Thursday, August 04, 2005

Retaining People in Technical Jobs

Introduction

Since I work as a engineer in a high tech company, I have learnt a few things of technical recruitment. Having worked in the USA & India and seen a boom to burst to boom cycles, it is interesting to know that that average tech worker remains in a company for about 18 months - this is same in most countries. This raises two interesting questions:
  • Why do tech workers get antsy after a year and a half?
  • Why is it that tech workers remain an average of 18 months in a position.

Given the cost of employee turnover, it is important to know the reasons why employees leave.

Cost of Turnover

Various formulas place the turnover cost of an IT worker from anywhere from 1.5 to 3 times the persons salary. A $50,000 programmer could cost from $75,000 to $150,000 to replace. Why so high? A myriad of direct and indirect costs associated with finding, recruiting, screening, interviewing, hiring, training, and integrating a new employee. Another major hidden cost is lost business or projects left idle.

Why tech workers get antsy after a year and a half?

The reason they get antsy is partly in the nature of technical work itself. Many engineers feel they have finished their work when their project is functioning smoothly. If they cannot find another interesting position internally, or if they want to continue developing software or projects, they have no choice but to look elsewhere.

Recent studies of high-tech employees suggests that three main factors affect IT employee retention:

  • Work environment (e.g. challenging work, atmosphere, physical environment)
  • Educational opportunities
  • Quality of life

Compensation and benefits were mentioned but to a lesser extent. Most of them are aware of the demand for their services and know that all they need to do to get a salary increase of 12-15% is to put themselves on the job market again.

The need for challenging work is often a factor in the allure of the dot.com's. Not surprisingly, many companies find it difficult to provide a constant challenge for their high-tech workers. Sometimes the work is of a maintenance nature and not quite as stimulating. Notwithstanding the inability to provide a continuos challenge, companies strive to make the rest of the work environment pleasant in the hope of keeping their staff.

Business Life Cycle

An interesting aspect of the technical recruiting is its involvement with two evolutionary milestones in a high-tech business - its birth and death. When a high-tech startup (including the dot.com's) develops its business plan, one of the critical needs is the right technical staff. In a tight labor market this must occur early in the process and a recruiting firm is often employed.

Conversely, when a high-tech business is in financial trouble, the employees that catch wind before the ax falls quickly distribute their resumes through technical employment venues. So from this unique vantage point we learn which businesses are posturing for start and those that are closing their doors. Between those extremes, however, we hear the grumbling of the high-tech employee that are invisible to the employer they are about to leave. In the interest of finding another job they share information with recruiters that they don't share with their family or friends and certainly not with their former employer. And the most pressing question that employers have for them is why are you leaving?

Knowing the cost of hiring, several research studies have been done on employee retention. The results of these studies can be summarized as simple but effective formula for employee retention to be strictly followed:

  • They are selective about whom they hire. At least four people interview each candidate.
  • Hire only what they need. Avoid hiring for project only and then have to terminate later.
    Make them feel wanted and important to the company. They mentor new hires and emphasize a strong personal touch.
  • Office environment, build around the employee versus making them fit a mold. A personal space that is tailored to the individual makes the workspace pleasant

Some companies allow additional flexibility by letting their employees telecommute on a limited basis. Workforce automation tools such as Web-based Knowledge Management Tool allow companies to link their geographically dispersed workforce through a common interface.

Educational opportunities are very important to IT workers. A survey by the web portal ComputerJobs.com revealed the 93% of IT workers surveyed (2296) said educational opportunities were "critical" to their career. Getting the education to keep one's skills current in their work requires the type of flexibility to balance work and education. Learning should be an ongoing part of a company's corporate culture - but again flexibility is important to meet individual learning styles. Some people want formal classroom training while others learn best through books and on-the-job training. Budget training dollars for each employee - some are using this money to pay for degree classes at universities while others stock up on technology books from the bookstore."

Quality-of-life reasons for an employee leaving apply mostly to those relocating to another living environment and not to those making job changes within this region. We discovered many sought this area as an escape from the metropolitan maze of traffic, crime, congestion, smog etc. That area's waters and beaches are a strong attraction for those fed up with the rat race. This lifestyle attraction is key to the strategic vision of attracting IT workers. But it is important to note that those content with the quality of life are less likely to leave the region. However, high-tech employees motivated by primarily by compensation will follow the money wherever it takes them.

In an information technology economy shaped by knowledge-based workers, the financial cost of a technical member leaving is akin to robbery, embezzlement, or litigation. It is as financially horrific as the corporate knowledge that a high-tech employee takes when he unceremoniously walks out the door. And this is not a commercial problem alone. Projects stymied or aborted by lack of technical expertise are equally devastating.

Conclusion

Many companies today are aggressively pursuing measures to redefine the workplace in order to minimize turnover costs and intervene early into situations in which a critical member may be taking flight. In some larger firms an "Office of Retention" has been created to be a focal point for retention matters. This office can easily pay for itself by keeping a key employee. Making the workplace challenging and pleasant has now become bottom-line driven as retention will play key role in the success of the company.

3 comments:

Kalpana said...

I am amazed at the varietry of subjects you have dealt with. I think I can find answers for just about anything that I might currently be struggling with.

Thanks for inviting me to your blog.

Kalpana Ganesh

Ashok Kumar said...

Unemployment is the worst case, but these can be minimized through education to everyone. In India, Government has made compulsory education to the all the children's and i hope in future there are more job openings and everyone gets benefited.

Karthik said...

Nowadays there are more job openings available for freshers and experienced persons in various categories. Just apply to the jobs or register in the job providing websites, so that right jobs will be intimated based on the resume. Its a simple and a best way to get into the good job.