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Compensation Trends Spotlight: Technology, Media and Telecommunications

Compensation Strategy & Design|Executive Compensation|Future of Work|Total Rewards
Beyond Data

November 2, 2020

Compensation surveys and industry research highlight key trends in TMT industry. 

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Technology, Media and Telecommunications industry sectors

The TMT industry generally includes organizations that provide software products and services, media and entertainment, telecommunication and network products and services, e-commerce services, and semiconductors and computer hardware and office equipment.

COVID-19 significantly impacted how people work, where they work and what they value. For Technology, Media and Telecom (TMT) organizations, nothing rings truer. The industry saw various forms of growth and changes, largely due to the diverse types of organizations and sectors across the industry. Some have seen significant rises in business and market valuation, others have seen their business fall dramatically.

Based on our 2020 compensation surveys and industry research, we observed a few key trends in 2020 for the TMT industry.

Chart showing three high level compensation trends for TMT industry 1) Slight decrease in year-over-year salary increase budgets between 2019 and 2020; 3% projected salary increase for 2021 across most pay levels; 2) Actual bonus payout trending below targets, but most organizations are not changing short-term incentive plans; 3) Long-term incentives for High Tech organizations has higher value compared with LTI for general industry.
Compensation trends in the TMT industry

Base salary movements

There was a slight decrease in the year-over-year salary increase rate from 2019 to 2020. Approximately a third of respondents from our recent salary budget survey indicated they had implemented a pay freeze in 2020 or decided to postpone salary review. Projected salary increases for 2021 appear consistent across most levels in the industry. Many organizations remain optimistic for 2021, with over 80% expecting to conduct a regular salary review. The overall salary increase rate for 2021 is forecast to grow globally by 0.7% compared to 2020.

Approximately a third of survey respondents in six major markets indicated having taken a pay-related action in response to COVID-19. In the U.K. and U.S., 40% of organizations took actions. In Germany, 35%. In Brazil, 33%. In France, 32%. And in China, 24%.
Figure 1 – Organizations that took actions in response to COVID-19 by country
TMT organizations in China expect to see a 2021 salary increase rate above 6.0%, similar to 2019 and 2020. Organizations in Brazil saw the trend dip from 5.5% in 2019 to 3.5% in 2020 and expect to see this increase to 4.6% in 2021. Germany, U.K. and U.S. all hover around 3.0% year-on-year. Lastly, the salary trend remained the same for organizations in France at 2.5% and the trend is forecast to increase to 2.7% in 2021.
Figure 2 – Salary increase trend from 2019 to 2021

One of the most prevalent actions we observed in the effort to manage labor costs was to freeze or reduce hiring. Most organizations have been cautious with taking pay-related adjustments. Within the TMT industry, only 9% reduced or delayed merit increases and another 9% plan to do the same (Figure 3). A pay freeze is the next most prevalent action within the sector. 10% have already frozen salaries or are planning to do so, while two-thirds are not planning nor considering salary freezes. The timing of the pandemic response may have played a role in this decision, as many organizations may have already allocated their merit increases in the first half of 2020.

Less than 20% of TMT organizations are planning or considering salary reductions. Among those that are, they may target these reductions at board or executive levels only.

Other actions being considered include reducing annual bonus accruals and adjusting pay at risk (given employees had the opportunity to earn a backpay reduction amount linked to company performance).

Chart comparing the percentage of organizations in all industries versus in high tech that had taken pay-related actions. Within the TMT industry, only 9% reduced or delayed merit increases, compared to 12% in most organizations. Within the sector, 10% have already frozen salaries or are planning to do so, while two-thirds are not planning nor considering salary freezes. Less than 20% of TMT organizations are planning or considering salary reductions.
Figure 3 – Pay-related actions

Industry hot jobs

Our survey data shows a greater than average increase in market demand for jobs clustered in these main functions: advertising sales, journalism, technical training and talent management in HR, and IT and IT development.

Figure 4 shows the highest paid roles at the professional career level (P3) for major markets. In the U.S., these include roles in technology product development, IT development, IT consultancy and data science. For other countries, technology roles are also in demand, but certain non-technology roles have become hot jobs as well such as generalists in legal, media and medical functions.

Hot jobs in major markets for senior professionals

Figure 4 – Hot jobs in selected major markets
Country Job title
Brazil Medical Doctor
Brazil Engineering Product Development
Brazil Full Stack Development
Brazil Journalism - Editing
China IT Architecture (Systems Design)
China Predictive Analytics
China Strategy Planning
China Application Development
Germany Cost Accounting and Control
Germany IT generalist
Germany Process Engineering
Germany Journalism Generalist
United Kingdom Backend Development
United Kingdom Mobile Applications
United Kingdom User Interface Design
United Kingdom Media Business Affairs Generalist
United States Legal Generalist
United States Machine Learning
United States User Interface Design
United States Broadcast Engineering

Bonus payout and short-term incentives

Actual bonus payouts are trending close to or just below targets in 2020 (Figure 5). A small percentage of organizations are offsetting the financial impact of COVID-related disruptions by restructuring their total compensation program for executives, such as delaying goal setting for annual incentive plans.

The bonus funding for 2021 remains strong for the TMT industry from a performance standpoint. It would benefit TMT organizations to stay cautious of persisting market forces that could affect the global economy, including the pandemic and geo-political shifts, and may have a downward effect on bonuses next year for all industries.

Chart showing that actual bonus payouts for executives and senior managers are trending close to or just below targets in 2020 across five major markets. For China in particular, targets were exceeded by 1% or 2%. At M2 level, target was 15% while actual was 16%. At executive level, target was 25% while actual was 27%. In the U.S., the actual payout met the target 40%.
Figure 5 – Target vs actual bonus payout

Long-term incentives (LTI)

LTI mix has seen significant change over time especially in large technology organizations. LTI offerings for c-suite executives now commonly have a mix of performance shares and restricted stock/units (RSUs) with a fairly limited use of stock options. The LTI awards at higher employee levels almost exclusively tend to be in the form of 100% time-based RSUs.

Looking at the LTI payout eligibility in certain major markets (Figure 6), higher employee levels appear to also be enjoying a modest premium for salary and much higher levels of LTI compared to peers in the general industry.

Chart showing that in TMT organizations in China and U.S., a larger percentage of employees at higher levels (executive, senior management and senior professional) are eligible for LTI payout, compared to peers in the general industry. In the U.S., 78% of executives in media and 95% in high tech organizations are eligible for LTI payout in 2020, compared to 64% in the general industry. In China, LTI eligibility among executives is at 73%.
Figure 6 – LTI eligibility of executives in TMT vs general industry organizations

The pandemic’s unprecedented impact on employee wellbeing and business created a continuously evolving and uncertain environment for the TMT industry, forcing organizations to reevaluate their rewards priorities. As such, access to an array of high-quality compensation market data and insights to support decision-making has been critical in helping organizations creatively address compensation and benefits issues. Our High Tech and Media Compensation surveys offer timely and lasting support. Join us.

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