Skip to Content

The Intersection of W2 and 1099: How Technology Managers Are Funded and The Impacts on Businesses

7:07 AM EST on December 13, 2023


    Young and senior Asian businessmen sitting at table in office and arm-wrestling. Competition and rivalry in business concept

    Introduction: The Role of a Technology Manager in Today's Businesses

    In the realm of modern business, the technology manager plays a pivotal role in overseeing IT strategy and implementing technology. This crucial position can take two distinct forms:

    1. W2 - An Employee on Payroll
    2. 1099 - An Independent Contractor

    Understanding the compensation structure and incentives of technology managers is essential for aligning them with company leadership and overall business goals.

    W2 Technology Managers: In-House Efficiency Experts W2 technology managers are integral to optimizing internal IT operations and infrastructure. Their focus is primarily on:

    • Cost Savings and Efficiency: They work toward reducing overall IT expenses through owned assets and in-house staffing.
    • Internal Challenges: While loyal to the company, these managers might miss out on innovative solutions offered by external partnerships due to their focus on in-house resources. As the trend shifts towards outsourcing, they face increasing pressure.

    1099 Technology Managers: External Innovation Drivers On the flip side, 1099 technology managers, as independent contractors, enjoy a more flexible operational framework. Their characteristics include:

    • Vendor-Driven Compensation: They often receive commissions through vendor “deal registration,” incentivizing them to recommend optimal vendor products and services.
    • Access to a Broad Ecosystem: Their connections with various vendors provide them with insights into innovative solutions, enhancing their ability to propose cutting-edge technologies.

    Navigating the Friction Between W2 and 1099 Roles The differing interests of W2 and 1099 technology managers can sometimes lead to friction, impacting the leadership’s ability to objectively evaluate technology partnerships and solutions. This tension, if not managed, can hinder a business's tech strategy.

    The Path Forward: A Dual-Manager Model To harness the strengths of both W2 and 1099 roles, businesses should consider a co-management approach:

    • 1099 Managers as Innovation Scouts: They bring insights from their vast network of vendors, offering a window into external technological advancements.
    • W2 Managers as Internal Optimizers: Focused on streamlining in-house IT processes, they advocate for internal resource optimization.
    • Equal Footing in Decision-Making: Both roles should have equal say in technology-related decisions, fostering a balanced perspective.

    Ensuring Transparency and Balance Transparency about funding and incentives from both types of managers to leadership is crucial. This approach allows businesses to leverage the distinct strengths of each, while being mindful of their inherent biases.

    Conclusion: Striking the Right Balance for Future Growth This dual-manager structure enables companies to maintain a balanced viewpoint, crucial for scaling technology effectively for both growth and cost efficiency. By combining the internal focus of W2 managers with the external insights of 1099 managers, businesses can navigate the complex technological landscape more effectively, setting the stage for long-term success.

    Engaging Our Readers We invite technology managers and C-level executives to share their experiences and thoughts on this dual management model. How do you balance internal optimization with external innovation in your organization? Join the conversation below.

    W2 vs 1099 Technology Managers: How can both models win?

    Stay in touch

    Sign up for our free newsletter