InformationWeek

September 28, 1998

Rebirth Of Loyalty

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Of course, no company is going to retain everyone. Some people care only about money and will leave when they get a better offer. Others will quit to pursue a unique opportunity, such as the chance to be part of a promising startup. Even workers who have made a commitment to their company won't be blindly loyal.

But by teaching IT managers to use hiring techniques, compensation, promotions, training, the opportunity to learn new technologies, and recreational facilities to engender loyalty, companies can significantly reduce their turnover rates.

Hiring Practices
Who you hire has a lot to do with who you keep, companies say. Rushing to grab someone with in-demand technical skills can be a mistake if that person quits in six months. Home Depot has found that it's better to take the time to try to identify people who are likely to stay. "Changing our hiring practices was the key," Milner says of the company's dramatic improvement in retaining IT workers. "Before, we weren't making good hiring decisions."

Home Depot was hiring talented people, but they weren't necessarily people who wanted to stay with the same company for a long time, or who were able to fit in with the company's culture, which stresses team spirit and unity. Home Depot does several interviews and testing to screen job candidates. "We try not to take people who want to move around a lot, even if they're talented and good people," says Milner.

Cellular One also relies on carefully planned interviews. Human resource executives look not just for technical skills, but also for the ability to fit into the company's structure and work well with colleagues. The company sometimes has the people within the organization with whom a candidate would work conduct interviews to get a sense of how the candidate may fit in.

Craig McKibben, who co-founded WRQ Inc. in Seattle, prefers to hire more experienced workers who can accept responsibility without too much management, rather than people right out of school. WRQ is also careful about hiring someone who has spent a few years in a large, structured organization. "We ask them specifically if they want to take initiative and ownership," says McKibben.

Compensation
While money isn't everything, it certainly counts. Companies need to pay IT people a competitive salary and provide good benefits to have any chance of keeping them. Careful use of compensation is also a good way to show IT workers that the company appreciates their work and is committed to them.

"We did an unscheduled salary evaluation this year and made a midyear adjustment for our IT staff," says William Bush, who manages a 20-person IT group at Universal Weather & Aviation, a travel-services company in Houston. "We also put in project bonuses, which went over very well." Only one member of Bush's team has left in the past year.

At Cellular One, programmers aren't held to a companywide salary scale. Instead, the company tracks salaries of other programmers in the Bay area and pays its people based on that information. Home Depot offers stock options as incentives across the company, but IT managers decide how many options each member of their team gets.

Steve Berman, president of Paladin Inc., a consulting firm, recently left his position as a managing director at Price Waterhouse (now PricewaterhouseCoopers), where he helped design a compensation plan that helped reduce the turnover rate from 30% a year to 9%. The company increased its bonus pool and reduced the time for vesting. The cost of the plan was more than offset by the money the company saved by reducing the turnover rate.

Promotions
Dan Costinett joined WRQ after his previous employer told him there weren't any positions available beyond the job he held. Experts say that won't cut it in this market; you have to give workers clearly defined opportunities for advancement. If the job is routine, providing the opportunity to do other tasks can also help keep a person on board.

Costinett used to answer the support line and pass calls off to someone else who solved their problems. At WRQ, he's responsible for solving each caller's problem--but he's also allowed to work on side projects when he has the time. "It's enough to keep me interested," says the 31-year-old, who started out as a Cobol programmer.