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September 28, 1998

Rebirth Of Loyalty

Companies find they must offer new incentives if they want to slow the turnover rate among their IT personnel

By Edward Cone

on Toledo, Webmaster for wireless telecommunications provider Cellular One in San Francisco, was recently offered significantly more money--and options--by a Bay area competitor. He was ready to make a move, but in the end decided to stay with Cellular One. It wasn't a lucrative counteroffer that kept him from leaving. When he thought about it, Toledo realized he cared enough about his co-workers, his managers, and the projects he was working on to stay at Cellular One.

"When I told my manager I was leaving, she said, 'But we have so much more to do,'" Toledo says. "The 'we' really hit me. This company makes a personal investment in my career, and I reciprocate by investing in this company."

As Webmaster, Toledo was interested in developing a Web-based training program. His superior approved the idea and gave him the resources he needed. That kind of support means a lot to him.

Conventional wisdom maintains that worker loyalty died when companies stopped promising lifetime employment. But many companies, struggling to cope with high turnover in their IT departments, are looking for ways to win back their employees' loyalty. They're finding that simply paying people more, or offering attractive benefits or flexible hours, isn't enough. They must make retention a corporate goal and make a commitment--which can take many forms--to eachemployee.

Last year, Cynthia Hauck, then the director of a software development group for Lexis Law Publishing in Charlottesville, Va., felt stalled in her career and considered leaving. She expressed her concerns to her superior, who arranged for her to meet with senior managers from different departments to find out what jobs were available. As a result, Hauck landed a promotion to a senior director of IT and now manages about 100 people, including engineering and operations departments.

"Through the company's actions, they've proven to me that they value me and my contribution," she says. "They've made a commitment to me to help me be successful, and because of that I'm willing to make that commitment to them, to help them be successful."

Analysts estimate that the average turnover rate for IT departments is between 12% and 18% a year; it's higher in some specialties and local hot spots. Given that each IT person who resigns costs a company tens of thousands of dollars in lost productivity, recruitment, and training costs, the need to retain people like Hauck has forced companies to rethink their retention strategies.

Recruitment experts say there's no single policy that can stem defections. Companies must provide the essentials--competitive pay and good benefits. Other perks, such as recreational facilities and the opportunity to work from home, can help retain staff. But to keep someone who's been offered more money,managers must develop personal relationships with employees.

When Cellular One hired Karen King as director of organizational development and training, one of her key tasks was to bring down the turnover rate throughout the company, but especially in IT. King introduced flexible working hours, tweaked compensation packages, and increased management training. Most important, she focused the company's IT managers on the need to develop a rapport with each employee. She won't say what the turnover rate was, but claims that it's come down by five percentage points in the past 12 months.

The Home Depot Inc. has also made retaining IT professionals a corporate mandate. Dana Milner, director of staff development for IS, reports to the CIO, and the company recently hired another person to look into what Milner calls "people practices" in the IS department.

The company revamped its hiring practices to screen out candidates who may not fit into its corporate culture. It now gives aptitude tests, evaluates problem-solving skills, and has several people conduct interviews to determine the candidate's goals, work habits, and attitudes. As a result, the turnover rate has dropped to 4% to 6% from 10% to 12% in recent years.

Given the current job market, IT managers may be skeptical that anything can reduce turnover. But Home Depot's Milner, for one, says many workers want to make a commitment to a company. "A lot of people, especially younger workers, want more than a new job every 18 months," Milner says. "They want a sense of belonging, acknowledgment, and recognition."