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Focus on Retention to Save Time and Money in the Long Run

Focus on Retention to Save Time and Money in the Long Run

Attracting and retaining information technology professionals is the job of an IT recruiter, right? Well, it may be true in theory, but in reality, the retention part of the job is often neglected. Consider the recruiter who has to fill 25 competitive IT positions per month. Just how much time would he or she have to dedicate to instituting retention programs? Furthermore, recent research shows that for every dollar spent by a company's HR/recruiting office, 90 cents goes to attracting and recruiting individuals and 10 cents to all other areas of the HR office, according to Barbara Mitchell, founder of the Millennium Group, an IT HR consulting company.

"Nothing is spent on keeping employees. What does that say about where our priorities are?" Mitchell asked.

The retention expert speaks often about this subject; she recently spoke at an Employment Management Association conference and at the ComputerWorld Technical Recruiting & Retention Conference. She has hands-on knowledge of what IT recruiters go through on a daily basis from her experience working in HR for two start-up companies — one in the high-tech field, the other in biotech — and as an HR director for Mariott Corp. for 12 years.

Mitchell said she understands the hectic lives of IT recruiters who are under pressure to perform, but she said her mission at speaking engagements is to empower them to do more.

"I want recruiters to realize that they play a major role in retention. So many are focused on the time to fill positions, but a better way to look at it is by asking how many of the people you actually hire are going to stay with the company," Mitchell said.

Finding the Time and Techniques

Grant Du Plooy is a senior technical recruiter for AFG Consulting, a 400-employee ERP consulting company. His position is strictly recruiting consultants with experience in implementation of ERP systems, such as Peoplesoft, for the Western region.

The IT specialists that Du Plooy recruits are highly sought after and it takes up all of his time and energy. In fact, the consultants that Du Plooy recruits are in such demand that he said he gets into a "shoot-out with another company" for each candidate he tries to hire.

While he does not spend time developing retention programs, he said they are crucial to the success of AFG's projects and the development of the client base.

"Retention is very important. It's more cost-effective to retain a person, especially if recruiters are used. The cost per hire can be very high — $5,000, $10,000 or more. Investing money in retaining people is crucial," Du Plooy said.

Although Du Plooy focuses all of his attention on attracting consultants who can implement ERP software, AFG does have retention programs in place developed by executives at the company. The most effective retention practice is the retention bonus.

"Retention bonuses are project-related. Sometimes the implementation of a system may take 18 months, so we will offer a retention bonus after 20 months," Du Plooy said.

Statistics seem to support this strategy. According to the Pinnacle Publishing Oracle Developer salary survey, respondents stated that retention and similar types of bonuses are desired by employees far more than they are granted.

The retention bonuses vary by position at AFG, but they are all given in lump sums between $5,000 and $25,000. Du Plooy said he often tries to recruit talented employees away from other companies and sometimes the only reason they are staying is because they are waiting for their retention bonus to come in.

But retention bonuses are not the only bonuses that AFG has. All AFG employees are given bonuses after staying a year at the company, according to Du Plooy. The amount of the bonuses varies upon position, and higher bonuses are given for those who have stayed more years. The recruiting staff is also compensated when candidates they recruit reach the year milestone, Du Plooy added.

Another retention effort by AFG is the use of employee surveys to determine how well AFG is doing as an employer. Du Plooy said that these help human resources gauge what benefits their IT staff enjoys most and what areas they can improve upon.

All of these retention efforts have helped AFG keep a lower turnover rate — something hard to do in such a competitive field as ERP software implementation and consultation, Du Plooy said.

"Our retention efforts have been very successful. Our turnover rate is at 19%, and the industry average is 25% or higher," Du Plooy explained.

Mitchell said that surveying employees about their needs should be conducted by all companies in order to implement retention programs that will work the best for them. "There is no one retention strategy that will work at all organizations. You need to know what's important to your employees. Surveys will do this, but they need to be done continuously because employees. needs change," Mitchell said.

Mitchell warned that retention bonuses do not always work because aggressive recruiters elsewhere will still lure talented IT workers away with sign-on bonuses that are larger than their retention bonus.

"At the EMA conference, someone said, 'Stock options used to be a good retention strategy, but now workers will go to another company that will give them a sign-on bonus worth more than their stock options.' Organizations are struggling. IT employees now stay in positions for six months to a year," she added.

Influencing the Higher-ups

While some companies, like AFG, do have retention strategies in place, other companies could do much more. Often, IT recruiters know what they'd like to do to improve retention but feel they are too far down the line politically to bring about change.

Sharlene Moody is a high-tech recruiter for USWest. She is one of four who recruits high-tech employees for the company that has 50,000 employees — 5,000 of whom are IT. Moody said that she has been adjusting to her new position (she has only been at USWest for five months) because her previous employer in the semiconductor industry only had 2,500 employees. While retention is definitely an important issue, the reality of Moody's situation is that she only has so much time in her day.

"We're busy enough trying to find the right people to put in these positions. I don't think we have the time to put in retention, although it's very important and in our best interests in the long run," Moody said.

Moody recruits mid-level IT executives for USWest. She said that each month at least 400 requisitions for IT positions are given to her team of four recruiters. The 400 requisitions can represent more than 400 positions as well — with the implication that each recruiter faces a minimum of 100 requisitions a month.

While the workload may seem impossible, Moody said that recruiters for lower technical positions and entry-level positions rarely have a problem finding candidates, since so many seek employment with USWest. But for Moody's specific area — that of mid-tier management — she has her work cut out for her.

But regardless of her harried days, Moody says that she tries to devote time to retention by establishing strong relationships with candidates, determining the best job fit and then also finding out what perks and compensation will best keep a new hire happy.

"It is our role to ensure the fit with the candidate. This is one thing that we can do on the front end that can affect retention down the road," Moody said.

And one way she determines a good fit is by conducting thorough reference checks. She also tries to analyze the hiring manager's motives.

"I try to make sure that no one is making a hasty decision. Managers can get hasty, and candidates can get anxious. And some candidates are just motivated by money. It takes the effort of the recruiter to establish that relationship [with the candidate] and to do thorough reference checks," Moody said.

While the USWest IT recruiter does not actually spend her time creating retention programs, she does have firsthand knowledge of what makes IT workers stay and go. The first thing is current and cutting-edge technology. The second is money, and Moody said that her department definitely has an impact in that regard.

"We could have influence internally in regards to salary. We have a lot of contact with other recruiters and candidates, and know what the reality is and what the going rate is in the market," she said.

The best type of monetary incentive to keep IT workers, in Moody's opinion, is sign-on bonuses that are timed. For instance, a bonus can be given in increments, or stock options can be given once a candidate has vested. Since most companies offer performance bonuses, she said this is rarely the incentive that keeps IT workers. But if they know they will have to give a certain percentage of the sign-on bonus back because they haven't stayed with the company a specified number of years, they might think again about leaving, she explained.

USWest covers its bases by also providing "very nice bonus structures tied to performance."

She said it is a good rule of thumb that it is a normal time frame for a high-tech worker to stay with a company for two to five years. Since many IT workers are project-motivated, they may sign on with a company to work in a particular technology and to finish a project, but if the company appears not to have any projects coming down the pike that are challenging, they may go elsewhere. Therefore, recruiters would do well to find out what type of technologies an IT worker wants to work with after a project is completed. But Moody's office just doesn't have the time. She said US West does have a mentoring program and a "very formal" orientation program that may be effective in lowering turnover.

As far as creating retention programs and conducting studies, she thinks it would have to come from top executives at the company because IT recruiters, at least at US West, are far too busy.

This is where Mitchell comes in. Through her consultation and speaking engagements, she said that she hopes to motivate IT recruiters to come up with retention ideas and go to their HR directors or IT project leaders who they may be recruiting for. If a proposal is carefully and intelligently worded regarding cost per hire, turnover and a program to save the company lots of money, Mitchell said others will often stand up and listen.

"Recruiters have to be able to speak knowledgeably about the costs of losing an IT employee. The costs beyond the financial are staggering. When one leaves a team, what is the effect? There is a ripple effect down the line. Recruiters can help HR departments [with retention programs], but in order for HR to do a good job, they need to be a business partner with the company," she said.

Mitchell advised recruiters who feel they are too far down the chain of command to forward costs-per-hire and costs-per-bad-hire reports and then proposals for retention strategies, such as quarterly surveys about which perks are most valued, to their HR director. The director will then, whether in a meeting with staff or in communication directly with superiors, bring up the issue. But Mitchell said the key is to talk numbers.

"If you state that 'I have a plan that could potentially save us millions of dollars,' they'll take notice," she said.