Salary Guide for Managers in Engineering, Science and IT

Salary Guide for Managers in Engineering, Science and IT 2016

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Published by Professionals Australia GPO Box 1272, Melbourne Victoria 3001 e: [email protected] w: www.professionalsaustralia.org.au/financial-edge/salary-survey-reports/professional-engineers/

Questionnaire and report preparation Alex Crowther, Surveys Manager, Professionals Australia Stephen Gargano, Research Officer, Professionals Australia Kim Rickard, Director, Survey and Research, Professionals Australia

Copyright © 2016 by the Association of Professional Engineers, Scientists and Managers, Australia (trading as Professionals Australia). All rights reserved. No part of this work may be reproduced or stored in any form, especially typographically, electronically and including photocopying without written permission of the publisher. The use of material for private study, research or criticism is excepted from the reservation and may be undertaken within the accepted meaning of fair dealing. The publisher makes no representation, in any form, as to the accuracy of the information contained in this work and cannot accept any legal responsibility for errors, omissions or consequences of any action taken by readers.

www.professionalsaustralia.org.au

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Professionals Australia


Contents Page

Preamble ................................................................................................................................................. 4 Key findings ............................................................................................................................................. 4 Data summary ......................................................................................................................................... 5 Base salary and total packages for engineering, science and IT managers ....................................... 5 Base salaries for engineering, science and IT managers - 2016 .................................................... 5 Total packages for engineering, science and IT managers - 2016 ................................................. 5 Salary movements for engineering, science and IT managers ........................................................... 6 Average (mean) salary movements for engineering, science and IT managers ............................. 6 Average (median) salary movements for engineering, science and IT managers by sector .......... 6 Average annual performance incentives for engineering, science and IT managers ......................... 6 Engineering Management Remuneration ............................................................................................... 7 Science Management Remuneration ...................................................................................................... 9 IT Management Remuneration ............................................................................................................. 11 Further information ................................................................................................................................ 13 About the survey ................................................................................................................................... 13 Definition of management roles ......................................................................................................... 13 Sample............................................................................................................................................... 13 Statistical terms used ........................................................................................................................ 13 Other terms used ............................................................................................................................... 14 Base salary .................................................................................................................................... 14 Total package ................................................................................................................................ 14 Methodology ...................................................................................................................................... 14 Superannuation.............................................................................................................................. 14 Annual salary movement ............................................................................................................... 14 Valuation of motor vehicles ............................................................................................................ 14


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Preamble

Key findings

• Our survey shows that over the past year, average annual salary movements across engineering, science and IT management roles ranged from 2.6% to 2.3% to 2.8% respectively, outperforming both the Consumer Price Index (1.3%) and general wages growth (2.1%). This increase underlines the value that STEM professionals in management roles deliver every day at the enterprise level. • Base salaries ranged from $101,150 to $159,500 for engineering managers. • Base salaries ranged from $101,150 to $140,000 for science managers. • Base salaries ranged from $103,393 to $165,000 for IT managers. • Total packages ranged from $120,463 to $186,788 for engineering managers. • Total packages ranged from $119,690 to $167,276 for science managers. • Total packages ranged from $120,932 to $197,917 for IT managers. • Engineering managers fared best with the highest average total package of $216,247 at 25 to 30 years’ experience. • In the Private sector, median annual base salary movements ranged from 1.7% to 1.6% to 2.2% for engineering, science and IT managers respectively. • In the Public sector, median annual base salary movements ranged from 2.5% to 2.5% to 1.7% for engineering, science and IT managers respectively. • Average performance incentives for managers ranged from $10,647 in engineering, $16,305 in science to $19,907 in IT.

Technology-management professionals with engineering, science and IT backgrounds form the basis of the STEM workforce that drives innovation and productivity in Australia. At the enterprise level, the attraction and retention of managers with STEM backgrounds is fastbecoming one of the key challenges facing business leaders. A recent Deloitte report found that “four powerful forces - from demographic upheavals and the rise of digital technology to rapid business-model innovation, and socially driven evolution in the employer-employee relationship - are driving change for both HR functions and the organisations they serve, creating talent challenges and potential solutions radically different from those faced by previous generations of leaders.” 1 Without proper talent retention strategies in place, organisations risk losing their engineering, science and IT management professionals and, in turn, their capacity to respond strategically to these radical changes. Ensuring STEM professionals in key management roles are remunerated in line with current market rates should be fundamental to an organisation’s reward and recognition strategy. An investment in STEM talent is a direct investment in technical and innovation capability. Professionals Australia is committed to providing specialist remuneration information services to support these important objectives.

1

Global Human Capital Trends 2016, http://www2.deloitte.com/us/en/pages/humancapital/articles/introduction-human-capital-trends.html


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Data summary Base salary and total packages for engineering, science and IT managers Base salaries for engineering, science and IT managers - 2016 $180,000 $160,000 $140,000 $120,000 $100,000 $80,000

$141,410

Median

$166,845

Lower quartile

$165,000

$130,677

$103,393

$127,584

Science

$197,917

Engineering

$140,000

$115,500

$101,150

$133,309

$0

$159,500

$20,000

$127,980

$40,000

$103,500

$60,000

IT

Upper quartile

Mean

Total packages for engineering, science and IT managers - 2016 $250,000 $200,000 $150,000

Engineering Lower quartile


Science Median

Upper quartile

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$151,610

$120,932

$150,284

$167,276

$136,640

$119,690

$159,094

$186,788

$0

$150,153

$50,000

$120,463

$100,000

IT Mean


Salary movements for engineering, science and IT managers Average (mean) salary movements for engineering, science and IT managers Percentage increase 2.8

3

2.6

2.5

2.3

2.1

2

1.3

1.5 1 0.5 0

IT

Engineering

Science

WPI

CPI

Average (median) salary movements for engineering, science and IT managers by sector 3

2.5

2.5 2

1.7

2.5

2.2 1.7

1.6

1.5 1 0.5 0

Engineering

Science Private sector

IT

Public sector

Average annual performance incentives for engineering, science and IT managers $25,000 $19,907

$20,000 $15,000 $10,000

$16,305 $10,647

$5,000 $0

Engineering


Science

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IT


Engineering Management Remuneration Base salaries for Professional Engineers in Management roles ranged from $103,500 to $159,500 with the mean base salary sitting on $133,309. Total packages ranged from $120,463 through to $186,788 with a mean total package of $159,094.

The annual base salary movements reported for engineering managers ranged from 0.0 to 3.2% with an overall average of 2.6%. The median salary movements by sector over the previous 12 months were 1.7% in the Private sector and 2.2% in the Public sector. Performance incentives for Engineering Managers averaged $10,647 and the average number of years for respondents in their current roles was 6.3.

Base salaries ranged from an average $73,833 at less than 5 years’ experience to a peak of $170,705 at 25 to 30 years’ experience. Total packages ranged from an average $85,168 to a peak of $216,247 at 25 to 30 years’ experience.

Components of Engineer Management Remuneration N = 111

Lower Quartile

Median

Upper Quartile

Mean

Response %

Age

37

45

54

45

99.1%

Years of Experience

11

21

30

21

99.1%

Years in Current Role

2.0

4.0

9.0

6.3

99.1%

$103,500

$127,980

$159,500

$133,309

100.0%

Base Salary Annual Salary Movement

0.0%

2.4%

3.2%

2.6%

70.5%

Leave Loading

$1,300

$1,522

$1,924

$6,060

28.6%

Award Allowances

$1,318

$3,534

$9,000

$4,642

6.3%

Overtime Paid

$5,000

$15,580

$45,356

$30,430

5.4%

Car Allowance

$7,250

$16,000

$24,375

$15,963

7.1%

Total Cash

$104,630

$131,618

$163,000

$138,145

100.0%

Original Cost of Vehicle

$30,500

$35,000

$50,000

$39,542

21.4%

Benefits Subject to FBT

$3,500

$7,893

$9,761

$7,201

7.1%

Benefits Exempt from FBT

$1,824

$5,000

$11,000

$6,130

4.5%

Employer Superannuation Contributions

$10,409

$13,354

$16,638

$14,047

94.6%

Fringe Benefits Tax

$1,864

$3,123

$4,525

$3,922

27.7%

Performance Based Incentives

$5,500

$9,310

$15,360

$10,647

27.7%

$120,463

$150,153

$186,788

$159,094

100.0%

Total Package

Engineer Management Base Salary & Total Package by Years of Experience Base Salary

Total Package

N

Lower Quartile

Median

Upper Quartile

Mean

Lower Quartile

Median

Upper Quartile

Mean

Less than 5

9

$61,000

$79,000

$83,000

$73,833

$68,985

$89,453

$97,900

$85,168

5 to 10

10

$80,000

$92,155

$111,000

$93,738

$92,310

$100,458

$121,545

$107,258

10 to 15

21

$105,000

$121,000

$163,000

$133,007

$121,275

$143,327

$184,450

$155,211

15 to 20

10

$100,973

$121,824

$131,000

$122,976

$121,678

$138,279

$165,445

$141,722

20 to 25

19

$115,000

$133,200

$150,000

$132,695

$132,495

$165,000

$172,500

$156,386

25 to 30

13

$133,000

$175,000

$200,000

$170,705

$156,258

$224,750

$238,015

$216,247

30 to 35

17

$135,000

$145,000

$170,000

$154,084

$149,989

$170,334

$203,191

$181,956

35 or more

13

$120,000

$147,000

$165,000

$149,692

$156,160

$179,129

$192,500

$186,694


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Engineer Management Mean Remuneration Trendline Across Years of Experience $220k $200k $180k $160k $140k $120k $100k $80k $60k

Base Salary

Total Package

Engineer Management Annual Salary Movement by Employment Sector N

Annual salary movements Lower quartile Median Upper quartile

Mean

Private

25

0.0%

1.7%

4.6%

3.4%

Public

54

0.0%

2.5%

3.5%

2.2%

Education

0

0.0%

0.0%

0.0%

0.0%

Other

0

0.0%

0.0%

0.0%

0.0%

Engineer Management Annual Salary Movement by Employment Sector 3.0% 2.5%

1.0% 0.5%

1.7%

1.5%

2.5%

2.0%

0.0% Private


Public

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Science Management Remuneration Base salaries for Professional Scientists in Management roles ranged from $101,150 to $140,000 with the mean base salary sitting on $127,584. Total packages ranged from $119,690 through to $167,276 with a mean total package of $150,284.

The annual base salary movements reported for managers in science ranged from 0.0 to 3.1% with an overall average of 2.3%. The median salary movements by sector over the previous 12 months were 1.6% in the Private sector, 2.5% in the Public sector and 3.0% in the Education sector. Performance incentives for Science Managers averaged $16,305 and the average number of years for respondents in their current roles was 8.0.

Base salaries ranged from an average $91,873 at less than 5 years’ experience to a peak of $146,903 at More than 35 years’ experience. Total packages ranged from an average $116,430 to a peak of $177,751 at more than 35 years’ experience. Components of Science Management Remuneration N = 152

Lower Quartile

Median

Upper Quartile

Mean

Response %

Age

41

49

56

49

100.0%

Years of Professional Experience

16

25

33

24

99.3%

3.0

6.0

11.0

8.0

100.0%

$101,150

$115,500

$140,000

$127,584

100.0%

Tenure in Current Position Base Salary Annual Salary Change

0.0%

2.1%

3.1%

2.3%

75.0%

Leave Loading

$1,280

$1,490

$1,832

$1,636

32.9%

Award Allowances

$2,059

$5,100

$8,125

$5,127

6.6%

Overtime Payments

$5,000

$12,000

$20,000

$15,184

7.2%

Car Allowance

$6,000

$12,000

$22,000

$13,154

9.9%

Total Cash

$105,000

$122,035

$144,390

$130,857

100.0%

Cost of Car

$28,000

$40,000

$45,000

$41,364

7.2%

Other FBT Benefits

$1,300

$2,800

$15,500

$7,712

17.1%

Other Non-FBT Benefits

$8,900

$9,800

$17,000

$11,655

12.5%

$10,070

$11,875

$15,675

$13,533

91.4%

Fringe Benefits Tax

$1,525

$3,681

$12,626

$7,808

19.1%

Performance Based Incentives

$3,210

$11,951

$19,975

$16,305

13.8%

$119,690

$136,640

$167,276

$150,284

100.0%

Employer Superannuation Contribution

Total Package

Science Management Base Salary & Total Package by Years of Experience Base Salary

Total Package

N

Lower Quartile

Median

Upper Quartile

Mean

Lower Quartile

Median

Upper Quartile

Mean

Less than 5

7

$72,000

$97,258

$109,000

$91,873

$78,840

$130,151

$137,679

$116,430

5 to 10

8

$87,182

$89,338

$111,157

$97,919

$95,464

$109,183

$126,121

$115,637

10 to 15

15

$97,500

$107,225

$110,000

$108,412

$110,654

$119,994

$136,413

$125,072

15 to 20

28

$105,750

$117,000

$129,500

$121,385

$120,100

$130,356

$146,300

$135,869

20 to 25

16

$112,250

$126,500

$162,220

$139,542

$129,888

$152,589

$204,233

$165,653

25 to 30

28

$99,905

$116,000

$139,582

$127,305

$118,420

$138,946

$157,538

$149,560

30 to 35

22

$104,967

$131,480

$160,000

$137,768

$124,975

$150,255

$182,154

$158,638

35 or more

28

$105,500

$135,500

$163,500

$146,903

$130,102

$165,130

$202,813

$177,751


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Science Management Mean Remuneration Trendline Across Years of Experience $200k $180k $160k $140k $120k $100k $80k $60k

Base Salary

Total Package

Science Management Annual Salary Movement by Employment Sector N

Annual salary movements Lower quartile Median Upper quartile

Mean

Private

38

0.0%

1.6%

3.0%

2.4%

Public

41

0.0%

2.5%

3.3%

2.3%

Education

14

2.1%

3.0%

3.1%

3.0%

Other

21

0.0%

1.1%

2.5%

1.7%

Science Management Annual Salary Movement by Employment Sector 3.5% 3.0% 2.5%

1.1%

0.5%

1.6%

1.0%

2.5%

1.5%

3.0%

2.0%

0.0% Private


Public

Education

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Other


IT Management Remuneration Base salaries for IT Professionals in Management roles ranged from $103,393 to $165,000 with the mean base salary sitting on $141,410. Total packages ranged from $120,932 through to $197,917 with a mean total package of $166,845.

The annual base salary movements reported for IT managers ranged from 0.0 to 3.8% with an overall average of 2.8%. The median salary movements by sector over the previous 12 months were 2.2% in the Private sector and 1.7% in the Public sector and 2.9% in the Education sector. Performance incentives for IT Managers averaged $19,907 and the average number of years for respondents in their current roles was 4.9.

Base salaries ranged from an average $80,521 at less than 5 years’ experience to a peak of $169,435 at more than 35 years’ experience. Total packages ranged from an average $96,519 to a peak of $204,249 at 30 to 35 years’ experience. Components of IT Management Remuneration N = 267 Age

Lower Quartile

Median

Upper Quartile

Mean

Response %

39

47

54

46

92.7%

Years of Experience

15

20

28

21

99.3%

Tenure in current position

2.0

4.0

6.0

4.9

99.7%

$103,393

$130,677

$165,000

$141,410

100.0%

Base Salary Annual salary movement

0.0%

2.2%

3.8%

2.8%

70.1%

Leave loading value

$1,198

$1,499

$1,871

$1,636

21.5%

Annual on-call/call back allowance

$2,250

$4,550

$12,000

$7,055

4.2%

Overtime pay

$1,000

$2,500

$5,000

$3,571

2.4%

Annual car allowance

$9,875

$16,000

$25,000

$16,016

11.8%

Total cash

$105,353

$133,500

$169,750

$144,034

100.0%

Cost of vehicle provided

$30,000

$40,000

$45,000

$40,267

5.2%

Other benefits subject to FBT

$375

$3,800

$5,750

$5,100

4.2%

Other FBT-exempt items

$425

$600

$4,500

$4,321

11.1%

Value of employer superannuation contributions

$10,075

$13,008

$16,933

$14,179

92.4%

Fringe Benefits tax Performance Based Incentives

$1,158 $6,000

$2,306 $14,706

$5,258 $23,533

$4,161 $19,907

7.3% 34.0%

$120,932

$151,610

$197,917

$166,845

100.0%

Total package

IT Management Base Salary & Total Package by Years of Experience Base Salary

Total package

N

Lower Quartile

Median

Upper Quartile

Mean

Lower Quartile

Median

Upper Quartile

Mean

Less than 5

13

$62,519

$80,250

$90,000

$80,521

$70,634

$99,500

$101,692

$96,519

5 to 10

15

$85,000

$104,000

$113,000

$105,200

$94,170

$114,975

$126,450

$120,357

10 to 15

40

$95,200

$114,000

$145,500

$118,079

$110,636

$134,909

$173,328

$139,393

15 to 20

58

$111,862

$134,000

$160,000

$142,459

$129,272

$157,763

$201,990

$171,358

20 to 25

46

$105,000

$139,000

$169,000

$144,733

$118,900

$159,823

$196,505

$168,381

25 to 30

49

$115,000

$135,000

$170,000

$143,369

$132,750

$154,600

$190,200

$167,716

30 to 35

34

$130,000

$159,000

$200,000

$171,806

$145,200

$187,125

$227,760

$204,249

35 or more

33

$120,000

$150,000

$196,000

$169,435

$138,000

$176,430

$232,558

$199,054


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IT Management Mean Remuneration Trendline Across Years of Experience $220k $200k $180k $160k $140k $120k $100k $80k $60k

Base Salary

Total Package

IT Management & Administration Annual Salary Movement by Employment Sector

N

Annual Salary Movements Lower quartile Median Upper quartile

Mean

Private

115

0.0%

2.2%

4.0%

3.0%

Public

66

0.0%

1.7%

3.1%

2.0%

Education

17

2.3%

2.9%

4.8%

4.4%

Other

4

2.2%

2.6%

3.6%

2.9%

IT Management Annual Salary Movement by Employment Sector 3.5% 3.0% 2.5%

0.5%

1.7%

1.0%

2.2%

1.5%

2.6%

2.9%

2.0%

0.0% Private


Public

Education

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Other


Further information

To purchase the full Engineering, Science or IT survey reports, or download the summary reports from our Engineering, Science and IT Employment and Remuneration Surveys, visit http://www.professionalsaustralia.org.au/financial-edge/salary-survey-reports/.

About the survey

The data contained in this report was compiled from the latest Professionals Australia engineers, scientists and IT employment and remuneration surveys. The analysis is based on a total of 530 responses.

Definition of management roles In each of the engineering, science and IT remuneration and employment surveys, respondents selfreported their management status. For the purposes of this survey analysis, those who identified management as their main job responsibility were included in the sample.

Sample The sample on which this survey was comprised was as follows:

111 267 152

Engineers

Scientists

IT

Statistical terms used For the purposes of salary analysis, the following statistical terms were used: • N: The number of observations recorded for each category; • Lower decile (10th Percentile): The value below which 10% of observations were recorded. Not reported where N is less than 10; • Lower quartile (25th Percentile): The value below which 25% of observations were recorded. Not reported where N is less than 5; • Median (50th Percentile): The value below which 50% of observations were recorded. Not reported where N is less than 4; • Upper quartile (75th Percentile): The value below which 75% of observations were recorded. Not reported where N is less than 5; • Upper decile (90th Percentile): The value below which 90% of observations were recorded. Not reported where N is less than 10; • Mean: The sum of individual salary values divided by the number of observations; • Interquartile range: The values between which 50% of observations fall. The lower boundary is the lower quartile, the upper boundary the upper quartile; and • Response %: Proportion of the survey sample represented by the number of observations in a given category. Statistics for Base Salary and Total Package are calculated separately for each of the sample respondents, and then ranked. The median is not, therefore, a reflection of the middle ranked respondent across all categories, but rather, the middle value of the particular component when all values of that component are ranked. As a consequence, the component statistics will not add up to the value given by the overall statistic.


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Where a significant difference exists between the value of the mean and the median, this will indicate the following: Where the mean is higher than the median, a number of high values were recorded, sufficient to skew the mean upwards away from the median; Conversely, if the mean is lower than the median, a number of low values were recorded, sufficient to skew the mean downwards, away from the median. If the mean and median are relatively close, the distribution was approximately normally distributed.

Other terms used Base salary Participants were asked to provide both their base salary and an hourly rate of pay. Where a participant did not provide a base salary, but did provide an hourly rate, this was used in conjunction with their reported hours worked each not including overtime to determine an equivalent base salary. Total package The total remuneration package received by a participant, including the value of all components of remuneration. Total package includes the following: • Base salary; • Annual leave loading; • Overtime; • Award allowances; • Employer superannuation contributions; • Motor vehicle; • Parking; • Performance pay; • Fringe Benefits Tax (FBT); • Other items eligible for FBT; and • Other items not eligible for FBT. Where a non-cash benefit such as a motor vehicle is provided, an estimate is made of the salary equivalent value of the benefit.

Methodology Superannuation The dollar value of a participant’s superannuation as a component of their total package was calculated by multiplying their employer’s contribution percentage by their base salary. Where a participant did not specify their employer’s contribution percentage, but did indicate they received superannuation as part of their role the government mandated minimum rate of 9.5% was used. Annual salary movement Annual salary movements were calculated by taking the percentage change from a participant’s annual base salary 12 months ago to their annual base salary at the time of the survey. The calculation is only performed for participants indicating they had not received a promotion or changed employers in the last 12 months. The calculation was also not performed for individuals with less than one year of experience. Valuation of motor vehicles The value given to a motor vehicle provided as part of a salary package has been determined based on the following formula: 22.5% of cost of vehicle + 25 cents per km. Cost of vehicle is the original cost of the car inclusive of government taxes and charges and dealer delivery fees. Capital costs within the formula are based on 22.5% straight-line depreciation over four years with a 10% salvageable value at the end of those four years. Vehicle running costs are based on an average derived from the Royal Automobile Club of Victoria annual survey of car running costs. These costs include registration, insurance, fuel and servicing. For the purposes of the analysis contained in this report, the Fringe Benefits Tax statutory rate of 20% is used in calculating the FBT liability component of a motor vehicle. www.professionalsaustralia.org.au

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