences of IT Project failure are going to be more significant.
Research by McKinsey and the BT Centre for Major Programme Management at the University of Oxford suggests that half of all large IT projects “massively blow their budgets”. On average, large IT projects run 45% over budget, with software projects showing the highest risk of cost overruns.
One of the main cost areas is salaries. Many Projects are incorrectly budgeting for talent, both over and under, and many are paying too much.
This is the curious thing, average salaries seem to be rising at a conservative pace, largely in line with inflation. Now, several factors could combine over the next 12 months to accelerate salary inflation: the potential disruption to the contract market in 2020 with the IR35 changes; Brexit; further demand for leadership skilled Project Management talent; etc. None of this is certain though, indeed if the UK economy continues to slow, as it did in early 2019, average project management salaries could remain largely unchanged.
So – how can you get it right?
When it comes to budgeting, a few factors are going to influence the pay structure for your Project Team. Anticipating these is key and where a specialist project talent recruiter is worth their weight in gold.
Business Analysts with GDPR experience, for example, enjoyed above-average salary rises as organisations reacted to that legislative change. Forty percent increases were common for these BAs as demand soared with average salaries rising from £32,500 to £45,745. Organisations who had a specialist recruitment partner were more prepared for this and adjusted their strategies in anticipation.
Similarly, with the increasing challenge to provide additional business value, organisations are now seeing the full benefits of optimising PMO. This realisation has sparked a demand for PMO specialists and thus increased average salary rates. The average salary for Programme or Project Office Managers has risen 10% from £57,500 to £59,875. Again, specialist recruiters are best placed to find the talent needed to meet these demands and at the right price.
HOW TO BUDGET FOR IT PROJECT
When creating a budget for it Project talent it can be useful to start by defining ‘the average’ and then look at a whole host of influencing factors specific to you.
For illustrative purposes, let’s consider our average Project Manager to be aged between 35-44, to have seven years’ experience, and be a PRINCE2 Practitioner as a minimum qualification. Based on this the UK average salary for a Project Manager, as I write, is £47,500.
In our experience, the market rate for the average Project Manager then increases by a further £1,000 for each additional year of experience (above the 7 we’ve included in the average) but this then starts to plateau after a further 5 years.
Influencing factors like company culture, age, experience, qualifications, geography, willingness to travel can contribute to variances but, £47,500 is consistently the average salary in England (across the East Midlands, East Anglia, South East, Yorkshire and the North West) and across Scotland.
As I say, geography can impact this, and averages may vary quite wildly from region to region. Average salaries in Wales, for instance, are below the £40k mark whereas in London they top out at over £55k.
It is interesting to consider those regional variations when recruiting. We find that many London based operators are underestimating the cost of talent and many outside the capital are paying (or offering) too much.
League Table of Average UK Project Manager Salaries
London - £55,500
Scotland, East Midlands, East of England, South East, Yorkshire, North West - £47,500
North East, West Midlands, South West - £42,500
Northern Ireland - £40,000
Wales - £37,500
Beyond geographical factors, as mentioned, 2020 could see some considerable disruption to the Project Management jobs market. Changes to IR35, (which was so disruptive to the Public Sector in 2017), will hit the Private Sector by April 2020. We anticipate a shrinking in the contract market, with flexible resourcing models becoming more attractive and organisations increasing their internal project headcount. As a result, you should expect salaries to rise at faster rates from early 2020 with many analysts predicting above-inflation increases in most areas.
In conclusion, as IT Projects become more specialist, business case aligned and central to business growth and survival, it has never been more important to ensure that the right people are on your team. Demand for talent is high and expected to increase and a range of factors in 2020 could really mix things up in this talent market.
Failure rates are still high, and cost overruns are still far too common, offering too little in terms of salary can limit your appeal but paying too much can fatally harm return on investment. Partnering with a specialist recruiter, with a finger on the pulse of the market, can mitigate this.
Right talent on board for the right price. Sounds simple, doesn’t it!? And with the right IT Project talent recruitment partner in your corner, it is.
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