People power is key to bottom line performance

So how can companies ensure their investment in skilled workers pays dividends?

The IT industry is particularly susceptible to high staff turnover as people seek out new job challenges and more rewarding career paths. Due to the poor economic climate, the current turnover of trained IT staff in SA is not as high as it was in the past. However, this does not mean staff members do not want to move on. They may simply be biding their time until suitable positions become vacant.

The 2001 ITWeb IT Salary Survey showed that 54% of the 3 788 respondents wanted to leave SA, with 34% of the sample citing better opportunities for exposure and 20% listing economic factors as their reasons for wanting to leave. Lured by the promise of higher overseas salaries, the numbers of local candidates looking to leave are now so great that more and more independent consultancies are being established to facilitate off-shore recruitment.

On average, the period for retaining IT staff is one year and 11 months, while staff staying in one position for two years marks a real milestone for some companies.

Colin Smith, strategic HR and change management consultant for Meta Group South Africa, says: "Human capital management will continue to be a critical issue for CIOs to attract and retain highly skilled workers in a protracted, tight labour workforce environment with escalating IT labour costs. Despite major cutbacks in several industries, including the hard-hit technology sector, our research indicates that Global 2000 IT organisations are hardly being affected by the announced layoffs. The IT workforce shortage and escalating compensation for skilled IT workers is still an issue despite the recent market downturn, announced layoffs and unemployment figures.

It is important to grow talent proactively and look after the individual needs of employees.

Jill Hamlyn, MD, The People Business

"Through 2002/03, CIOs will continue to be pressurised to develop on-demand sourcing relationships and enterprise-wide sourcing strategies. They will have to build talent/skill pools and develop IT product portfolios with internally and externally consistent pricing. All this against a backdrop where the demand for IT professionals will outstrip supply, and by year-end 2001, Meta predicts that approximately 600 000 IT jobs will go unfilled in the US labour market.

"Even with the recent dot-com meltdown and economic insecurity arising from the terror attacks on the US, we believe that critical skills such as Java programming and the forecast demand for Siebel, Lotus Notes, and network specialists will continue to outstrip the current supply of trained and experienced resources through 2003."

Recent research by Meta indicates a continued focus on recruiting for "hot" skills (including C++, Java programmers, network engineers) and paying compensation premiums to retain existing talent. But research also found organisations where employee turnover is still too high (10% to 20%). Meta says this indicates an underlying retention problem due to environment dynamics and compensation imbalances.

Smith adds: "Furthermore, our research indicates that fewer than 5% of Global 2000 organisations use integrated human capital management processes for managing people and more than 80% have no knowledge of what they spend on hiring/rehiring, training and overall retention costs."

The financial drain caused by losing a staff member may not be immediately apparent. However, if companies consider the costs involved in temporarily filling the vacant post, advertising the post and recruiting a suitable replacement, training the new staff member and absorbing an inevitable drop in productivity, replacing a staff member can prove expensive.

En masse, these costs can be crippling. PricewaterhouseCoopers says 70% of Fortune 1000 companies cite lack of trained employees as their number one barrier to sustaining growth.

The cost of lost knowledge, skills and contacts when a trained employee leaves can be measured using a formula of 50% of the person`s total annual salary package, increased by 10% for each year of service.

During the time the post remains vacant, there is a 100% loss in productivity in that post, plus drops in the productivity of other employees who have to take over certain crucial tasks. The advertising and recruitment process can also prove expensive and time-consuming.

IT professionals usually want variety, challenges, recognition for their efforts, and a pleasant working environment.

Janette Cumming, director, Paracon Holdings

Once a new employee has been recruited, initial costs include training or orientation, business and office supplies, and the additional administration work to add the new employee to the payroll.

A new staff member typically operates at a 25% productivity level for the first two to four weeks after training and orientation. This increases to around 50% by week 12 and 75% by week 20. During this time, the new employee may make expensive mistakes and may require assistance from co-workers, causing drops in their productivity levels too.

In the IT sector, losing a key staff member halfway through a project can have a major impact on the project as a whole. A new employee may need months of experimentation to determine how the project has been designed, or may need to start again from scratch. Rapid staff turnover also has a tendency to drive up salaries in the industry, meaning added expense for all companies hiring IT professionals.

Crucial to curbing a high staff turnover is developing a corporate understanding of what employees want.

In contrast with the materialism of the 1980s and 1990s, increasing numbers of employees are now seeking job satisfaction and quality of life over mere financial reward. It would seem that people have come to realise that what they do with their working day is more important than what they earn for doing it.

Of course, if an employee can find a job he enjoys and earn top dollar for doing it, he is going to leap at the opportunity. Employers must therefore ensure their salaries match the going market rates if they want to retain their skilled staff. In the IT industry, employee "job-hopping" drives salaries up far faster than in other industries, so salaries have to be kept under constant review.

Respondents to the 2001 ITWeb Salary Survey said that annual bonuses, 13th cheques and performance bonuses were important factors in their overall job satisfaction. Other perks rated as important include medical aid, pension and provident funds, and cellphone, car and housing allowances. Besides the financial advantages for employees, these perks give employees the feeling that their company cares enough about them to look after them well. This inevitably helps to build company loyalty.

People don`t leave companies, they leave managers and leaders.

Jill Hamlyn, MD, The People Business

Jill Hamlyn, MD of The People Business, a consultancy specialising in facilitating staff communication and employee retention, says employees are not only "in it for the money".

"Financial reward is certainly important - perhaps among the top five priorities of employees," says Hamlyn. "However, more important is a sense of belonging to a company prepared to invest time and money in its people. It is important to grow talent proactively and look after the individual needs of employees."

Janette Cumming, a director of Paracon Holdings, an IT services and solutions provider, believes job satisfaction is just as important as a good salary package to the IT professional. She points out that any promises made during job interviews, salary reviews or performance appraisals have to be kept.

"It is key to review salary packages regularly. Just as important is job satisfaction - IT professionals usually want variety, challenges, recognition for their efforts, and a pleasant working environment."

What contributes to job satisfaction? The 2001 ITWeb Salary Survey revealed that local IT professionals rate holiday leave, flexible working hours and peer recognition as the three most important factors for job satisfaction. Some local companies have already increased basic leave allowances from 15 to 20 days as part of their staff retention policies.

However, smaller companies may not be able to afford longer leave periods for staff. In these cases, flexible working hours and working from home may allow employees the time flexibility they need to effectively juggle work and home life.

Andre Besselaar, head of Innovative HR Strategies, notes that the IT industry has a major advantage in that people can carry out their allocated tasks at any time and place using portable or multiple hardware systems, allowing for flexible working hours. However, most companies still prefer to see their staff in person and visibly working hard at the office.

In addition, training, career growth opportunities and recognition of achievement are important job satisfaction factors.

Cumming says: "Training is also a very important factor in keeping staff happy. If a course costs R30 000 to R100 000, an employee is going to find it difficult, if not impossible, to finance it alone."

There are no quick fixes. Improving communication and establishing a management style that works takes time.

Jill Hamlyn, MD, The People Business

Therefore, rather than draining company resources, sponsored training is likely to serve as a powerful incentive to keep top IT staff within the company. Making staff members submit motivations for sponsored training, or reaching agreements whereby the employees "work back" a number of years in return for training received may also discourage employees from moving on as soon as their training is completed.

However, Cumming points out that a truly unhappy employee will move on, regardless of any agreements signed or training received. He or she may simply decide to pay back the money due on the training, or the new employer may offer to pay back what is owed.

Employees are increasingly taking ownership of their careers, and recognise that they need to continuously refine and upgrade their skills. If ample opportunities for growth and development are made available within a company, they are more likely to stay put.

It is also important to ensure employees` skills and interests are properly aligned with their work assignments. A highly-skilled employee forced to work on mundane tasks is likely to become frustrated and leave the company. Assessing the competencies and interests of employees should be an ongoing task of middle management.

Hamlyn says one of the most important factors in retaining a productive workforce is simple, old-fashioned communication. "We find that once we have facilitated mature, open communication between all levels of a company, employees have a better understanding of how their company`s business works and how they fit into the bigger picture. If they have contributed to a change process, they have a better acceptance of it, and are less likely to feel dissatisfied and leave the company."

Leadership is another important issue in staff retention. Hamlyn points out: "People don`t leave companies, they leave managers and leaders."

Gone are the days of, 'I pay your salary, you do the work`.

Chris Sinclair, CEO, IQ Business Group, SA operations

Being a good leader is not something that can be done according to a set formula. Each manager has a unique personality and leadership style, and needs to tap into this to devise his or her own leadership style, taking into account the needs and values of each employee. Determining these needs and values can only be done through open communication.

"If you analyse the specific needs of people and help to develop their skills over a period of time, their productivity and commitment increases," says Hamlyn.

"There are no quick fixes. Improving communication and establishing a management style that works takes time. But it is important to note that the building block of the new economy is the individual."

Mosaic Software is a local company that is particularly proud of its low staff turnover rates. The company has a proactive staff retention strategy in place, but says a key factor in retaining staff is recruiting the right individuals in the first place.

"We believe that recruiting the right individuals in the first place is a fundamental element to the success of staff retention strategies," says Magda Harber, Mosaic HR manager. "Another factor is the induction process for new recruits. Mosaic Software also has a specific corporate culture that encourages personal growth and career development to ensure that employees advance with the company."

Mosaic Software CEO Willem van Biljon notes: "Without paying attention to the needs of staff and making them feel valued in the company, organisations` retention rates will continue to drop and recruitment costs will continue to rise."

Chris Sinclair, CEO of the IQ Business Group`s South African operations, says IQ grapples with the issue of creating a business environment that fosters motivation and innovation on a daily basis. "The problem calls for an entirely new approach. The answer lies in removing the traditional hierarchical organisational structure and bringing in flat meritocracies. We take the grind out of work and put fun on the agenda. Management becomes a service to the organisation, not a self-serving administratively heavy ivory tower."

Sinclair says that at IQ, people participate in the strategy and experience real life accountability and responsibility, while management provides a leadership-focused environment that provides them with the tools and mechanism to execute their roles. "Hierarchies can`t do this," he points out. "Gone are the days of, 'I pay your salary, you do the work`. We`ve invested too much time and energy in our people to lose them to this attitude."

Human resources experts also emphasise the importance of conducting thorough exit interviews when staff leave. These interviews can uncover patterns of dissatisfaction that need to be addressed, so preventing further staff losses in future.

In the US, where the average person has 9.2 jobs between the ages of 18 and 34, and the average IT worker remains in a job for around two years, corporations have been forced to reassess their staff retention strategies and offer employees what is most important to them.

Despite the current sorry state of the US IT market, competition for IT workers with the right skills is still fierce and HR professionals are reported to be pulling out all the stops to keep their best people on board. Incentives being offered include flexitime, child-care facilities, gym memberships and holiday trips.

The IT workforce shortage and escalating compensation for skilled IT workers is still an issue despite the recent market downturn, announced layoffs and unemployment figures.

Colin Smith, strategic HR, change management consultant, Meta Group SA

Because modern employees generally work longer and harder than ever before, many companies are also developing strategies to assist the whole person - not just the person as an employee. Sophisticated intranets offering specialised advice and assistance are being introduced to help employees maximise their time at home and work. These services often include news and chat facilities, links to timesaving services and shopping or travel discounts.

It appears that the stampede of IT professionals leaving SA has slowed down somewhat as available jobs dry up overseas. However, this has not stopped many people from packing up and leaving.

Abacus Recruitment IT consultancy says South African IT workers are still in demand overseas. Abacus director Org Geldenhuys says local IT professionals are sought after because they have high levels of training, a good work ethic and speak English. They are also known for being adaptable and hard working.

Geldenhuys says some of the skills that are currently popular with overseas companies include Visual Basic, C, C++, Oracle, Java, and Internet and Web development languages, as well as specialist technical skills in systems security and systems architecture.

Local IT professionals are sought after because they have high levels of training, a good work ethic and speak English.

Org Geldenhuys, director, Abacus

Abacus says that in 1999, for the sixth year in succession, SA had a net outflow of about 4 000 people - 8 402 emigrants against 3 669 immigrants. However, the company says the real number of people leaving this country is believed to be at least three times higher.

There are various reasons why IT professionals are leaving SA. In many cases, crime is the major catalyst. Employees with families, and those who have been victims of crime, or who personally know crime victims, want to leave for the sake of their families` safety. Other reasons for emigrating include better educational opportunities, healthcare and living standards. Many people are simply disillusioned about life in SA.

Many younger employees often want to go overseas simply to experience new cultures, travel and earn pounds or dollars. These professionals often return to SA within a few years.

However, there is little local companies can do to hold on to staff in the face of compelling reasons to leave the country.

Ultimately, it would appear that a company set on retaining its trained staff will be able to do so - provided it is prepared to listen to the needs of its employees and take steps to meet those requirements.

Quality of life has become a major factor in the new millennium. For many professionals - particularly those with young families - this can be more important than prestige or even money. Catering for these needs through perks, flexible working hours and other job satisfaction benefits may well make the difference between a costly, high staff turnover, and a productive and stable workforce.