A study by the Center for American Progress think tank estimated, for example, that the average cost of an employee leaving an organisation can be anything from 16% of their wage if they are paid on an hourly basis to 213% of their salary if they are a highly trained professional. Costs range from the expenditure involved in both time and money terms of interviewing and on-boarding candidates to dealing with productivity levels that will initially be lower than existing employees and can take up to two years to come to parity.
As a result, research by Dale Carnegie Training somewhat unsurprisingly revealed that staff turnover actually costs US businesses a huge $11 billion each year.
Although not limited to tech professionals alone, the report also indicated that firms whose employees felt engaged outperformed those with more demotivated workers by a vast 202% - although it likewise noted that a mere 29% of the staff members questioned were actually actively buying in in this way. Some 45%, on the other hand, were not, while a worrying 26% were “actively disengaged” - and chances are that the figures hold as true for the tech segment of the workforce as they do for any other.
But in a world in which the war for tech talent is only set to escalate over the next few years, such findings are not good news. According to a US-based poll undertaken by jobs search engine Indeed, 86% of the organizations surveyed said they were finding it difficult to find and hire tech talent, with more than a third describing it as “very challenging”.
As a result, 53% admitted that they had ended up hiring people who did not really meet their requirements as they were simply unable to wait any longer. Just over a third also said their inability to hire staff in a timely fashion had led to burnout among existing employees, which had had a negative effect on the business.
But Barnaby Parker, chief executive of recruitment consultancy Venquis believes that one of the secrets to keeping hold of staff is to always ensure that you hire the right ones – no matter how tricky that might be. He explains:
A good starting point to retaining talent is getting the right talent in the first place. As a manager, you need to have the confidence that you’re dealing with the right person and nothing kills a relationship quicker than someone not being the right person for the job.
Attitude, aptitude and ability
Andy Wilton, CIO of Claranet, agrees, but says his focus when recruiting is less on formal skills and work experience per se and more on “attitude, aptitude and ability”. The managed services provider certainly took this approach when building a team of 20 developers in Lisbon, Portugal, to supplement its 50 existing developers in London. Wilton explains:
It’s difficult acquiring and retaining hot tech skills in an affordable way, especially in London as it’s such a competitive market. But Portugal has a slightly depressed economy and a highly educated workforce that speaks good English. So in our advert, we said it’s not just about work experience and the languages you can develop in - talk to us if you think you have the aptitude. So we picked the people who were the best cultural fit and trained for the rest. We put our money where our mouth is and invested in them and it’s paying off. It’s an approach that breeds loyalty and we’ve created a highly motivated team - our Net Promoter score there is +73.
While Wilton was initially concerned that it might take a long time for the developers to become productive, he found the average learning curve was about three months instead.
Another firm that has taken a grow-your-own approach as a means of boosting staff retention levels is UK-based IT support and solutions provider, MCSA. It introduced a Level 3 Advanced Apprenticeship scheme about five years ago and takes on an average of three apprentices as IT engineers and IT sales staff each year. Susan Mullerworth, group HR director, says:
When they complete the programme, there’s a proper job at the end and their career paths are formulated with us from the outset. They get hands-on work experience and they stay very loyal. Not one of them has left so far.
But recent research conducted by three North American universities found that another productive means of minimising high rates of tech staff turnover was to offer employees small but frequent promotions.
The study revealed that the higher an IT professional’s chance of promotion was, the less likely they were to leave their employer. Unfortunately though, many organisations are reducing the number of promotion opportunities available these days in a bid to cut the costs associated with hefty salary increases.
As a result, the research indicated that enabling small but frequent promotions was a useful means of boosting employee retention rates while also keeping costs low. The data was drawn from HR records at a multi-national North American systems integration and consulting firm over a five-year period from 2005 to 2010.
The report itself, meanwhile, was co-authored by Alain Pinsonneault, a professor at the Desautels Faculty of Management at Canada’s McGill University; Frank MacCrory, assistant professor at the Gabelli School of Business at New York City’s Fordham University, and Vidyanand Choudhary at the Paul Merage School of Business at the University of California Irvine. Pinsonneault says:
A key factor in the retention of IT professionals is creating a ‘promotion ladder’. This allows for employees to aim for smaller, more frequent promotions, and spares many from the dissatisfaction of losing out on the larger financial benefits of elusive, coveted promotions – a shock which is likely to push them to move on from the company. This can be accomplished either through marginal adjustments to existing jobs or by inserting new levels into the job ladder. For businesses wishing to decrease staff turnover without affecting their profit, offering other benefits at each step on the ladder can be seen as a small investment into avoiding the high costs of replacing employees.
But Claranet’s Wilton is not so sure that such an approach would work for his organisation, although he appreciates it could have some merit for organisations offering a “very conventional managerial promotion route”.
About a year ago, however, the company introduced a dual career path for its IT staff, of which it has about 70, adding a tech track to its existing management track. The tech track is aimed at those people who do not wish to become managers but would prefer to pursue a career as technical specialists. Wilton explains:
The worst thing you can do is promote someone and call them a manager if it’s not right for them or the business. It’s about playing to people’s strengths and giving them an alternative career path rather than forcing them into something to which they’re not suited.
Training and development
But he also believes that providing ongoing training is a key factor in keeping hold of staff. He says:
“If your employer stops training you, for most people it’s time to leave, especially because vocational stuff has a half-life – it’s much shorter than other subject areas. Firstly, we’re talking about things like programming languages and databases as there’s always new versions coming out. But it’s also about bigger picture stuff as fashions change – I mean things like DevOps and Agile.
The organisation runs a bi-annual “fairly conventional performance management process”, a key part of which is a personal development plan that includes both job-specific and soft skills training, he adds.
MCSA’s Mullerworth is another great believer in the value of training in staff retention terms. She explains:
We have a policy of continual personal development across the organisation. We very much rely on the quality of our people, particularly in terms of technical competence, and so we have to ensure the team is fully trained and accredited. But it’s about finding out what’s best for each employee as an individual and ensuring you train, motivate and reward them appropriately.
She is also convinced of the value of open communication at all levels. MCSA, for instance, holds regular get-togethers for the firm’s 140 staff to ensure they all know what the company is doing and where it is going. Managers all have open door policies and listening and acting on staff feedback is considered key.
For Venquis’ Parker, however, it is about ensuring that everyone is clear about the company’s vision and where they fit into it. He concludes:
Everyone wants to feel they have a purpose so it’s about creating a picture of what you’re trying to achieve and how you communicate that to the individual so they understand where they fit into it. It’s also about recognition and creating a culture where people feel they’re part of the discussion. So there are a lot of ingredients to staff retention and if you don’t get it right, people will vote with their feet.
Keeping hold of good workers makes sense whether there is a war for talent on or not. But as Claranet’s Wilton points out, you do not necessarily want to hold onto everyone all the time.
In his personal view, the optimal employee turnover rate is about 10% per year in order to bring in new blood. Any lower and “you’ve probably got complacent people and aren’t being tough enough on under-performers”. Which would sound about right to me.