retention for it

8/8/2019 Retention for IT

1/25

This project was researched and written to fulfill the specific research request of a single member of the Corporate LeadershipCouncil and as a result may not satisfy the information needs of other members. In its short answer research, the CorporateLeadership Council refrains from endorsing or recommending a particular product, service or program in any respect. Sourcesare contacted at random within the parameters set by the requesting member, and the resulting sample is rarely of statisticallysignificant size. That said, it is the goal of the Corporate Leadership Council to provide a balanced review of the study topicwithin the parameters of this project. The Corporate Leadership Council encourages members who have additional questionsabout this topic to assign custom research projects of their own design.

Catalog No.: 070-191-906

CORPORATE LEADERSHIP COUNCILLITERATURE REVIEW

Beyond the Pay Raise: RetentionTactics for IT Professionals

February 1998

What do IT professionals value in a job?

What reward and recognition tactics appeal to IT staff members?

What career pathing and personal developmental opportunities may companies offer to IT professionals?


2/25

CORPORATE LEADERSHIP COUNCILTHE ADVISORY BOARD COMPANY

__________________________________________________________________________________________________

600 New Hampshire Avenue, N.W. Washington, DC 20037 Telephone: 202-672-5600 FAX: 202-672-5700

TABLE OF CONTENTS PAGE

RESEARCH M ISSIONS AND IMPERATIVES 2

STATE OF THE UNION : T HE IT L ABOR MARKET 3

A Sellers Market 3

With demand up and supply down, IT professionals are a scarce assetand they know it.

New-Wave Recruiting Techniques Increase Talent Sourcing 3While leading-edge recruiting tools are sourcing IT professionals from their current employers, retention becomes an increasingly critical endeavor.

Initial Reaction to Retention Issue Compounding the Problem? 5

First generation retention tactics such as increased base salary and payback agreements are enhancingnot stemmingthe flight of IT talent.

What IT Professionals Want in a Job: Survey Results 6

Results of a 1997 Computerworld survey indicate that IT professionals look to factorsbeyond an attractive base salary in their employment decisions.

PROFILED RETENTION TACTICS :

I. REWARDS AND RECOGNITION 7

Tactic #1: Golden Handcuffs 7Foster employment relationships by offering long-term compensation vehicles

Tactic #2: Patent & Publication Awards 8Provide monetary rewards for employees earning patents or recognized by trade organizations

Tactic #3: Voice of the IT Community 9 Reinforce the importance of the IT function by appointing adepartmental spokesperson and liaison

Tactic #4: Internal Fellowship Programs and Instructor Series 11 Recognize and leverage the internal expertise of IT professionals by offering fellowships and instruction opportunities


3/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALS PAGE 2TABLE OF CONTENTSFEBRUARY 1998

TABLE OF CONTENTS (CONTINUED ) PAGE

II. CAREER PATHING AND DEVELOPMENT

Tactic #5: Dual Career Ladders 13 Implement parallel career paths to provide multiple career options for IT professionals interested in continued individual achievement or management opportunities

Tactic #6: Star Tracks 14For IT staff members not interested in managerial positions, Star Tracksoffers the opportunity to reach the senior levels of the organization

Tactic #7: Career-Planning Classes 15Career planning courses encourage IT professionals to take ownership of their career at the organization, as well as educate them on the benefitsof lateral moves

Tactic #8: Flexible Management Styles 16Practice flexible management techniques to foster IT creativity and innovation

III. P ERSONAL DEVELOPMENT

Tactic #9: Individual Learning Accounts 17Personalized training accounts devolve upon employees the autonomy of

personal development with corporate subsidization

Tactic #10: Innovation Banks 18Foster entrepreneurship by funding internal enterprises proposed by IT staff members

Tactic #11: Personal Growth Leaves 19Sabbaticals or leave programs offer IT professionals the time necessary to

pursue individual developmentor just some time to recharge.

RESEARCH M ISSION AND IMPERATIVES

Council staff has reviewed published literature and past Advisory Board research in an attempt tosynthesize the specific strategies employed by companies to retain information technology (IT)professionals. In some instances, Council staff developed hypothetical models to illustrate further theproposed concepts. This research brief contains footnotes to guide the reader to the relevant articles thatprovide further descriptions of the individual tactics presented herein.


4/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALS PAGE 3STATE OF THE UNION : THE IT LABOR MARKETFEBRUARY 1998

STATE OF THE UNION : T HE IT L ABOR MARKET

A Sellers Market

With the growth of electronic commerce, the rise of the Internet, the threat of Year 2000 systems problems and thedemand for computerized applications, information technology now more than ever represents a critical componentof business survival. In order to offer increasingly technology-based products and services to their customers,companies are scrambling to recruit and retain the individuals that will support such services: information technologyprofessionals.

While the demand for such talent is increasing, the supply is not. The following statistics indicate that the IT talentpool is not meeting the needs of the market demand.

S 400,000 IT positions remain open worldwide 1(19,000 within the United States 2 alone)

S Job openings and replacements in the US will demand 95,000 new IT workers annually until 2005 3

S Only seven candidates exist for every 10 open IT positions 4

S Turnover rates for IT professionals have doubled, from 10 to 20 percent annually, since 1995. 5

New Wave Recruiting Techniques Increase Talent Sourcing

With competition for IT professionals so fierce,companies are focusing their recruiting efforts onstrategies most likely to identify and attract suitableIT candidates. According to career services firm LeeHecht Harrison, electronic talent sourcing nowrepresents a primary means of companiesrecruitment efforts. 6

Electronic Sources Used to Identify Job Candidates

6%

12%

12%

27%

37%

56%

0% 10% 20% 30% 40% 50% 60%

Disks/CD-Rom

None

Other

Electronic Job Postings

Resume Banks

Internet

Down from60% in 1995


5/25


STATE OF THE UNION : T HE IT L ABOR MARKET (CONTINUED )

Companies are now combining more traditional recruitment strategies with newer technology-based systems tomaximize recruiting efforts. For example, Perot Systems, an information-services company, is utilizing a traditional

resume tracking system (Resumix) in conjunction with a web page in order to create an in-house database of potential employment candidates. 7 Additionally, Cisco Systems combined Internet recruiting with the relativesuccess of employee referrals to develop a Web Referral Network. 8 Ciscos strategy is presented below.

In order to combat extensive recruiting efforts as well as aggressive poaching practices, companies must now focusupon retention strategies to prevent the loss of key IT staff. Retention strategies may work in conjunction withrecruiting strategies, but companies must realize that although recruiting strategies may be successful in bringing ITstaff into a corporation, recruiting tactics are not successful tools for preventing IT staff from leaving.

SAMPLE : C ISCO SYSTEMS INCORPORATED (SAN JOSE , CALIFORNIA )

Some Current Recruitment Tactics: Web Referral Network matches prospective employees with current Cisco employees. Cisco employees provide

prospective employees with an intimate view of Cisco, screen candidates for qualifications and makerecommendations for future action

Keyword activated web site matches applicants skills with job openings On-line resume bank On-line menus answer frequently asked questions about Cisco Targeted Cisco advertisements at specially linked popular web sites directed toward employees of top-notch

companies

Past Recruitment Techniques: Cisco Systems advertised on Bostons leading electronic city guide immediately prior to the New England

Patriots/Green Bay Packer Super Bowl .

Results:Ciscos techniques have been very successful due to the quantities of people that they have been able to reach throughthe internet. Ciscos jobs page records as many as 500,000 accesses per month. In addition, the electronic city guidethat Cisco used on the night of the Super Bowl registered 2.5 million hits per day.

OBrien, Chris. Firms Scramble for Tech Workers The News and Observer (April 1997): A1.

Brichard, Bill. Hire Great People Fast. http://www.fastcompany.com/10/hire.html(12 Nov 97).


6/25



Initial Reaction to Retention Issues Compounding the Problem?

In light of current downsizing trends and cost-cutting measures, corporate executives are learning that replacinginformation technology professionals is no small task, financially or logistically. Information technology employeesrealize that they are in high-demand and frequently disregard employee loyalty issues. Companies complain thatemployees can be lured away these days with promises of state-of-the-art equipment, idyllic surroundings, evenlarge cash incentives to sign on for entry-level positions. 9 The estimated cost of replacing a senior database analystwho earns approximately $60,000 a year is detailed below. 10

+ + + = $38,000 +

Initial reaction to improve IT staff retention focused upon two primary tactics: increased base salary and pay backagreements. However, these practices may in fact be compounding the retention problem. According to aComputerworld survey, a majority of the 200 respondents claim that base salaries are not as important as otherfactors in their decisions. 11

Corporations are also confronted with high turnover rates after providing IT employees with expensive educationaltraining or IT certification. Technical employees who complete degree programs or added coursework in their fieldsare more marketable to outside companies. Some companies have taken measures to protect themselves from thisphenomenon by instituting pay back agreements. For example, Prudential Insurance Company of Americaemployees must sign a contract to stay on for at least a year or pay back a $10,000 training bill. The payback agreement decreases to 50% of costs after one year. 12

However, stay-on contracts or pay back agreements may domore harm than good. According to five IT professionalssurveyed in the article, these agreements reduce employeesloyalty to their organizations. 13

Hiring$9,400

Recruiting: $4,400Search Firm: $5,000

(1 months salary)

Transition Costs$16,000

Lost value createddue to inefficiencies

of departing andincoming employees

Training$12,600

Training: $4,200Lost Salary: $3,360Lost CreatedValue: $5,040

Value of LostKnowledge

$$$?

Ive heard of this kind of policy from time to time.It clearly sends a signal to the employees thatmanagement does not trust them. Bad idea.

Robert R. Dickson, Data AdministratorFamily Restaurants, Inc., Irvine, CA


7/25



What IT Professionals Want in a Job: Survey Results

While increased base salaries and pay back agreements served as knee-jerk reactions to retention attempts, they donot effectively address factors that IT professionals value in an employment opportunity. By concentrating efforts onfactors desired by IT staff members, companies can implement retention tactics that are more attractiveandultimately more effectivethan previous attempts.

Computerworld s 1997 survey highlights the primary reasons that IT employees reject or accept job offers; thesefactors are presented below in order of importance.

BIBLIOGRAPHY

7-Recruiting and Retaining IT EmployeesNovember 1997

Computerworld s 1997 Survey ResultsFactors in IT Job Attractiveness

1. Quality of boss2. Technology direction of IT department3. Ability to use new technology4. Job security*4. Faith in financial stability of company*6. More challenging assignments7. Geographic location8. Decision-making responsibility and authority*8. Quality of IS peers*8. Access to resources and funding needed to satisfy goals*11. Quality of top IS leadership12. Base salary*12. Ability to influence the success of the IS department*

*Indicates a tie.PR Newswire , February 26, 1997


8/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALS PAGE 7FEBRUARY 1998

RETENTION TACTICS R EWARDS AND RECOGNITION

TACTIC #1: G OLDEN HANDCUFFSFoster employment relationships by offering short-term compensation vehicles

Practicing Companies: Cigna Corporation, Sapient Corporation, Sears Roebuck & Company, TexasInstruments, Xerox

Profile of Tactic: Through the use of stock options, profit-sharing programs and performance-based bonuses, companies allow IT employees to reap the benefits of overallbusiness success in addition to compensation traditionally provided by basesalaries. Tying rewards to business success also aligns employees more closelywith overall business goals; when combined with effective communication of company strategy and performance this strategy, can help to establish a greatersense of commitment to and interest in the company.

Sample Handcuffs:

Stock options: Stock options prove a valuable component of the rewards package as they allowcompanies to provide near-term incentives without spending inordinate sums of cash. The popularity of this tactic is confirmed by a 1997 Coopers &Lybrandsurvey which found that a majority of 667 software firms use stock options toreward technical professionals. 14

The accelerated vesting of stock options is another tool provides a furtherenticement to IT and other employees. At Texas Instruments, IT employees arerewarded with stocks that vest in as little as two years, should the companyexceed stated expectations.

Performance-Based Bonuses: Companies may link bonuses to monthly, annual or project milestones.

Profit Sharing:

Texas Instruments 15 1995 All employees received 14% of their basesalary in profit sharing bonuses

Sears, Roebuck andCompany 16

1995 15% of annual cash compensation is tied tocompany performanceAverage increase given to IT employees was10% or more

Xerox 17 1997 All employees participate in corporate profitsharing program; 1995-1997 participantswitnessed an average 10% increase in basepay


9/25


RETENTION TACTICS R EWARDS AND RECOGNITION (CONTINUED )

TACTIC #2: P ATENT & P UBLICATION AWARDSProvide monetary rewards for employees earning patents or recognized by trade organizations

Practicing Companies: Dell Computer Corporation, Everex Systems,General Motors, Texas Instruments, Company C (Information technologycompany that employs fewer than 7,500 employees and generates less than$2 billion in revenue)

Profile of Tactic: Through the reward and/or recognition of patent applications and journalpublications, companies enhance an environment focused upon constantinnovation and individual achievement. Further, employees receive a level of individual recognition often obscured in team-oriented corporate environments.

Companies may provide cash rewards or other public recognition for:S Patent application

S Patent approvals

S

Articles published in journalsS Recognition from professional associations

Sample Rewards:

REWARDING PATENT APPLICANTSApplication Filed Patent Issued

Dell ComputerCorporation 18

$1,000 in cash

$5,000 in stock options

Typically allow awardees tocash in on stock options atearlier date

Everex Systems 19 $2,000 in cash If multiple inventors, all

share $3,000

Information unavailable

General Motors 20 $250 in cash $750 ($2,000 extra if patented research is producedor developed)

Texas Instruments 21 Information unavailable Up to $175,000 in bonusesper patent

SAMPLE : C OMPANY C P UBLICATION AWARD PROGRAM

Award: $700 for Tier One publication$350 for Tier Two publications(Difference between Tier One and Tier Two publicationsdetermined by company; not disclosed to Council staff)

Eligibility: All employees

Nomination/Selection: Contingent upon publication

Recognition: Employees receive public recognition at departmental meetings.Recipients are also recognized on plaque, and are featured on thecompanys intranet.


10/25



TACTIC #3: V OICE OF THE IT C OMMUNITY Reinforce the importance of the IT function by appointing a departmental spokesperson and liaison

Practicing Companies: International Paper, Prudential Insurance

Profile of Tactic: Corporations recognize the Information Technology function as a strategicbusiness partner in order to increase the retention of IT employees.

1. Appoint an IT department spokesperson/liaison. The department liaisonallows the CIO greater freedom to work with the CEO to develop the ITstrategy, IT budget and manage project workloads.The responsibilities of the liaison include:

Communicate departmental needs to the rest of the company

Communicate departmental accomplishments to the rest of the

company

Work with headquarters to ensure that IT employees areprovided with a state of the art work environment

Work with human resources to ensure all possible endeavors to

increase developmental opportunities for IT staff will beundertaken

SAMPLE : P RUDENTIAL INSURANCE COMPANY (NEWARK , NEW JERSEY )

Objective: Prudentials new CEO authors a plan to have a world-class ITorganization by 1999.

Results: A new position is created to link IT with the rest of theorganization; Ms. Barbara Macescko is hired as an ITCommunity Builder to serve as the voice of Prudentials 6,000-person IT function. Her responsibilities include:

Identifying changing skill sets that are necessary amongdifferent IT areas

Serving as a liaison between IT and HR to addresscompensation, recruiting and training issues

Sharing best practices throughout the entire IT department


11/25



TACTIC #3: V OICE OF THE IT C OMMUNITY (CONTINUED )

2. Appoint an HR professional dedicated to the staffing needs of the ITdepartment. The responsibilities of this individual include:

Staffing the IT department

Training the IT department

Serving to bridge any gaps between the human resources and

information technology functions

SAMPLE : I NTERNATIONAL PAPER (PURCHASE , NEW YORK)

Objective : To build a strategic relationship between the corporate staff,line employees and IT staff prior to investing more than $100million in information technology over three years

Results : Creation of a new position of liaison/coach/translator/catalyst

Too frequently the business people and the IT people speak indifferent tongues. Having someone to translate not just the wordsbut the fears and feelings too is a progressive step towards harmonyand cooperation


12/25



TACTIC #4: I NTERNAL FELLOWSHIP PROGRAMS AND INSTRUCTOR SERIES Recognize and leverage the internal expertise of IT professionals by offering fellowships and instruction

opportunities

Practicing Company: The models outlined below are based upon information gathered from aninformation technology company with fewer than 7,500 employees and less than$2 billion in revenue

Profile of Tactic: Programs highlight the intellectual endeavors of technical or other professionalemployees and focus attention on individual achievement, providing continuousopportunities for the transfer of information and the development of intellectualcapital.

Internal fellowship programs and instructional opportunities are two ways torecognize such outstanding performance.

Information Technology Fellows Program

Goal: To recognize the achievement of IT professionals

1. Managers nominate employees who meet agreed-upon selection criteria

2. Management team, or group of senior-level executives, select 10 finalistsfrom all nominated employees

3. Fellows are announced to company through the following vehicles:S Company-wide or division-wide meeting

S Corporate newsletters

S Postings on company intranet, and/or Internet sites

4. Fellows eligible to receive:S Change in title

S Commensurate salary increase

S Eligibility for larger, company-wide recognition programs

S Stock allocation or decrease in vesting periods for stock

Benefits : Enhances professional status of valued IT

professionals

Provides opportunity for company to publicly attestto value placed on IT professionals

Increases retention among IT professionals who seek

to achieve status of fellow

Possible Selection Criteria:9

Overall performanceexcellence

9 Singular outstanding

achievement, includingsubstantial cost savingsor development of newproduct

9 Tenure with firm

9 Number of years

experience in field9

Recognition by externalprofessional association


13/25



TACTIC #4: I NTERNAL FELLOWSHIP PROGRAMS AND INSTRUCTOR SERIES (CONTINUED )

Description : Once a month, the company selects a technical expert or a senior

executive to teach a three- to eight-hour seminar on their specialty area; allemployees may attend seminars.

Value of the Program : According to Company Cs human resourcesdirector, the Instructor Series sends a message to employees that the companyvalues its employees expertise and professional achievements.

Company Cs Instructor Series

Model Instructor Series

Goal: To highlight intellectual achievements of IT staff while facilitating the exchange of information

1. Company selects technical experts or senior executives toteach a seminar class in their area of expertise.

2. Sessions typically last for 3 to 4 hours, but may last in excessof a full business day.

3. Company provides instructors with dedicated period of time

and all necessary materials and technology for developingcourse and support materials.

4. Description of course with a biography of the instructor isposted on the companys internet; this serves both toadvertise class availability and to recognize the instructor.Care should be taken to design the biography in a way thathighlights skills of instructor and significant accomplishmentsduring their tenure.

5. Session held off-site or at corporate facility (when possible)to heighten attention surrounding event.

Possible Course Topics:

Database creation

Advanced network

management

Data mining strategies

Infrastructure architecture

Protecting intellectualproperty

The future of telecommunicationstechnology


14/25


RETENTION TACTICS C AREER PATHING AND DEVELOPMENT

TACTIC #5: D UAL CAREER LADDERS Implement parallel career paths to provide multiple career options for IT professionals interested incontinued individual achievement or possible management opportunities

Practicing Companies: BP Exploration, National Semiconductor

Profile of Tactic: Structured, parallel paths that offer advancement to IT employees in bothmanagerial positions as well as technology positions. Paths are comparable interms of responsibility, rewards and influence extends to the senior levels of theorganization.

A 1992 study conducted by Lincolnshire, Illinois-based Hewitt Associatesrevealed that roughly 90% of large companies surveyed implemented dual careerladders to retain their best technical staff and two-thirds of respondents reportedthat their career ladders are successful .22

Critical Components forDual Career Ladder Success

; Allows vertical and lateral movementamong paths

; Clearly defines paths; Customized to the technical needs of the

company; Stretches to the companys highest levels; Applies the same standards and expectations

along both paths, such as:S Compensation

S Decision-making authority

S Influence/credibility

S Responsibility

S Salary and incentives

S Status

Common Factors of Dual Career Path Failure

; Employee confusion regarding purpose of dualstructure

; Poorly-defined paths; Relaxed selection criteria for technical track ; Management track perceived to be more

rewarding and desirable; Inequality between paths in the following areas:

S Compensation

S Decision-making authority

S Influence/credibility

S Responsibility

S Salary and incentives

S Status


15/25


RETENTION TACTICS C AREER PATHING AND DEVELOPMENT (CONTINUED )

TACTIC #6: S TAR TRACKSFor IT staff members not interested in managerial positions, Star Tracks offers the opportunity to reachthe senior levels of the organization

Practicing Companies : Ulysses Company (Software development company that employs 11,000 andgenerates more than $2 billion in annual revenue.) 23

Profile of Tactic : A career path for softwareengineers to the chairmans office, Star Tracks is a practicalexample of dual career ladder strategy. Practice based on needto leverage growing contingent of knowledge workers uponwhom businesses increasingly rely.

Chairman creates elite Sponsors Council at executive vicepresident level for seven top software engineers/sponsors incompany. Once established at the senior-most levels of the

company, individual contributors provide counsel relative totheir own areas of expertise to executives exploring newbusiness opportunities.

Four-stage sponsor track tiesdifferent levels of technicalmastery with appropriate levelsof business contribution.Knowledge workers allowed toconcentrate on making technical

contributions without thedistraction of managementresponsibilities.

Ulysses reports 100 percentretention rate at the tracks toplevel across the first five years of its implementation, with lessthan 10 percent annual turnoverdown through the apprenticelevel.

Sponsor

Coordinatorand Coach

Contributor

Apprentice

S Maintains network across and beyond company to stimulate,

leverage great ideasS Forms political alliances to promote new ideas, challenge status

quo, change strategic direction of companyS Plays active role in industry, professional associations,

government advisory committees

S Provides project supervision to contributors

S Serves as interface between hierarchical management,

professional track contributorsS Begins working closely, maintaining relationships with people

outside company, suppliers, customers

S Independently carries out definable projects with pre-specified

outcomesS Works across horizontal organization rotating among different

process groups, units

S Becomes socialized, familiar with company culture

S Learns critical dependencies, how to work with other knowledgeworkers

S Serves as assistant on projects while building basic skills

Sponsor's Council

Ex ecutive V PD evelopmen t

Ex ecutive VM arketing

C EO

Ch ai rman ' s Off ice

Executive Suite at Ulysses Integrates Seven TopSoftware Engineers in the Firms Governance


16/25



TACTIC #7: C AREER -PLANNING CLASSESCareer planning courses encourage IT professionals to take ownership of their careers at theorganization, as well as educate them on the benefits of lateral moves

Practicing Companies: PacTel Corporation, John Hancock Mutual Life Insurance

Profile of Tactic: Career management courses and workshops designed to provide employees withthe means to plan their career paths. 24 Allows employees the autonomy to takeownership of their career development and progress, a distinctly differenttechnique than traditional company-coordinated employee developmentstrategies.

John Hancocks career-planning courses for employees similarly focus on theopportunities associated with lateral career moves. The workshop entitled Upis Not the Only Way discusses the various components of a satisfying career, aswell as the benefits of lateral moves. 25

SAMPLE : P ACTEL S CAREER -COMMUNICATIONS WORKSHOP (WALNUT CREEK , CA)

Duration & Eligibility Two-day seminar is optional for employees, but required forall management-level staff members.

Objectives To help employees accomplish the following:

; Develop a realistic career plan; Explore different career options, including lateral moves and

relocations; Identify their skills, interests and values; Learn about PacTels norms and how they affect careers; Learn to communicate with their managers about career growth


17/25



TACTIC #8: F LEXIBLE MANAGEMENT STYLESPractice flexible management techniques to foster IT creativity and innovation

Practicing Companies: 3M, National Institute of Standards & Technology (NIST),Hewlett-Packard, Saphikon Inc.

Profile of Tactic: Companies that encourage their employees to pursue challenging projects of their own design reduce the risk of boredom and burnout in their key valuecreators.

According to the R&D/KSR Career Satisfaction Survey , participants rankedtoo much bureaucracy as the single least satisfying aspect of their jobs. 3Maddresses this concern with a 15% rule that allows technical employees tospend up to 15% of their time on projects of their own choosing. 26 Thefreedom to choose [your own] research area is a primary factor in retainingindividuals at NIST. 27

Respect for technical skillsmeans littleover-your-shouldersupervisory techniques or consistent priority shuffling

IT professionals prefer mutual trust and participatory management from theirsupervisors, according to interviewed individuals: 28

I have complete freedom to work on any project I feel needs attention. Fromthe time I started nine years ago, I have worked for supervisors who understandthat some people dont need looking after. Right up through the short chain of command, Saphikon has given people freedom to be creative.

Earle Rich, Engineer, Saphikon Inc.

[I]f your business strategy requires you to be changing focus all the time, thatcan be a real demotivator. If one week your project is seen as the hottest in the

world and then the company cancels it the next week, that doesnt fly.Bob Witte, Business Team Manager, Hewlett-Packard


18/25


RETENTION TACTICS P ERSONAL DEVELOPMENT

TACTIC #9: I NDIVIDUAL LEARNING ACCOUNTSPersonalized training accounts devolves upon employees the autonomy of personal development withcorporate subsidization

Practicing Companies : Cedar Company 29 (Information technology company that employs 5,200people and generates $850 million in annual revenue)

Profile of Tactic : In the model of cafeteria-benefits, accounts represent reserves of time and moneyprovided by the organization that IT employees may use for classes,certification, internships or other educational experiences of their choice.From the employer perspective, learning accounts constitutebeyond thepaychecka recruiting/retention lever. From the employee perspective, learningaccounts promote skill development and future employability.

Because IT professionals place high value upon staying marketable across time,the opportunity to learn new skills is highly attractive. Individual learning

accounts strongly recommended for individuals in positions in which:; Rapid skill obsolescence is a major concern; Retention is crucial to business competitiveness

Sample Individual Learning Account Process:

Cafeteria-stylebudget isleaner: Cost of accountsactually lowerthan those of traditionaltrainingprograms

Although it is difficult to quantifycost savings with precision, it iseasy to conclude that a tailoredapproach to development yieldsbetter results at a lower cost. Thefollowing example assumes only60% of classroom trainingbut allself-directed learningmeetsemployee needs. 30

Employee participatesin different stretch

experiences

Employee draws up scopeof learning assignments

into contract

Organization allocateslearning time and money

$January

February

Manager and employee discusstiming and nature of experiences

ILAContract:

Across the next90 days I willperform thefollowing

March

Employee documentsexperiences and shares

with organization

$2,160 wastedtraining dollars

$5,400

Self-DirectedLearnin

Employee Attending StandardTraining Courses

(Estimate: 3 courses at a cost of $1,800 per course)

$6,000

$4,000

$2,000

$3,000

60% Applicableto Employee

Needs

40% NotApplicable

100% Relevancefor Employee

Value of a Training Dollar

Dollars Spenton Training


19/25


RETENTION TACTICS P ERSONAL DEVELOPMENT (CONTINUED )

TACTIC #10: I NNOVATION BANKSFoster entreprenuership by funding internal enterprises proposed by IT staff members

Practicing Companies: 3M, Eastman Kodak

Profile of Tactic: Corporate headquarters invites innovation through the ranks by bankrollingand supporting employees ideas for new products or market opportunities.Organizations with state-of-the-art research and development functions allow ITprofessionals to pursue new ventures, while insulating them from the risksassociated with such projects if those employees attempted on their own. 31

Funding internal enterprises establishes multiple benefits for both parties:

For the organization; Large ventures may be supported within the company as a

separate business; Encourages employees to satisfy intellectual and/or

entrepreneurial cravings without leaving the organization

For the IT Professional; Presents the opportunity of large financial rewards if proposed

ventures succeed; Provides valuable resources not available through conventional

means

$

$ $$

ProductChampion

ProductChampion

ProductChampion

ProductChampion$100,000

$125,000

$75,000

Employee obtains research grant to explore market readiness for a new idea

$50,000


20/25


RETENTION TACTICS P ERSONAL DEVELOPMENT (CONTINUED )

TACTIC #11: P ERSONAL GROWTH LEAVESSabbaticals or leave programs offer IT professionals the time necessary to pursue individualdevelopmentor just some time to recharge.

Practicing Companies: Apple Computers, Silicon Graphics, Intel, Tandem Computers, Xerox

Profile of Tactic: A paid or unpaid leave of absence with full benefits and a job guarantee. 32 ForIT professionals, an abridged eligibility period of generally less than five yearstranslates into absences of between six and twelve weeks. With disability costsrelated to stress estimated at $75 billion annually in the United States alone 33,companies tend to offer sabbaticals as "burnout prevention. 34

Sabbaticals are a good alternative for companies that do not have extensive in-house educational and development alternatives, yet need to retrain their ITprofessionals to combat the skill obsolescence spurred by rapid technicalinnovation. 35 According to Hewitt Research Group, the primary reasons for

offering sabbaticals include the following.

; Avoid technical obsolescence; Reduce job burnout ; Reward longevity on the job; Use as a carrot to retain senior employees

Sabbaticals typically fall into one of two categories:

Personal growth leave Allows employees as much as a year off topursue an activity of their choosing. Educational activities such as ITcertification programs or extensive training on emerging technologymight be most appropriate for IT professionals.

Social service leave Allows employees a chance to work on a projectthat will benefit the community. For example, Xeroxs Social ServiceLeave (SSL) allows employees to work for a nonprofit service agencyfor up to six months, with full pay and benefits. 36


21/25


__________________________________________________________________________________________________


BIBLIOGRAPHY

Beyond the Pay Raise: Retention Tactics for IT ProfessionalsFebruary 1998

Alexander, Steve. The Best of the Best: Sears, Roebuck and Company. Computerworld ,Date unknown: 18 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Austin, Nancy K. Why Sabbaticals Make Sense. Working Woman , March 1994, 19+.

Author unknown. Computer Survey Reveals that Good Training, Good Boss Retain In-DemandInformation Technology Personnel. PR Newswire , 6 February 1997: page unknown(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Author unknown. Salary Incentives Alone No Longer Enough to Recruit, Keep Software Employees.Software Industry Report , 21 July 1997: 1(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Author unknown. Turnover Soars in Information Technology Field, EIU ViewsWire , 12 June 1997:page unknown.

Bachler, Christopher J. Workers Take Leave of Job Stress. Personnel Journal , January 1995, 38+.

Baker, Stephen. The Global Search for Brainpower. Business Week , 4 August 1997: 46(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Bellinger, Bill. Shortage Spurs Meeting. Electronic Engineering Times , 23 June 1997(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Corporate Leadership Council. Forced Outside: Leadership Talent Sourcing and Retention .Washington: The Advisory Board Company, (1998): 85-109.

Corporate Leadership Council. Tactic #3: Individual Learning Accounts. Compelling Careers:Workforce Management Structures of the New Employers of Choice, (1996): 55+

Corporate Leadership Council. Practice #2: Non-Managerial Star Tracks. Perfecting the Labor Market , Washington: The Advisory Board Company, 39+.

Crenshaw, Dana. Breach of Faith. Computerworld, 24 February 1997: 89(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Caudron, Shari. Motivating Creative Employees Calls for New Strategies. Personnel Journal


22/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALSBIBLIOGRAPHYFEBRUARY 1998

(May 1994). (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Deloitte & Touche. Leading Trends in Information Service (1995) quoted in Cafasso, Rosemary.Satisfaction Guaranteed . Computerworld , 20 November 1995, and Ettore, Barbara.How are Companies Keeping the Employees They Want? American Management Association

Management Review (May 1997) (Obtained through LEXIS-NEXIS, a division of Reed ElsevierInc.).

Earls, Alan. Retention Getters. Computerworld, 9 February 1998: 82(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Fillon, Mike. Skills Retention Tension: How to Keep Your Star Staffers? Client/Server Computing(January 1997): 82 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Gaw, Jonathan. Perks and Pay are Keys in Staffing the Digital Age. Star Tribune (Minneapolis) ,12 January 1998, 1D (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Gomez-Mejia, Luis R. et al. Rethinking Rewards for Technical Employees. Organizational Dynamics , 22 March 1990: 62+(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Greco, Susan. Unusual Incentives Help Boost Engineers Motivation. EDN , 28 June 1990: 111(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Harrison, Lee Hecht. Survey 97: Are You Using Technology to Recruit?http://www.careerlhh.com/hrama97.html.

Higginbotham, Julie S. 1997 Career Satisfaction & Salary Survey. R&D Magazine (September 1997):

R-V (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

King, Julia and Robert L. Scheier. Want TrainingJust Sign Here Computerworld ,24 February 1997: 89 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Ladendorf, Kirk. Patents on Upswing: Austin Inventors Led Texas in 96 Registering.The Austin American-Statesman , 13 January 1997.

LaPlante, Alice. The 100 Best Places to Work in IS in 1997. Computerworld ,http://computerworld.com, 6 June 1997.

Levering, Robert and Milton Moskowitz. The 100 Best Companies to Work For In America. Fortune ,

12 January 1998, 84+ (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Lissy, William E. Currents in Compensation and Benefits. Compensation & Benefits Review ,January-February 1993, 3 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).


23/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALSBIBLIOGRAPHYFEBRUARY 1998

Messina, Judith. Firms Boost Tech Pay in Heated Effort to Foil Rivals Search Engine.Crains New York Business , 14 July 1997: 17(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Ristelhueber, Robert. Whats Behind Management Pay? Electronic Business Today(December 1995): 42 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Roberts, Wooing Wizards: Recruiting and Retaining Software Engineers. PC Week , 30 October 1995:A1 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Rosa, Jerry. VAR Shows How Common Sense Can Help Good Employees. Computer Reseller News ,7 October 1996: 47+ (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Solomon, Charlene Marmer. Keep Them! Workforce , 9 August 1997): 48(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Vohra, JS Lakinder. Online Recruiting Fills Positions. Denver Business Journal ,9 August 1996: 27A (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Working Council for Chief Information Officers. Stemming the Flight of IT Talent . Washington:The Advisory Board Company (September 1997).


24/25


__________________________________________________________________________________________________


END NOTES

Beyond the Pay Raise: Retention Tactics for IT ProfessionalsFebruary 1998

1Stephen Baker, The Global Search for Brainpower, Business Week 4 August 1997: 46.2Bill Bellinger, Shortage Spurs Meeting, Electronic Engineering Times , 23 June 1997.3Jonathan Gaw, Perks and Pay are Keys in Staffing the Digital Age. Star Tribune (Minneapolis), 12 January

1998, 1D.4 Judith Messina, Firms Boost Tech Pay In Heated Effort to Foil Rivals Search Engine, Crains New York

Business 14 July 1997: 17.5 Author unknown, Turnover Soars in Information Technology Field, EIU ViewsWire 12 June 1997: page

unknown.6 Lee Hecht Harrison, Survey 97: Are You Using Technology to Recruit?

http.//www.careerlhh.com/hr_ama97.html7 JS Lakinder Vohra, Online Recruiting Fills Positions, Denver Business Journal, 9 August 1996 :27A .8 Corporate Leadership Council, Forced Outside: Leadership Talent Sourcing and Retention (1998): 85-109.9 Charlene Marmer Solomon, Keep Them!, Workforce (August 1997): 48.10 Working Council for Chief Information Officers, Stemming the Flight of IT Talent (September 1997).11 Author unknown, Computer Survey Reveals that Good Training, Good Boss, Retain In-Demand Information

Technology Personnel, PR Newswire 6 February 1997: page unknown.12 Julia King and Robert L. Scheier, Want Training? Just Sign Here Computerworld 10 March 1997: 1.13 Dana Crenshaw, Breach of Faith, Computerworld 24 February 1997: p. 89.14 Author Unknown, Salary Incentives Alone No Longer Enough to Recruit, Keep Top Software Employees,

Software Industry Report 21 July 1997: 1.15 Robert Ristelhueber, Whats Behind Management Pay?, Electronic Business Today (December 1995): 42.16 Steve Alexander, The Best of the Best: Sears, Roebuck and Company, Computerworld : 18.17 Alan R. Earls, Retention Getters, Computerworld 9 February 1998. 82.18 Shari Caudron, Motivating Creative Employees Calls for New Strategies, Personnel Journal (May 1994).19 Susan Greco, Unusual Incentives Help Boost Engineers Motivation, EDN , 28 June 1990: 111.20 Ibid.21 Shari Caudron, Motivating Creative Employees Calls for New Strategies, Personnel Journal (May 1994).22

William E. Lissy, Currents in Compensation and Benefits,Compensation & Benefits Review

January-February 1993: 9.23 Corporate Leadership Council, Practice #2: Non-Managerial Star Tracks. Perfecting the Labor Market

Washington: The Advisory Board Company, 39+.24 Bill Roberts, Wooing Wizards, Recruiting and Retaining Software Engineers, PC Week , 30 October 30 1995:

A1.25 Ibid.26 Robert Levering and Milton Moskowitz, The 100 Best Companies To Work For In America, Fortune , 12

January 1998, 84+.27 Julie S. Higginbotham, 1997 Career Satisfaction & Salary Survey, R&D Magazine (September 1997): R.


25/25

BEYOND THE PAY RAISE : RETENTION TACTICS FOR IT P ROFESSIONALS PAGE 2ENDNOTESFEBRUARY 1998

28 Ibid.29 Corporate Leadership Council, Tactic #3: Individual Learning Accounts, Compelling Careers: Workforce

Management Structures of the New Employers of Choice, 1996, 55+30 Ibid .31 Luis R. Gomez-Mejia, Rethinking Rewards for Technical Employees, Organizational Dynamics March 22, 1

1990, 62+.32 Nancy K. Austin, Why Sabbaticals Make Sense, Working Woman March 1994, 19+.33 Christopher J. Bachler, Workers Take Leave of Job Stress, Personnel Journal January 1995, 38+.34 Nancy K. Austin, Why Sabbaticals Make Sense, Working Woman March 1994, 19+.35 Luis R. Gomez-Mejia, Rethinking Rewards for Technical Employees, Organizational Dynamics March 22,

1990, 62+.36 Christopher J. Bachler, Workers Take Leave of Job Stress, Personnel Journal January 1995, 38+.

The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members.This project relies upon data obtained from many sources, however, and the Council cannot guarantee the accuracyof the information or its analysis in all cases. Further, the Council is not engaged in rendering legal, accounting orother professional services. Its projects should not be construed as professional advice on any particular set of factsor circumstances. Members requiring such services are advised to consult an appropriate professional. Neither TheAdvisory Board Company nor its programs is responsible for any claims or losses that may arise from any errors oromissions in their reports, whether caused by The Advisory Board Company or its sources.

Professional Services Note

retention for it

Documents