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Download this report on strategies for keeping top employees

published on September 24, 2002

Last fall, when the economy was in the midst of its downward trend, management consulting firm Hay Group was busy preaching employee retention strategies to executives. A year later, in spite of dynamic changes in the employment market— unemployment hovers around 6 percent— the group is as busy as ever.

That's because many workers are looking for new jobs, despite the sluggish economy and continuing downsizing. Yet, mention "employee retention" to some IT executives today, and you may be met with indifference. They may be thinking that retention isn't a viable issue because the economy and the layoffs that go with it make it an employer's market. If employees leave, they reason, that means one fewer worker who has to be laid off. On the recruiting side, they may believe that employees laid off from other companies will be knocking down the door of their HR department.

But that wrongheaded perspective can eventually destroy an IT department, according to Hay Group management experts, who report that job satisfaction is the key to lowering employee turnover rates, which are often twice as high in departments where employees are unhappy.

There's no doubt that motivating employees is more difficult these days, yet it's more critical than ever if tech leaders want to keep top talent.

Employees still moving on

Download Hay Group's paper, "The Retention Dilemma: Why productive workers leave— seven suggestions for keeping them," for an in-depth look at why CIOs should make more of an effort to retain employees. The report, published in 2001, includes a fact that could surprise many tech leaders— one-third of all workers plan to leave their jobs in the next two years.

The tightening job market over the last year hasn't changed that fact, said Alan Wolfson, senior consultant of Hay Insight and a contributing author to the paper.

Figures from the Bureau of Labor Statistics support Hay Group's findings. The BLA's "Quit Rate," or the number of employees who voluntarily resigned as a percentage of overall employment, was 24.1 percent from June 2001 to June 2002.

Those figures illustrate why tech executives should strive to retain their best employees, Wolfson said. As he pointed out, if the best workers quit, there's no guarantee a tech leader will make the right hiring decision or employ other high performers.

Strategies for retaining workers

Wolfson pointed out that even during a tight labor market, unhappy employees still want to resign from a job if they're unhappy.

"But a lot depends on the labor market, whether it will allow them to leave," he said.

But staying in place doesn't mean employees will remain motivated— if frustrated workers can't get jobs elsewhere, their commitment and work level may drop.

"Yes, they'll show up to work, [but] they'll be absent more, they may not work as hard," explained Wolfson.

To prevent workers from quitting, mentally or otherwise, executives need to focus on the following strategies:

Create opportunities for advancement.
  • Ensure good managers are in place.
  • Recognize people for a job well done.
  • Make certain employees feel you're using their skills and abilities to the fullest.
  • Make sure the pay is fair.
  • Ask bosses to coach employees.
  • Ensure that the staff knows the vision/direction of the company.
  • Listen for ideas from workers and use them if it makes sense to.

And that's just a start. Wolfson said leaders need to recognize that the state of the economy will affect how employees view the value of opportunities, inspiration, recognition, and fair compensation. "That's a real challenge for organizations— how to fully utilize people when you have less people and less levels," said Wolfson. Yet, even with less formal forms of advancement, managers can still motivate employees. It all hinges on the abilities of managers, making it essential that companies retain their best managers.

Tech leaders should begin by emphasizing that the IT organization still has a sense of direction.

"That puts a big premium on the leadership to talk and share things," said Wolfson. Rather than take the stance that the details of the business are on a "need to know basis," executives should be prepared to speak more openly with employees. This gives workers an opportunity to be heard and to provide input in ways they may not have had in the past.

Next, managers have to revisit what employees do and how they get rewarded. To implement any program that advances employees' skills, management has to really know staff competencies and be willing to invest time in training.

Give people more responsibility, more autonomy, and more opportunity to develop new skills, advised Wolfson. Ad hoc task forces are one way to empower employees.

In the end, IT leaders have to recognize that the same things that drive employee retention also drive high achievement.

"If you say you don't care and behave as if you don't care, it will transfer to them [remaining employees] and will affect their performance," said Wolfson.

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david southgate
writing for living.