Never Let Them Go
Finding superstar employees is just the first step. Smart partner companies do everything in their power to keep them as well.
- By Fred Bayles
- May 01, 2006
The success of Berbee Information Networks Corp. can be measured in many
ways. The Madison, Wis.-based Microsoft Gold Certified Partner has opened
a half-dozen offices across the upper Midwest. Its customer list continues
to expand. It's seen an average revenue growth of 33 percent annually
for the past five years.
Berbee's success can also be measured by its growing staff. CEO Paul
Shain says the company, which offers a range of IT solutions, has been
adding about 20 new employees per month for the last 18 months, pushing
to its current roster of 700 workers. Yet Shain is equally proud of another,
smaller number: the scant two to three people who leave the company each
month for other jobs in an increasingly competitive market.
Shain sees Berbee's ability to retain its people as a major key to its
success. Although any lost employee is a negative, the departure of two
or three a month is nothing when compared to the 45 percent to 60 percent
turnover rate seen in the bloody competition for employees among Silicon
Valley firms during the last economic boom of a decade ago. "Without
the engineering resources, our business model really breaks down fast,"
he says. "That makes it very important for us to figure out what
works to keep our talented people." Berbee uses a combination of
tactics to maintain those admirably low turnover rates -- for instance,
having employees work with supervisors to develop career plans and offering
an incentive-compensation program tied to workers' contributions to the
Those intensive retention efforts reflect a challenge that many companies
are just beginning to grasp: The world's best strategies for bringing
new talent in the front door won't do you much good if you've got a steady
stream of experienced employees walking out the back. For that reason,
Berbee and other Microsoft partners rely on a variety of strategies to
keep their employees happy -- and on the payroll.
A Changing Employment Marketplace
Two decades ago, employee turnover was seen more as a nuisance
than a strategic disaster. There were plenty of other eager young candidates
hitting the job market to fill an empty spot. That all changed with the
IT boom of the mid-1990s, when suddenly there were more available jobs
than candidates. Now, with the job market recovering from the economic
downturn of earlier in this decade, it's becoming clear to many that a
company's survival depends on its ability to keep its workers.
"Some of the most successful employers are adapting to the mindset
that losing a talented employee is like losing a major customer,"
says Leigh Branham, an Overland Park, Kan., consultant who specializes
in employee retention.
"Some of the most successful employers
are adapting to the mindset that losing a talented employee
is like losing a major customer."
-- Leigh Branham, consultant and author of The
7 Hidden Reasons Employees Leave
So how do you go about retaining those assets so important to both you
and your customers? Conventional wisdom emphasizes the old standbys --
a golden handcuff of higher salaries and richer perks and benefits packages.
But HR experts say the increasing competition for workers raises the possibility
that someone out there can always outbid you. What that means, they say,
is you will have to look to other ways to keep your employees happy and
Branham enumerates some of these retention strategies in his book The
7 Hidden Reasons Employees Leave (American Management Association,
2005). Only one of those reasons, he says, has to do with money.
"Eighty-eight percent of managers still think it's mainly about
salary and benefits," Branham says. "But research indicates
people start disengaging from their jobs for many other reasons."
Branham's list includes less tangible causes of employee turnover, including
a perceived lack of appreciation by bosses, a shortage of opportunities
for personal and career advancement, a limited stake in company decisions
and an out-of-whack balance between life and work.
Although some of these issues are being addressed in the industry, Branham
says too many managers still have a mindset developed during the 1980s,
a time when a strong worker pool meant that few employees were genuinely
irreplaceable. But a look at some statistics from today and tomorrow should
prove a sobering exercise for those who still fail to see the importance
of an aggressive retention program.
As detailed in last month's management series article ("Hire
Power," April 2006), the twin forces of demographics and a steadily
growing economy have sparked increasing competition for employees, especially
the IT workers and system integration engineers that populate the world
of Microsoft partners.
The U.S. Bureau of Labor Statistics predicts that there will be 54.7
million jobs to fill between now and 2013 -- with the IT industry among
the fastest-growing sectors. Add to that the fact that 77 million baby
boomers -- people now about 42 to 60 years old -- will be hitting retirement
age between 2010 and 2020, making it difficult to find the bodies to fill
all the jobs. That means more competition just to keep existing employees.
Jennifer Schramm, manager for workplace trends and forecasting at the
Alexandria, Va.-based Society for Human Resource Management, says there's
evidence that the competition has already begun. "We've been doing
ongoing research over the past few years, asking employees what their
intentions would be when the job market improved," she says. "We
found there was a lot of potential build-up for movement. We're beginning
to see that movement now."
That movement will be costly for firms that aren't ready to stem the
flow of employees out the door. According to John Challenger, a principal
in Challenger, Gray & Christmas Inc., the Chicago-based employment-consulting
firm, the cost of replacing a trained professional can be up to 10 times
that person's annual salary.
"There are lots of repercussions and hidden costs when a key person
leaves," Challenger says. "It's not only the initiatives and
company-specific knowledge that's lost. It means projects are delayed
Shain, of Berbee, agrees. He says a steady turnover can be deadly to
a company when it comes to customer relations.
"We recognize this is a huge concern for our customers," he
says. "They make an investment in your ability to provide consistency.
If they feel you're training your people on their technology and systems,
it's going to be a much less successful relationship."
Advice from the Trenches
Tamara Erickson, a co-author of Workforce
Crisis: How to Beat the Coming Shortage of Skills and Talent (Harvard
Business School Press, 2006), and the executive officer of Concours Group,
a consulting firm with offices in Kingwood, Texas, and Watertown, Mass.,
says one of the most important steps in retention is making sure that
you're hiring the right people in the first place. Companies, she says,
must "brand" themselves as a definable culture to potential
employees in order to attract the ones who will thrive in their new environment.
"Some people want to work in a slow, steady, well-defined environment,
others want to work at a fast place. You can't offer both," she says.
"You have to define what you are right up front." (For more
tips, see "7 Tips for Keeping People on Board.")
7 Tips for
Keeping People on Board
In his book, The
7 Hidden Reasons Employees Leave, consultant
Leigh Branham offers recommendations for companies serious
about retaining their workers. The following list draws
on Branham's expertise and advice from other experts:
right in the first place. Fight the urge to fill jobs
with any available warm bodies. Hiring the wrong employees
increases the likelihood of their early departure --
and the cost of replacing them.
new workers feel welcome. New employees' first three
months are the most precarious. Reduce turnover by checking
in regularly to address potential problems. Consider
ongoing initiatives such as Incremax Technology Corp.'s
professional-development program to keep all employees
moving forward beyond the probationary period.
employees to think about their futures. Most professionals
want to advance in their careers. If you can tie their
goals to the ompany's interests, everybody benefits.
employees to think about the company's future. Nothing
distances people more than keeping them out of the loop.
Nothing vests them in your success more than including
them in strategic planning.
5. Pay attention
to industry wages. Keep compensation levels current
to prevent losing workers to competitors. Whatever you
pay in raises is probably less than replacement costs.
their lives easier. The days of expecting employees
to prove their loyalty with 80-hour weeks are over.
Younger workers want a good work-life balance; older
ones are deciding between retirement and less stressful
jobs. Don't drive either group away by requiring more
and more work.
7. Be fair.
If you offer options such as flex time and telecommuting,
apply the rules equally. The perception that someone
is getting special treatment can send others in search
of greener pastures. -- F.B.
Such is the philosophy of Jeff Grell, a senior vice president at Junction
Solutions, a Lincolnshire, Ill.-based Microsoft Gold Certified Partner.
Grell and the others who meet with job candidates paint a realistic, if
not slightly dismal, picture of what a job with their company would entail:
100 percent travel to set up Microsoft Dynamics AX at manufacturing plants
far away from the bright lights and fine dining of the big cities.
"We don't paint an overly negative picture, but we make it clear
that they will always be out in some little suburb or sleepy hamlet that
may be a four-hour drive from the airport," Grell says.
Very often that enticing picture will dissuade an applicant from going
further. That's fine with Grell. "I'd rather them not join up than
to come and leave early," he says. "It's quite an investment
to bring in a consultant, train them and get them up to speed. You don't
want to see that investment wasted in a couple of months when they decide,
'Hey, this isn't for me.'"
The importance of an arduous screening process for a new hire is fast
becoming dogma among managers and HR professionals. But where companies
often fail is in the next step: keeping in touch with the new employee's
thoughts and desires.
At Incremax Technologies Corp., a Manhattan-based systems integrator
and Microsoft Gold Certified Partner, president and founder Kerry Gerontianos
discovered that key employees were frustrated with what they perceived
as a lack of interest in how they wanted their careers to evolve and grow.
That grumbling stopped, Gerontianos says, after he instituted a system
of regular job reviews focused on professional development.
"When we ask engineers what they want, they are very clear about
keeping their skill sets up to date," he says. "I now tell them
'I'm going to push you very hard in that direction because I need you
to stay current.' It works well for all of us."
These job reviews also provide Gerontianos with other vital information.
If an employee says he or she is growing bored with an established long-term
project, he will rotate that person into a new job.
"To keep people, you need to keep them engaged in interesting projects
that allow them to expand their knowledge bases," he says.
The promise of movement within a company is another way to hold your
employees' interest. Some places encourage workers to try out new opportunities
within the organization -- and while some of the best examples don't involve
technology companies, their ideas can certainly apply to Microsoft partners.
For instance, Charlotte, N.C.-based Duke Energy lets people swap jobs
to see if it's the right fit. Lands' End, the Dodgeville, Wis.-based apparel
company, allows employees to try new jobs for two weeks before they decide
whether they really want to leave their old ones.
Overcoming Objections and Obstacles
Of course, some managers oppose the free flow of movement between jobs
and departments because they worry about losing their own good employees.
"There are some managers who try to hoard their talent, which doesn't
work for the manager or the company," Branham says. "The managers
might not want to lose someone to another department, but if people feel
they are at a dead end, they will leave the company anyway." For
that reason, he says, it's important to offer ways to overcome such resistance.
He talks of one small firm where employees can call the CEO's hotline
to complain if they think their loftier career goals are being stifled
by a controlling department head.
Another sure way to see a hemorrhage of departing workers is failing to
recognize that the 80-hour week and constant travel demands -- seen as
heroic in the last economic upturn -- are longer acceptable to many employees,
especially those who are just starting families.
"Younger workers value flexibility and a work-life balance the most,"
says Schramm, the researcher for the Society for Human Resource Management.
Schramm says programs such as flex time and telecommuting are perks that
carry no real extra costs -- good news for companies struggling with the
soaring price of health care and other benefits that are getting harder
Although Schramm says most companies surveyed by the society haven't
done much to add to those types of options, she expects that will change
in the next few years as the baby boomers start considering retirement.
When that happens, Schramm and others say, companies must begin to come
up with ways to keep this wealth of talent and experience from leaving
for other less stressful venues.
The retention of those senior employees will raise a multitude of tricky
issues. Challenger says that although many baby boomers may not be ready
to accept retirement, few are willing to keep working in high-pressure
jobs into their 60s. This creates questions that go to the heart of your
workplace's social structure. How will these long-time managers be managed
themselves as part-timers or contract workers? How will the younger employees
relate to former bosses now working for them?
Such are the hard issues that lie ahead for managers and human relations
professionals. For employees, however, the workplace will likely be a
kinder, gentler place. In order to keep them at their desks, Branham says
some of the tougher, my-way-or-the-highway managers will have to change
into teddy bears.
"The whole structure of companies, from the board of directors on
down, will come to see that you will have to communicate to the work force
to show that you have their interests at heart instead of a management
style that encourages a take-the-money-and-run attitude," he says.
"It will be a great time to be in the workforce if you are old or
young. It's just too bad that it took the economic changes to wake people
up to the fact they need to treat people better."