Compensation trending upward
03/01/2007
As micro- and nanotechnologies begin to mature, industry salaries increase
By Elizabeth Gardner
Want to know where you stand, in salary, benefits, and bonuses, compared to your small-tech colleagues worldwide? The results of the second-annual Small Times compensation survey shows average small-tech salaries up about 12 percent worldwide.
The survey data was gathered from visitors to Small Times’ Website (www.smalltimes.com) from late December 2006 to early January 2007. The survey attracted 849 responses from 44 countries (up from 37 in 2006), and 41 U.S. states plus the District of Columbia.
Overall, compensation has risen. The average reported salary globally is $96,000, up from nearly $85,000 last year, and the average U.S. salary is $106,000, up from $98,000 last year.
More than half the respondents-56 percent-report that their jobs involve both micro- and nanotechnology. The remainder of the respondents are evenly split between micro-only and nano-only.
Changes in hiring
The technologies as well as hiring practices are starting to mature, even in the smallest of companies. Those who follow the field say that although plenty of person-to-person networking is still going on, it’s more likely that companies are finding new people through newspaper ads, Web job boards, and executive recruiters-and less likely that a newly minted Ph.D. will be exactly what they’re looking for.
Pam Bailey, president of tinytechjobs.com, a job board for the small-tech fields, says there’s been a noticeable increase in postings from companies looking for mid-level technical workers. “In 2005, we saw many more senior-level positions,” she says. “Companies were hiring their thought leaders. In 2006, after those companies obtained funding, they started to build out.” Almost 70 percent of postings on tinytechjobs.com are for scientific or engineering openings. The balance of postings are in product development and manufacturing (a growing area, Bailey says), sales or business development, and academic or government lab research.
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Neil Kane, president of Advanced Diamond Technologies, Romeoville, Ill., has recently ramped up to 11 employees for his young company, which was born out of work in ultrananocrystalline diamond coatings at Argonne National Laboratory. The company recently received a $500,000 National Science Foundation small-business grant to develop UNCD-enhanced seals for pumping applications, and it expects to introduce a diamond-based MEMS product sometime this year.
Kane has advertised for employees in a variety of venues, including Craigslist, tiny techjobs.com, and the Chicago Tribune.
“There are a lot of qualified people with academic backgrounds,” he says. “The overwhelming majority of responses are either recent grads or people coming out of post-doc positions. But we’ve evolved to the point where that’s less interesting and a demonstrated track record is much more important. The company is making the transition from development to shipping products, and we need people who have expertise in managing projects and working in a deadline-oriented environment.”
Kane plans to level off ADT at about 15 employees by year-end and then add employees only as business growth demands them.
Steve Johns, head of corporate and business development at venture capital firm Ardesta, in Ann Arbor, Mich., has helped grow more than a dozen portfolio companies out of infancy and into adolescence, including Sensicore, Discera Inc., and Sensicast. He, too, is looking for people with more experience. “In an early stage technology start-up, [hiring] a Ph.D. student out of a university is almost preferable, because the first work he’ll do is basically an extension of their research,” he says. “But now all of our companies are focused on commercializing that technology and dealing with issues like repeatability and scalability, so we’re looking for people from a commercial environment who have experience taking something all the way to a product. These aren’t research projects anymore.”
For its top managers, Ardesta has had good luck with both large and smaller recruiting firms and favors those who specialize regionally as well as by industry. Johns says many positions are still filled by tapping into personal networks.
Carbon nanotubes have made significant strides toward commercial viability in the past couple of years. This trend has benefited companies such as Nantero, Woburn, Mass., which has grown beyond the point where it can rely on the employees’ personal networks to fill all vacancies. Now at about 40 employees, Nantero is using carbon nanotubes to develop next-generation semiconductor devices and recently patented a technique to position them reliably on silicon wafers-a major step in developing industrial-scale production techniques.
Chief executive Greg Schmergel, who gained his start-up experience in the dot-com boom, hopes to hire at least half a dozen more employees by year-end. “We have employees from all over the world-Asia, Europe, and the U.S.-which is testament to the fact that we have to cast our net very wide to find the people we need,” he says. Schmergel favors both boutique recruiters who specialize in small tech and, perhaps counterintuitively, the large Web job boards like Monster and Hotjobs.
“Maybe we have better success because if someone goes on one of those sites and types in ‘nanotechnology,’ they don’t get very many hits,” Schmergel says.
Analysis overview
The Small Times compensation survey asked 24 questions covering job title, company size, location, level of education, experience, hours worked, salary, bonuses, and benefits. Seventy-two percent of respondents are from the U.S. (almost identical to last year), with the balance from 44 other countries, from Australia to Zimbabwe. The respondents are highly educated: 31 percent hold master’s degrees, and 42 percent hold doctoral degrees-up from 36.7% last year. “This may help explain the overall salary increase from 2006,” says Small Times publisher Patti Glaza.
The group is weighted toward executives and researchers. Forty-four percent are in management: 17 percent are C-level executives (CEOs, CFOs, CTOs, etc.), while 8 percent are at the vice-president level and another 20 percent are managers. About 33 percent of respondents report their title as scientist, engineer, or researcher. These breakdowns are consistent with the 2006 data.
The respondent group is 86 percent male. The female respondents are on the young side; about half earned their bachelor’s degree during the 1990s or 2000s. Fewer of the male respondents, 37 percent, earned their bachelor’s degree in those same decades; 46 percent completed theirs in the 1970s or 1980s.
The majority of survey respondents’ employers are either very small or very large firms. Thirty-seven percent work for companies with 50 or fewer employees, and 31 percent work for employers with more than 2,500 employees.
Private-sector workers predominate. Sixty-five percent of respondents report being employed by manufacturers (13 percent), engineering or design firms (12 percent), corporate research and development (12 percent), materials or instrument suppliers (10 percent), micro/nano component integrators (4 percent), or a service firm such as law, consulting, or marketing (10 percent). In the public sector, 20 percent of respondents work in education or university research, and 6 percent worked in government labs.
Executive compensation-global and U.S.
Just as last year, the title of “Partner” is associated with the highest average compensation this time around. The partner respondents are generally involved with either law firms or consulting firms.
Among C-level executives globally, two categories-chief technical/science officers and CFO/COO/chief marketing officers-report higher average salaries than the president/CEO/managing director category (see chart on page 29). However, there were relatively few respondents in the CFO/COO/chief marketing officer and CTO/CSO categories, and the small numbers may skew the reported average salaries.
Only 42 percent of chief executives report receiving a bonus in 2006; among those who did, the average was $50,000.
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A few chief executives report receiving bonuses in seven figures-happy news for them, but bad news for survey number-crunchers who compute average compensation. To keep the averages from being misleadingly large, and causing unwarranted bitterness in the small-tech community over the size of its bonuses, Small Times dropped these “outliers” when it was computing the bonus averages. In fact, bonuses worldwide range from less than $100 to a robust $3 million. The median bonus reported by respondents for 2006, both globally and in the U.S., is $7,000, for all categories of companies and job titles.
Further down the management ladder, vice presidents of technology and related functions out-earn vice presidents of marketing, sales, operations, and business development, reflecting again the industry’s overall valuation of technical expertise. Technical managers were also a couple of rungs above operational managers.
For respondents from the U.S. only, salaries are significantly higher for CTO/CSOs, at an average of $157,000. U.S. CEOs make slightly more than the global average, at $132,000. Chief operating officers, marketing officers, and financial offers make slightly less on average compared with the global group, at about $137,500.
Engineer
esearcher compensation-global and U.S.
Among the employees who make up the technological backbone of small-tech employers worldwide-the engineers, the scientists, and the researchers-engineers report both the highest 2006 salaries, with an average of $83,000, and the largest 2006 bonuses, at an average of 16 percent of salary. Scientists worldwide make an average of $77,000, with a bonus of seven percent of salary, and researchers make $70,000, with a bonus of 11 percent.
Corporate research and development operations pay the highest average salary to this category of workers, at just over $97,000, followed by materials and tools suppliers, industry or government organizations, and component manufacturers, all in the low $90,000s. University researchers aren’t starving, at an average salary of almost $80,000, but their pay still isn’t up to that in the private-sector level.
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U.S. respondents report higher salaries than the global average, but the overall pattern is the same. Engineers report $94,000 in salary with an average bonus of 17 percent. Scientists report average salaries of $90,000 with a seven percent bonus, and researchers report average salaries of $80,000 with a nine percent bonus.
Education and age - global and U.S.
Both worldwide and in the U.S., salaries and bonuses generally increase with education.
Those who hold a bachelor degree in science report an average salary of $86,000. Holders of M.S. degrees reported an average salary of $91,000. Holders of Ph.D., J.D., and M.D. degrees report an average salary of $102,500. Average bonuses follow a similar pattern.
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Survey respondents with an associate degree and master of arts degree report compensation that appears unusually large compared with that of other degree holders (for example, the average salary for those with an associate degree was only a few hundred dollars less than the average for those with a bachelor of science degree). However, both those figures are probably anomalous, stemming from the low number of respondents holding those degrees (only three percent of respondents hold an associate degree).
Those with associate degrees and M.A. degrees are disproportionately represented among sales and marketing job titles. And M.A.s account for 13 percent of those who hold the title of president, CEO, or managing director-but less than five percent of survey respondents overall.
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The bulk of respondents received their degrees in the 1990s (27 percent), the 1980s (28 percent), or the 1970s (20 percent). More-recent graduates account for 15 percent of the respondents.
For the most part, age equates to earning power. Employees who earned their bachelor’s degree in the 1960s have the highest salaries of any age group, with an average of $135,000. New graduates earn less than half that, at $65,000, and average salaries climb steadily with each decade.
Hours worked-U.S. and global
Small-tech workers work hard. Globally, 75 percent of respondents work more than 40 hours a week, and 31 percent report working more than 50 hours weekly. Nine percent work more than 65 hours. Perhaps the most industrious group is in India, where a full 20 percent of respondents report working more than 65 hours a week.
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In the U.S., 77 percent of respondents report working more than 40 hours a week, and 30 percent work more than 50 hours. Eight percent work more than 65 hours a week.
Those putting in the longest hours are more likely to be at a lab bench than a desk: 14 percent of university researchers fall into the more-than-65-hours category, as do 10 percent of those who work for component manufacturers.
Not surprisingly, the people at the top put in the most grueling hours on average: One-third of presidents and CEOs work more than 50 hours a week. Other C-level employees report similar schedules. Engineers and scientists are more likely to make it home for dinner: less than 10 percent work more than 50 hours a week, and about 75 percent work between 36 and 50 hours.
Regional variations-U.S.
Respondents from the U.S. are scattered throughout the country. While the West Coast is home for 29 percent of those who specified a state, other regions aren’t far behind: 23 percent are from the South, 22 percent from the Northeast, and 18 percent from the Midwest. Eight percent are from the Mountain States.
Small-tech geographic salary patterns mirror those in the larger economy, according to the U.S. Bureau of Labor Statistics. Respondents in the Pacific region report the highest average salary, at $115,000. The Northeast was slightly less, at $112,000, followed by the South, at $97,000, the Midwest, at $95,000, and the Mountain States, at $93,000.
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On the other hand, the Northeast reports the highest 2006 bonuses, with an average of almost $30,000, followed by the Pacific and the South at $25,000 each, the Midwest at $12,000, and the Mountain States at $8,600.
Time in organization-U.S.
For U.S. employers, longevity means more money, but only up to a point. The sweet spot for compensation among survey respondents is 11 to 20 years with an organization, which nets an average salary of $125,500. For tenures of 21 to 30 years, the average salary drops to $110,000, and for more than 30 years, it pops back up to $116,000.
Respondents who have been with their companies from one to five years report an average salary of about $97,000, and from six to ten years, $105,000.
Benefits-U.S.
Down slightly from 2006, 86 percent of U.S. respondents report that their employers offer health insurance. Manufacturing companies and educational institutions are slightly more likely to offer health insurance, while consulting and sales companies are somewhat less likely to do so. Seventy-seven percent of respondents say their employers offer dental insurance.
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Only 29 percent of respondents report receiving stock options as an employee benefit, down from last year’s survey in which 33 percent of participants said they received stock options. Of those who report receiving them this year, 22 percent work for a component manufacturer or fabricator, 22 percent work for a supplier of materials or tools, and 19 percent work in a corporate research and development laboratory.
Ardesta’s Johns says the jury is still out on stock options for small companies. “They’re a great way to share ownership in a company and get everyone pursuing the common goal of making sure that the options are worth something someday,” he says. “But it’s not like the old days. We have to spend more time explaining stock options and the notion of wealth than we did five or ten years ago, when everyone knew the impact that options could have. People are [now] just as likely to want to skip the options in favor of a higher salary.”
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Three-quarters of respondents say their employer offers a 401(k) account or the equivalent. Employers most likely to offer the accounts are manufacturers, corporate research and development laboratories, government laboratories, and suppliers of materials and tools. These are also the employers most likely to offer a matching contribution to the employee’s account. Overall, 61 percent of U.S. employers offer a matching contribution.
The same types of employers are also more likely to offer traditional defined-benefit pension plans, though in keeping with national trends, only 21 percent of survey respondents say their employers offer such plans.
Changes in compensation-U.S.
Compensation in the small-tech industries is more than keeping pace with inflation, for the most part. A quarter of respondents say their salaries increased five percent or more in 2006, and 29 percent are expecting such increases in 2007. Forty-three percent say their salaries went up less than five percent in 2006, and 44 percent are expecting the same for 2007. Twenty-nine percent of respondents say their salaries had stayed the same in 2006, although only 25 percent are expecting 2007 to be similarly static. Only three percent report pay cuts in 2006, and only one percent expect the same for 2007.