Getting the A players

Borrow a few strategies from this play book for recruiting and retaining winners for your IT team

It was only a few years ago that most employers filled positions indiscriminately, often with high-priced contractors, consultants or permanent employees who weren’t necessarily the most qualified candidates. However, inhospitable economic conditions over the past two years have forced many to embrace a new mantra – quality over quantity.

Most companies no longer have the resources and flexibility to hire people who are not an optimal fit for the job. You must carefully determine which IT people and positions are business-critical, and the retention strategies needed to keep the best and brightest onboard. Now more than ever, it’s critical for IT leaders to develop and implement a comprehensive demographic-based recruitment and retention strategy to offer a compelling value proposition to the right employees in the most cost-effective manner.

The drivers of recruitment are different from the drivers of retention. To that end, pay will get you in the game but will not sustain you. According to People3’s 2003 IT Market Compensation Study, compensation is important but ranks behind challenging work environment, company reputation and benefit programs as the most effective attribute in attracting IT professionals.

To create a compelling offer, you need to provide a satisfactory and rewarding work experience through competitive compensation, challenging work, a variety of learning and development opportunities, work/life balance and individualized benefits.

While turnover is less significant today because of the surplus of IT talent in the job market, turnover still should be of concern because of its associated costs. Turnover typically costs from 100% to 250% of the base salary of a departing employee. Some of the costs are difficult to measure, but those that can be quantified include recruiter fees, cost of a temporary contractor, cost of manager’s interview time and administration, salary differential, sign-on bonus, employee training, productivity loss and relocation expenses. By gaining a clear picture of what it costs to lose your A players, you can begin to justify enacting retention initiatives that serve to mitigate these costs, and improve the performance and morale of the IT organization.

Use reward as a tool

In these tight times, many IT executives say they don’t have the budget to give their A players the financial rewards they deserve. To achieve the reward payout appropriate to an employee’s value to your organization, you don’t need to budget for more payroll dollars. Instead, you should distribute money differently.

Divide employees into three performance tiers. The top tier (superior performers) should receive significant payout. The middle tier (average performers) should receive awards aligned with the cost-of-living index. The third tier (those who don’t perform) should receive no increase. If your reward program doesn’t differentiate for superior performance, it will only promote mediocrity. Pay strategies designed to recognize and reward A players have been shown to significantly reduce turnover of employees key to company success.

Even in today’s tough economy, rewarding key talent and hot skills at the competitive market rate is still a critical element of an effective recruitment and retention strategy. Organizations should consistently track and benchmark their compensation strategies against peer groups in the market. By performing a competitive analysis, you’ll have a better chance of retaining your A players when business and market conditions improve.

Long-term incentive programs, if designed and managed properly, also are powerful recruitment/retention vehicles to link reward to a company’s long-term success. People3 research indicates that nonqualified stock options, deferred cash bonuses and incentive stock options are the most effective programs offered to IT employees. Although current economic conditions have lowered the value of stock-based rewards, it’s still considered an effective reward and retention tool when managed appropriately and communicated with a perspective of long-term growth.

More than money

Indirect financial rewards, non-monetary rewards and career development activities often are just as important and valuable to employees as direct financial rewards. The best benefit and recognition programs offer a variety of options to match an individual employee’s need.

Popular work/life programs reported in People3’s study include casual work environment, education/certification reimbursement, attendance at conferences and seminars, flexible work arrangements and company-matched 401(k) plans. Managers should be trained on how to effectively and consistently recognize employees and should be given a discretionary budget for “spot” awards to allow for immediate recognition of their direct reports’ achievements.

Compensation and benefits might get desired employees in the door, but culture has a significant impact on retaining them. Having a culture that supports a creative learning and development work environment is key to keeping IT employees.

Changing a culture doesn’t just happen, though. It takes dedication and consistent “walking the walk” to build, sustain and maintain a strong corporate culture. IT leaders must determine what type of culture is needed to drive the desired business results and clearly communicate that message to staff.

The trend is to look at employees as a whole, not just in the context of work. This means focusing on work/life balance; providing a flexible, comfortable and open work environment; and establishing feelings of loyalty and organizational support. Leaders and managers must be committed and supportive to ensure the success (and not abuse) of a flexible and open work environment. Understand what motivates your employees and develop programs that drive the desired behaviors.

In more difficult economic times, some companies tend to ignore the people issues because there are plenty of people available. They begin to view people as disposable.

The best organizations don’t do this. These businesses will be able to keep their best performers when the economy turns around, while firms that ignore their people issues will experience the greatest turnover and lower productivity and employee satisfaction.

Pittenger is president & CEO of People3, a Gartner Company specializing in human capital management strategies for IT organizations. She can be contacted at people3@gartner.com.