It's Cheaper to Keep 'em

By Chris Egizi

February 11, 2005: Retention and staff planning should take center stage as IT salaries begin to climb and your best and brightest go looking for greener pastures, writes CIO Update columnist Chris Egizi of Kforce.

After several years of downsizing, budget cuts and doing more with less, CIOs find themselves facing yet another challenge: how to keep their top IT talent from being lured away by the competition.

According to the Meta Group, IT professionals can expect to see salary gains of up to 15% over the next three years; an increase that is expected to push labor costs to 55% of IT enterprise budgets through 2007.

At the same time, IT hiring is on the rebound as previously shelved projects are brought back online. Combine the two and the result is an employment environment ripe for the exodus of top IT talent to greener pastures.

Smart CIOs have already figured out that the days of low attrition rates for IT staffs are coming to an end. As the market picks up, employees who were once willing to do more for less will no longer be satisfied with the status quo and will begin exploring their career options.

CIOs who haven't made retention a top priority or who underestimate the potential impact this trend may have on their organizations will likely find themselves struggling with major talent gaps in their IT departments.

However, by taking a two-pronged approach that incorporates comprehensive staff planning with effective retention programs, it is possible to not only generate employee loyalty, but also to ensure that anticipated personnel needs are met while top talent is still available.

Retention v. Recruitment

Recruitment, even in the best of times, is not cheap. According to Gartner, it can cost up to 2.5 times a departing employee's annual salary to recruit a replacement, including advertising, agency and/or internal recruiter and travel costs, as well as interview and training time and any incentives paid to the new hire.

Other indirect cost factors include lost productivity as the new employee gets settled in and possible declines in morale and/or productivity among remaining employees as they adjust to the change.

But the cost of recruitment isn't the only thing that should prompt a renewed focus on retention. The reality is that when the exodus begins, it's likely that the top IT talent will be among the first to go, creating a hole in IT departments that even the best new talent won't be able to fill, at least in the short-term.

When it comes to developing a strategic retention plan, it's important to understand that success rarely comes from simply throwing money at the problem. It comes from creating an environment in which talent, skills and creativity are rewarded. An environment in which IT pros feel they are key contributors to the company's success.

This requires investing not only in improved pay and benefits when possible, but also by recognizing that the No.1 reason employees leave a company is due to the relationship they have with their direct supervisor.

As such, a top priority of any retention program (and the best antidote to turnover) is management training and implementing programs specifically designed to open lines of communication that enhance positive interactions with managers.

These can be such things as regular meetings to gauge employee morale and to encourage employees to share their concerns and participate in the decision-making process expand skills. Other strategies include:

· Establishing education and training programs that help employees expand their skills and prepares them for advancement within the organization.

· Implementing incentive plans, promotion and career tracks that reward employees not just for meeting deadlines and budgets, but for improvements in soft skills such as collaboration, communication, leadership and team-building.

· Making retention mandatory including implementing formal programs that hold managers accountable for retention, such as tying specific retention goals to performance evaluations, compensation and development plans.

· Developing individualized retention plans that recognize the specific skills and needs of each IT team member and that focus on such things as development, work challenges and work-life balance.

· Developing a succession plan that identifies top talent for advancement as well as the next generation of talent who will fill vacancies as top performers move up in the organization.

Staff Planning

The other key to ensuring you have the strongest IT team possible, even in tight fiscal times, is to engage in strategic staff planning for the coming year.

In addition to ensuring that your core team doesn't wind up overworked, staff planning helps you to evaluate available internal and external talent in anticipation of future needs so you can recruit now -- before the cost increases -- as well as develop contingency plans for any staff augmentation that might be needed in the coming year.

Done properly a staffing plan can:

· ensure the best mix of talent;

· provide maximum flexibility in managing a changing business environment; and

· minimize staffing costs by identifying the right time to bring in consultants.

And, because it requires a comprehensive assessment of existing talent (full-time, part-timers and consultants) and future needs, the exercise of developing a staffing plan allows CIOs to maximize existing staff through such things as a cross-training program so they can move between jobs as demand dictates.

The first step in developing a staffing plan is to conduct a staffing resources assessment. For example, when we do this for our clients, we first gather detailed information on scheduling, timing, staffing, necessary skill sets and costs.

We then look at factors such as the:

· Availability of resources for upcoming projects, responding to new legislative requirements and/or achieving organizational goals.

· Alignment of existing resources and skill sets within the organization.

· Ability to request budget revisions or changes after the budget has been finalized.

· Inability to execute a plan due to lack of budgeted resources.

· Optimal mix of internal and external workers.

Once armed with this information, CIOs can identify skill sets that will be needed to round out their IT departments, set a viable staffing budget, and better plan resource allocation throughout the year and among projects.

Combining a comprehensive staffing plan with an effective retention program will not only help prevent negative ramifications such as missed deadlines or excessive overtime, but it will also improve morale and increase productivity.

And, in most cases, running an IT department with that sort of reputation will result in better performance as well as an improved ability to recruit and retain star performers.

Chris Egizi is vice president, Technology Consulting Services with Kforce Technology Staffing, a division of Kforce Inc.. He can be reached via email at cegizi@kforce.com.