How to prevent a staff exodus

To avoid a stampede of qualified staff to greener pastures, try rewarding individual skills rather than branding everyone with...

To avoid a stampede of qualified staff to greener pastures, try rewarding individual skills rather than branding everyone with obscurity. Lindsay Nicolle reports

The high-paid world of e-commerce is beckoning and the headhunters are on the horizon. Across the country, IT managers are busy drawing up staff retention plans to discourage key staff from making a quick dash to the enemy's side.

All the evidence suggests they don't stand a cat in hell's chance, but, intriguingly, there are few signs yet that staff are packing their bags - just the opposite, in fact. Resignations among IT staff are at their lowest rate since 1993, according to research from Computer Economics. The national rate stands at 7.7% compared to 12% recorded in the previous 18 months.

These figures may be only partly attributable to Y2K windfalls. A strong influence must be the pioneering in-house Internet, e-commerce and networking projects out there proving an irresistible long-term challenge to technologists and IT business managers alike.

But that does not mean that IT staff are putting down roots. Around the country, different regions report wildly different IT staff retention rates, with the worst in London and the South East. The cities have the highest turnover, up to 35% in some cases, but elsewhere there is no set pattern. IT staff turnover varies between 1% and 35%, with an average of 25%.

Job location, industry sector, and money are still great influences, but softer drivers of staff attrition are also evident, such as the draw of an open, honest and entrepreneurial company culture, promotion on merit and a less stressful approach to balancing work and home life, say recruiters.

Staff-churn caused by skills shortages is also a factor. The skill sets that are the most difficult and expensive to replace are e-business talents in high-level Java and Visual Basic, C++ and HTML. Skills in networking, Unix, Oracle, Microsoft, SAP and Baan are also in demand, as is good old Cobol as legacy systems linger.

Beyond these technical skills there is a widespread hunger for people who also have business knowledge and strong communication skills.

Some companies are waking up to the need to grow their own rare breeds if they can't steal them from others. Here, the suppliers are leading the way. By being able to offer leading-edge IT projects to work on, suppliers can now boast a lower staff turnover than users, on average 18%, compared with users' 30%.

E-business intelligence specialist MicroStrategy attributes its 7% IT staff turnover to an up-front $50,000 investment per employee in training; and data warehousing specialist SAS Institute credits its 5% figure worldwide to the company's family culture and flexible approach to the work/life balance. Sun Professional Services boasts a staff turnover of less than 2%, and Web-to-host integration specialist Attachmate has enjoyed a staff turnover of 1% over the past two years.

"Staff retention is not about money, it's about loyalty, treating people fairly, developing and motivating them," says Attachmate's UK manager Ian Wells. He should know. Wells left NatWest as network services manager seven years ago because he felt the bank's promotion strategy was regimented.

"There were jobs I knew I could do but I'd have to wait years to get them," says Wells. He joined Attachmate as a systems engineer and within three years won the top company job in the UK. He is still only 34.

The industry is rife with horror stories of undervalued IT staff leaving for pastures new, sometimes taking whole teams with them, especially in the finance sector. Likewise, we all know IT professionals who job-hop to push up their salaries. It is also not unknown for small groups of IT staff to follow each other from employer to employer, sharing the introduction fees and wielding their collective bargaining power when goodies don't come their way.

John Scott, head of Best Advice, the management consultancy practice of global IT recruitment organisation Best International Group, prefers to look on the bright side. "Turnover of staff can be entirely positive," he says. Scott's argument is that staff turnover can create career development opportunities for existing staff and create space for people with new ideas and different skills.

Tell that to the IT manager on the other side of the fence. Having a lot of jobsworths sitting around stifling innovation is no picnic in such a fast-moving industry as IT, but replacing a staff member halfway through a crucial project has been known to make grown men weep. And the ripple effect of one exiting disgruntled employee can whip up waves of discontent among those left behind, unless management handles the situation skilfully.

Signs that someone is thinking of leaving are not difficultto spot. Look for excessive use of the Internet and the telephone for personal use, grumbling about the job and work colleagues, absenteeism, lack of enthusiasm, declining motivation and contribution to team work and team spirit, working to rule and a generally detached attitude.

The first defence against defection should have begun the day the person was recruited. Do not let inexperienced hirers loose on recruitment because they cannot help "mirroring" - choosing people like themselves rather than the right person for the job. Prepare for the recruit's first day. Get the basics right, for example, the desk and the equipment. Appoint a departmental hand-holder for the first few weeks and provide training and assessment. US extranet software firm Aventail does all this and throws in your favourite biscuits and free beer, and personal greetings from senior management.

Keep staff motivated and ward off tedium by having them work on several projects. Train and appraise regularly, and praise good work. Be fair and loyal to staff and they will reciprocate (see case study, below ).

Remember that the job of keeping staff once they decide to leave is tough. You should know why they are leaving if you have followed their career and personal motivation. But if you have taken a good worker for granted, your chances of rooting out their discontent and persuading them to stay are slim. Offering more money rarely works and will only upset those in the ranks.

Research shows that people usually leave jobs because they lose motivation, feel under-valued or they want a better balance in their work/home lives. They may stay if you offer them different and more challenging projects to work on, flexible working and a definite career path in the first year. Also think about throwing in an unpaid sabbatical for them to mull over the deal. They may come back prepared to accept a fresh start.

But if the day of the leaving party dawns, part company amicably and be generous. Lawyers warn that a company's worst enemies can be its ex-employees. Most important, keep in touch. Aventail has rehired staff who learned the hard way where the grass was greener.

Staff retention is all about managing staff turnover, not fighting it. So talk to staff and find out what it would take to get them back on your trail. You never know, it might just be free beer.

Case study: Colonial As UK head of information services at Australian financial services group Colonial Financial Services, Pam Fellows has reduced her IT staff turnover rate through voluntary natural attrition from 18% in 1997 to less than 2% today, and she has no staff vacancies. In fact, Fellows has even been forced to release good people to meet the evolving needs of the business.

Fellows manages more than 100 IT professionals aged 17-late 40s, including a dwindling number of contractors. All are based at Colonial's modern UK headquarters in the redeveloped former dockyard at Chatham, Kent.

Fellows believes that staff stay because:

  • The company's location outside London attracts those who have a personal desire to work in the area.
  • Genuine opportunities for secondment and working overseas.
  • Flexible working strategies for all staff grades.
  • Higher than average salaries linked to experience and performance, and reviewed twice a year against market trends.
  • Bonus schemes linked to achievable deliverables.
  • A staff share scheme.
  • Open and honest communication.
  • "It's very important to bring the personal touch back into the office," says Fellows, who supplements regular staff satisfaction surveys with informal chats over coffee. "I think that's one of the reasons we have a good rapport going."

    Case study: Capital One

    Peter Knight, UK IT director of Nottingham-based US credit card company Capital One, has enjoyed a near-perfect staff retention rate since April 1998, when he set up the company's IT department. Knight employs 110 IT staff and has so far said goodbye to only one employee.

    "We work to ensure that everyone feels involved in the growth of the company and has the opportunity for self-development," says Knight. "We work hard to foster an entrepreneurial environment where staff can make a difference by helping to develop the whole business, or a discrete part of it. This ethos runs through the whole company and can be related to any issue from management through to e-commerce."

    Capital One nurtures this culture through multi-disciplinary project teams. Staff are encouraged to think laterally about market opportunities and then tackle them in an innovative fashion. This helps to build on the company's strengths and experience while potentially developing a whole new set of competencies.

    The corporate staff retention strategy begins with recruitment. Senior managers commit up to one third of their time to interviewing potential employees and more time again reviewing the impact of the company's evolution on staff.

    Capital One plans to hire at least another 100 IT staff this year.

    Recognition, recognition, recognition

    Howard Butterfield, chairman and managing director of Plexus, one of the UK's largest IT recruitment consultants, warns against forgetting the three Rs: recognition, recognition and recognition. Value staff, financially and personally. Job dissatisfaction often originates from a perception of low personal value and Butterfield encourages employers to:

    • Consult staff on corporate changes so they don't feel like victims of them.
    • Accept that the balance of market power lies with the employee.
    • Establish excellent internal lines of communication.
    • Support staff at every turn.
    • Clearly define goals and performance criteria.
    • Offer managed training and career development.

    Pointers on staff retention.

    City-based PC and networks specialist Plan-Net has maintained a 10% IT staff turnover rate despite growing its headcount this year. Jerry Cave, Plan-Net's director of recruitment, has this advice for others:

    • Allow technical staff to build their own direction and vision of how they wish to develop their careers.
    • Let them define the role types and technology that suits them best.
    • Give them a career structure allowing them to move from basic support roles up to project work and management positions.
    • Demonstrate a commitment to training and development.
    • Understand their need for new and different challenges.
    • Don't allow the issue of staff retention to be governed solely by money.

    This was last published in January 2000

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