CORPORATE LEADERSHIP COUNCIL

LITERATURE REVIEW

Beyond the Pay Raise: Retention

Tactics for IT Professionals
February 1998

• What do IT professionals value in a job?

• What reward and recognition tactics appeal to IT staff members?
• What career pathing and personal developmental opportunities may
companies offer to IT professionals?

This project was researched and written to fulfill the specific research request of a single member of the Corporate Leadership
Council and as a result may not satisfy the information needs of other members. In its short answer research, the Corporate
Leadership Council refrains from endorsing or recommending a particular product, service or program in any respect. Sources
are contacted at random within the parameters set by the requesting member, and the resulting sample is rarely of statistically
significant size. That said, it is the goal of the Corporate Leadership Council to provide a balanced review of the study topic
within the parameters of this project. The Corporate Leadership Council encourages members who have additional questions
about this topic to assign custom research projects of their own design.

Catalog No.: 070-191-906

 CORPORATE LEADERSHIP COUNCIL
THE ADVISORY BOARD COMPANY
__________________________________________________________________________________________________

600 New Hampshire Avenue, N.W. Washington, DC 20037 Telephone: 202-672-5600 FAX: 202-672-5700

TABLE OF CONTENTS PAGE

RESEARCH MISSIONS AND IMPERATIVES 2

STATE OF THE UNION: THE IT LABOR MARKET 3

 A Seller’s Market 3
With demand up and supply down, IT professionals are a scarce asset…and they know it.

 New-Wave Recruiting Techniques Increase Talent Sourcing 3

While leading-edge recruiting tools are sourcing IT professionals from their
current employers, retention becomes an increasingly critical endeavor.

 Initial Reaction to Retention Issue Compounding the Problem? 5

First generation retention tactics such as increased base salary and “payback
agreements” are enhancing—not stemming—the flight of IT talent.

 What IT Professionals Want in a Job: Survey Results 6

Results of a 1997 Computerworld survey indicate that IT professionals look to factors
beyond an attractive base salary in their employment decisions.

PROFILED RETENTION TACTICS:

I. REWARDS AND RECOGNITION 7

Tactic #1: Golden Handcuffs 7

Foster employment relationships by offering long-term compensation vehicles

Tactic #2: Patent & Publication Awards 8

Provide monetary rewards for employees earning patents or recognized
by trade organizations

Tactic #3: Voice of the IT Community 9

Reinforce the importance of the IT function by appointing a
departmental spokesperson and liaison

Tactic #4: Internal Fellowship Programs and Instructor Series 11

Recognize and leverage the internal expertise of IT professionals by offering
fellowships and instruction opportunities
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 2
TABLE OF CONTENTS
FEBRUARY 1998

TABLE OF CONTENTS (CONTINUED) PAGE

II. CAREER PATHING AND DEVELOPMENT

Tactic #5: Dual Career Ladders 13

Implement parallel career paths to provide multiple career options for IT
professionals interested in continued individual achievement or
management opportunities

Tactic #6: Star Tracks 14

For IT staff members not interested in managerial positions, Star Tracks
offers the opportunity to reach the senior levels of the organization

Tactic #7: Career-Planning Classes 15

Career planning courses encourage IT professionals to take ownership of
their career at the organization, as well as educate them on the benefits
of lateral moves

Tactic #8: Flexible Management Styles 16

Practice flexible management techniques to foster IT creativity and innovation

III. PERSONAL DEVELOPMENT

Tactic #9: Individual Learning Accounts 17

Personalized training accounts devolve upon employees the autonomy of
personal development with corporate subsidization

Tactic #10: Innovation Banks 18

Foster entrepreneurship by funding internal enterprises proposed by IT staff
members

Tactic #11: Personal Growth Leaves 19

Sabbaticals or leave programs offer IT professionals the time necessary to
pursue individual development…or just some time to “recharge.”

RESEARCH MISSION AND IMPERATIVES

Council staff has reviewed published literature and past Advisory Board research in an attempt to
synthesize the specific strategies employed by companies to retain information technology (IT)
professionals. In some instances, Council staff developed hypothetical models to illustrate further the
proposed concepts. This research brief contains footnotes to guide the reader to the relevant articles that
provide further descriptions of the individual tactics presented herein.
 BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 3
STATE OF THE UNION: THE IT LABOR MARKET
FEBRUARY 1998

STATE OF THE UNION: THE IT LABOR MARKET

A Seller’s Market

With the growth of electronic commerce, the rise of the Internet, the threat of Year 2000 systems problems and the
demand for computerized applications, information technology now more than ever represents a critical component
of business survival. In order to offer increasingly technology-based products and services to their customers,
companies are scrambling to recruit and retain the individuals that will support such services: information technology
professionals.

While the demand for such talent is increasing, the supply is not. The following statistics indicate that the IT talent
pool is not meeting the needs of the market demand.

ƒ 400,000 IT positions remain open worldwide1(19,000 within the United States2 alone)
ƒ Job openings and replacements in the US will demand 95,000 new IT workers annually until 20053
ƒ Only seven candidates exist for every 10 open IT positions4
ƒ Turnover rates for IT professionals have doubled, from 10 to 20 percent annually, since 1995.5

New Wave Recruiting Techniques Increase Talent Sourcing

Ele ctronic Sources Use d to Ide ntify Job Candidate s
With competition for IT professionals so fierce,
companies are focusing their recruiting efforts on
Internet 56% strategies most likely to identify and attract suitable
IT candidates. According to career services firm Lee
Resume Banks 37%
Hecht Harrison, electronic talent sourcing now
Electronic Job Postings 27% represents a primary means of companies’
recruitment efforts.6
Other 12%

None 12% Down from

60% in 1995
Disks/CD-Rom 6%

0% 10% 20% 30% 40% 50% 60%

 BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 4
STATE OF THE UNION: THE IT LABOR MARKET
FEBRUARY 1998

STATE OF THE UNION: THE IT LABOR MARKET (CONTINUED)

Companies are now combining more traditional recruitment strategies with newer technology-based systems to
maximize recruiting efforts. For example, Perot Systems, an information-services company, is utilizing a traditional
resume tracking system (Resumix) in conjunction with a web page in order to create an in-house database of
potential employment candidates.7 Additionally, Cisco Systems combined Internet recruiting with the relative
success of employee referrals to develop a Web Referral Network.8 Cisco’s strategy is presented below.

SAMPLE: CISCO SYSTEMS INCORPORATED (SAN JOSE, CALIFORNIA)

Some Current Recruitment Tactics:

• Web Referral Network matches prospective employees with current Cisco employees. Cisco employees provide
prospective employees with an intimate view of Cisco, screen candidates for qualifications and make
recommendations for future action
• Keyword activated web site matches applicants’ skills with job openings
• On-line resume bank
• On-line menus answer frequently asked questions about Cisco
• Targeted Cisco advertisements at specially linked popular web sites directed toward employees of top-notch
companies

Past Recruitment Techniques:

• Cisco Systems advertised on Boston’s leading electronic city guide immediately prior to the New England
Patriots/Green Bay Packer Super Bowl.

Results:
Cisco’s techniques have been very successful due to the quantities of people that they have been able to reach through
the internet. Cisco’s job’s page records as many as 500,000 accesses per month. In addition, the electronic city guide
that Cisco used on the night of the Super Bowl registered 2.5 million hits per day.

O’Brien, Chris. “Firms Scramble for Tech Workers” The News and Observer
(April 1997): A1.
Brichard, Bill. “Hire Great People Fast.” http://www.fastcompany.com/10/hire.html
(12 Nov 97).

In order to combat extensive recruiting efforts as well as aggressive “poaching” practices, companies must now focus
upon retention strategies to prevent the loss of key IT staff. Retention strategies may work in conjunction with
recruiting strategies, but companies must realize that although recruiting strategies may be successful in bringing IT
staff into a corporation, recruiting tactics are not successful tools for preventing IT staff from leaving.
 BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 5
STATE OF THE UNION: THE IT LABOR MARKET
FEBRUARY 1998

STATE OF THE UNION: THE IT LABOR MARKET (CONTINUED)

Initial Reaction to Retention Issues Compounding the Problem?

In light of current downsizing trends and cost-cutting measures, corporate executives are learning that replacing
information technology professionals is no small task, financially or logistically. Information technology employees
realize that they are in high-demand and frequently disregard employee loyalty issues. Companies complain that
“employees can be lured away these days with promises of state-of-the-art equipment, idyllic surroundings, even
large cash incentives to sign on for entry-level positions.”9 The estimated cost of replacing a senior database analyst
who earns approximately $60,000 a year is detailed below.10

Hiring Transition Costs Training Value of Lost

$9,400 $16,000 $12,600 Knowledge

Recruiting: $4,400
Search Firm: $5,000
+ Lost value created
due to inefficiencies
+ Training: $4,200
Lost Salary: $3,360
+ = $38,000+
(1 month’s salary) of departing and
incoming employees
Lost Created
Value: $5,040
$$$?

Initial reaction to improve IT staff retention focused upon two primary tactics: increased base salary and “pay back”
agreements. However, these practices may in fact be compounding the retention problem. According to a
Computerworld survey, a majority of the 200 respondents claim that base salaries are not as important as other
factors in their decisions.11

Corporations are also confronted with high turnover rates after providing IT employees with expensive educational
training or IT certification. Technical employees who complete degree programs or added coursework in their fields
are more marketable to outside companies. Some companies have taken measures to protect themselves from this
phenomenon by instituting “pay back agreements.” For example, Prudential Insurance Company of America
employees must sign a contract to stay on for at least a year or pay back a $10,000 training bill. The payback
agreement decreases to 50% of costs after one year.12

However, stay-on contracts or pay back agreements may do “I’ve heard of this kind of policy from time to time.
more harm than good. According to five IT professionals It clearly sends a signal to the employees that
surveyed in the article, these agreements reduce employees’ management does not trust them. Bad idea.”
loyalty to their organizations.13
Robert R. Dickson, Data Administrator
Family Restaurants, Inc., Irvine, CA
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 6
STATE OF THE UNION: THE IT LABOR MARKET
FEBRUARY 1998

STATE OF THE UNION: THE IT LABOR MARKET (CONTINUED)

What IT Professionals Want in a Job: Survey Results

While increased base salaries and pay back agreements served as “knee-jerk” reactions to retention attempts, they do
not effectively address factors that IT professionals value in an employment opportunity. By concentrating efforts on
factors desired by IT staff members, companies can implement retention tactics that are more attractive—and
ultimately more effective—than previous attempts.

Computerworld’s 1997 survey highlights the primary reasons that IT employees reject or accept job offers; these
factors are presented below in order of importance.

Computerworld’s 1997 Survey Results

Factors in IT Job Attractiveness

1. Quality of boss
2. Technology direction of IT department
3. Ability to use new technology
4. Job security*
4. Faith in financial stability of company*
6. More challenging assignments
7. Geographic location
8. Decision-making responsibility and authority*
8. Quality of IS peers*
8. Access to resources and funding needed to satisfy goals*
BIBLIOGRAPHY
11. Quality of top IS leadership
12. Base salary*
7-Recruiting and Retaining IT Employees
12. Ability to influenceNovember
the success of the IS department*
1997

*Indicates a tie.
PR Newswire, February 26, 1997
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 7
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION

TACTIC #1: GOLDEN HANDCUFFS

Foster employment relationships by offering short-term compensation vehicles

Practicing Companies: Cigna Corporation, Sapient Corporation, Sears Roebuck & Company, Texas
Instruments, Xerox

Profile of Tactic: Through the use of stock options, profit-sharing programs and performance-
based bonuses, companies allow IT employees to reap the benefits of overall
business success in addition to compensation traditionally provided by base
salaries. Tying rewards to business success also aligns employees more closely
with overall business goals; when combined with effective communication of
company strategy and performance this strategy, can help to establish a greater
sense of commitment to and interest in the company.

Sample Handcuffs:

Stock options: Stock options prove a valuable component of the rewards package as they allow
companies to provide near-term incentives without spending inordinate sums of
cash. The popularity of this tactic is confirmed by a 1997 Coopers &Lybrand
survey which found that a majority of 667 software firms use stock options to
reward technical professionals.14

The accelerated vesting of stock options is another tool provides a further

enticement to IT and other employees. At Texas Instruments, IT employees are
rewarded with stocks that vest in as little as two years, should the company
exceed stated expectations.

Performance-Based Bonuses: Companies may link bonuses to monthly, annual or project milestones.

Profit Sharing:

Texas Instruments15 1995 All employees received 14% of their base

salary in profit sharing bonuses

Sears, Roebuck and 1995 15% of annual cash compensation is tied to

Company16 company performance
Average increase given to IT employees was
10% or more

Xerox17 1997 All employees participate in corporate profit

sharing program; 1995-1997 participants
witnessed an average 10% increase in base
pay
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 8
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION (CONTINUED)

TACTIC #2: PATENT & PUBLICATION AWARDS

Provide monetary rewards for employees earning patents or recognized by trade organizations

Practicing Companies: Dell Computer Corporation, Everex Systems,

General Motors, Texas Instruments, Company C (Information technology
company that employs fewer than 7,500 employees and generates less than
$2 billion in revenue)

Profile of Tactic: Through the reward and/or recognition of patent applications and journal
publications, companies enhance an environment focused upon constant
innovation and individual achievement. Further, employees receive a level of
individual recognition often obscured in team-oriented corporate environments.

Companies may provide cash rewards or other public recognition for:

ƒ Patent application
ƒ Patent approvals
ƒ Articles published in journals
ƒ Recognition from professional associations

Sample Rewards:

REWARDING PATENT APPLICANTS

Application Filed Patent Issued
Dell Computer ƒ $1,000 in cash Typically allow awardees to
Corporation18 ƒ $5,000 in stock options cash in on stock options at
earlier date
Everex Systems19 ƒ $2,000 in cash Information unavailable
ƒ If multiple inventors, all
share $3,000
General Motors20 ƒ $250 in cash $750 ($2,000 extra if
patented research is produced
or developed)
Texas Instruments21 Information unavailable Up to $175,000 in bonuses
per patent

SAMPLE: COMPANY C PUBLICATION AWARD PROGRAM

Award: $700 for Tier One publication

$350 for Tier Two publications
(Difference between Tier One and Tier Two publications
determined by company; not disclosed to Council staff)

Eligibility: All employees

Nomination/Selection: Contingent upon publication

Recognition: Employees receive public recognition at departmental meetings.

Recipients are also recognized on plaque, and are featured on the
company’s intranet.
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 9
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION (CONTINUED)

TACTIC #3: VOICE OF THE IT COMMUNITY

Reinforce the importance of the IT function by appointing a departmental spokesperson and liaison

Practicing Companies: International Paper, Prudential Insurance

Profile of Tactic: Corporations recognize the Information Technology function as a strategic

business partner in order to increase the retention of IT employees.

1. Appoint an IT department spokesperson/liaison. The department liaison

allows the CIO greater freedom to work with the CEO to develop the IT
strategy, IT budget and manage project workloads.
The responsibilities of the liaison include:

¶ Communicate departmental needs to the rest of the company

¶ Communicate departmental accomplishments to the rest of the
company
¶ Work with headquarters to ensure that IT employees are
provided with a state of the art work environment
¶ Work with human resources to ensure all possible endeavors to
increase developmental opportunities for IT staff will be
undertaken

SAMPLE: PRUDENTIAL INSURANCE COMPANY (NEWARK, NEW JERSEY)

Objective: Prudential’s new CEO authors a plan “to have a world-class IT

organization by 1999.”

Results: A new position is created to link IT with the rest of the

organization; Ms. Barbara Macescko is hired as an IT
Community Builder to serve as the voice of Prudential’s 6,000-
person IT function. Her responsibilities include:

♦ Identifying changing skill sets that are necessary among

different IT areas
♦ Serving as a liaison between IT and HR to address
compensation, recruiting and training issues
♦ Sharing best practices throughout the entire IT department
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 10
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION (CONTINUED)

TACTIC #3: VOICE OF THE IT COMMUNITY (CONTINUED)

2. Appoint an HR professional dedicated to the staffing needs of the IT

department. The responsibilities of this individual include:

¶ Staffing the IT department

¶ Training the IT department
¶ Serving to bridge any gaps between the human resources and
information technology functions

SAMPLE: INTERNATIONAL PAPER (PURCHASE, NEW YORK)

Objective: To build a “strategic relationship” between the corporate staff,

line employees and IT staff prior to investing more than $100
million in information technology over three years

Results: Creation of a new position of liaison/coach/translator/catalyst

“Too frequently the business people and the IT people speak in

different tongues. Having someone to translate not just the words
but the fears and feelings too is a progressive step towards harmony
and cooperation”
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 11
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION (CONTINUED)

TACTIC #4: INTERNAL FELLOWSHIP PROGRAMS AND INSTRUCTOR SERIES

Recognize and leverage the internal expertise of IT professionals by offering fellowships and instruction
opportunities

Practicing Company: The models outlined below are based upon information gathered from an
information technology company with fewer than 7,500 employees and less than
$2 billion in revenue

Profile of Tactic: Programs highlight the intellectual endeavors of technical or other professional
employees and focus attention on individual achievement, providing continuous
opportunities for the transfer of information and the development of intellectual
capital.

Internal fellowship programs and instructional opportunities are two ways to

recognize such outstanding performance.

Information Technology Fellows Program

Goal: To recognize the achievement of IT professionals

Possible Selection Criteria: 1. Managers nominate employees who meet agreed-upon selection criteria
9 Overall performance
excellence 2. Management team, or group of senior-level executives, select 10 finalists
9 Singular outstanding from all nominated employees
achievement, including
substantial cost savings 3. Fellows are announced to company through the following vehicles:
or development of new ƒ Company-wide or division-wide meeting
product
9 Tenure with firm
ƒ Corporate newsletters
9 Number of years ƒ Postings on company intranet, and/or Internet sites
experience in field
9 Recognition by external 4. Fellows eligible to receive:
professional association ƒ Change in title

ƒ Commensurate salary increase

ƒ Eligibility for larger, company-wide recognition programs
ƒ Stock allocation or decrease in vesting periods for stock
Benefits: ¾ Enhances professional status of valued IT
professionals
¾ Provides opportunity for company to publicly attest
to value placed on IT professionals
¾ Increases retention among IT professionals who seek
to achieve status of fellow
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 12
FEBRUARY 1998

RETENTION TACTICS—REWARDS AND RECOGNITION (CONTINUED)

TACTIC #4: INTERNAL FELLOWSHIP PROGRAMS AND INSTRUCTOR SERIES (CONTINUED)

Model Instructor Series

Goal: To highlight intellectual achievements of IT staff while

facilitating the exchange of information Possible Course Topics:

¶ Database creation
1. Company selects technical experts or senior executives to
teach a seminar class in their area of expertise. ¶ Advanced network
management
¶ Data mining strategies
2. Sessions typically last for 3 to 4 hours, but may last in excess
¶ Infrastructure architecture
of a full business day.
¶ Protecting intellectual
property
3. Company provides instructors with dedicated period of time
and all necessary materials and technology for developing ¶ The future of
course and support materials. telecommunications
technology
4. Description of course with a biography of the instructor is
posted on the company’s internet; this serves both to
advertise class availability and to recognize the instructor.
Care should be taken to design the biography in a way that
highlights skills of instructor and significant accomplishments
during their tenure.

5. Session held off-site or at corporate facility (when possible)

to heighten attention surrounding event.

Company C’s Instructor Series

¾ Description: Once a month, the company selects a technical expert or a senior

executive to teach a three- to eight-hour seminar on their specialty area; all
employees may attend seminars.

¾ Value of the Program: According to Company C’s human resources

director, the Instructor Series sends a message to employees that the company
values its employees’ expertise and professional achievements.
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 13
FEBRUARY 1998

RETENTION TACTICS—CAREER PATHING AND DEVELOPMENT

TACTIC #5: DUAL CAREER LADDERS

Implement parallel career paths to provide multiple career options for IT professionals interested in
continued individual achievement or possible management opportunities

Practicing Companies: BP Exploration, National Semiconductor

Profile of Tactic: Structured, parallel paths that offer advancement to IT employees in both
managerial positions as well as technology positions. Paths are comparable in
terms of responsibility, rewards and influence extends to the senior levels of the
organization.

A 1992 study conducted by Lincolnshire, Illinois-based Hewitt Associates

revealed that roughly 90% of large companies surveyed implemented dual career
ladders to retain their best technical staff and two-thirds of respondents reported
that their career ladders are successful.22

Critical Components for Common Factors of

Dual Career Ladder Success Dual Career Path Failure

; Allows vertical and lateral movement ; Employee confusion regarding purpose of dual
among paths structure
; Clearly defines paths ; Poorly-defined paths
; Customized to the technical needs of the ; Relaxed selection criteria for technical track
company ; Management track perceived to be more
; Stretches to the company’s highest levels rewarding and desirable
; Applies the same standards and expectations ; Inequality between paths in the following areas:
along both paths, such as: ƒ Compensation
ƒ Compensation ƒ Decision-making authority
ƒ Decision-making authority ƒ Influence/credibility
ƒ Influence/credibility ƒ Responsibility
ƒ Responsibility ƒ Salary and incentives
ƒ Salary and incentives ƒ Status
ƒ Status
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 14
FEBRUARY 1998

RETENTION TACTICS—CAREER PATHING AND DEVELOPMENT (CONTINUED)

TACTIC #6: STAR TRACKS

For IT staff members not interested in managerial positions, Star Tracks offers the opportunity to reach
the senior levels of the organization

Practicing Companies: “Ulysses Company” (Software development company that employs 11,000 and
generates more than $2 billion in annual revenue.)23

Profile of Tactic: A career path for software Executive Suite at Ulysses Integrates Seven Top
engineers to the chairman’s office, Star Tracks is a practical Software Engineers in the Firm’s Governance
example of dual career ladder strategy. Practice based on need
to leverage growing contingent of knowledge workers upon
whom businesses increasingly rely. C h airman 's O ffice
Chairman creates elite “Sponsor’s Council” at executive vice
president level for seven top software engineers/sponsors in
company. Once established at the senior-most levels of the S ponsor's C ouncil CEO
company, individual contributors provide counsel relative to
their own areas of expertise to executives exploring new
business opportunities. E x ecu tive V P E x ecu tive V P
D evelo p m en t M ark etin g

Four-stage “sponsor” track ties Sponsor ƒ Maintains network across and beyond company to stimulate,
different levels of technical leverage great ideas
mastery with appropriate levels ƒ Forms political alliances to promote new ideas, challenge status
of business contribution. quo, change strategic direction of company
Knowledge workers allowed to ƒ Plays active role in industry, professional associations,
concentrate on making technical government advisory committees
contributions without the
‘distraction’ of management Coordinator ƒ Provides project supervision to contributors
responsibilities. and Coach ƒ Serves as interface between hierarchical management,
professional track contributors
Ulysses reports 100 percent ƒ Begins working closely, maintaining relationships with people
retention rate at the track’s top outside company, suppliers, customers
level across the first five years of
its implementation, with less Contributor ƒ Independently carries out definable projects with pre-specified
than 10 percent annual turnover outcomes
down through the “apprentice ƒ Works across horizontal organization rotating among different
level.” process groups, units

Apprentice ƒ Becomes socialized, familiar with company culture

ƒ Learns critical dependencies, how to work with other knowledge
workers
ƒ Serves as assistant on projects while building basic skills
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 15
FEBRUARY 1998

RETENTION TACTICS—CAREER PATHING AND DEVELOPMENT (CONTINUED)

TACTIC #7: CAREER-PLANNING CLASSES

Career planning courses encourage IT professionals to take ownership of their careers at the
organization, as well as educate them on the benefits of lateral moves

Practicing Companies: PacTel Corporation, John Hancock Mutual Life Insurance

Profile of Tactic: Career management courses and workshops designed to provide employees with
the means to plan their career paths.24 Allows employees the autonomy to take
ownership of their career development and progress, a distinctly different
technique than traditional company-coordinated employee development
strategies.

SAMPLE: PACTEL’S CAREER-COMMUNICATIONS WORKSHOP (WALNUT CREEK, CA)

Duration & Eligibility—Two-day seminar is optional for employees, but required for
all management-level staff members.

Objectives—To help employees accomplish the following:

; Develop a realistic career plan
; Explore different career options, including lateral moves and
relocations
; Identify their skills, interests and values
; Learn about PacTel’s norms and how they affect careers
; Learn to communicate with their managers about career growth

John Hancock’s career-planning courses for employees similarly focus on the

opportunities associated with lateral career moves. The workshop entitled “Up
is Not the Only Way” discusses the various components of a satisfying career, as
well as the benefits of lateral moves.25
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 16
FEBRUARY 1998

RETENTION TACTICS—CAREER PATHING AND DEVELOPMENT (CONTINUED)

TACTIC #8: FLEXIBLE MANAGEMENT STYLES

Practice flexible management techniques to foster IT creativity and innovation

Practicing Companies: 3M, National Institute of Standards & Technology (NIST),

Hewlett-Packard, Saphikon Inc.

Profile of Tactic: Companies that encourage their employees to pursue challenging projects of
their own design reduce the risk of boredom and burnout in their key value
creators.

According to the R&D/KSR Career Satisfaction Survey, participants ranked

“too much bureaucracy” as the single least satisfying aspect of their jobs. 3M
addresses this concern with a “15%” rule that allows technical employees to
spend up to 15% of their time on projects of their own choosing.26 The
“freedom to choose [your own] research area” is a primary factor in retaining
individuals at NIST.27

Respect for technical skills IT professionals prefer mutual trust and participatory management from their
means little supervisors, according to interviewed individuals:28
“over-your-shoulder”
supervisory techniques or “I have complete freedom to work on any project I feel needs attention. From
consistent priority shuffling the time I started nine years ago, I have worked for supervisors who understand
that some people don’t need looking after. Right up through the short chain of
command, Saphikon has given people freedom to be creative.”
—Earle Rich, Engineer, Saphikon Inc.

“[I]f your business strategy requires you to be changing focus all the time, that
can be a real demotivator. If one week your project is seen as the hottest in the
world and then the company cancels it the next week, that doesn’t fly.”
—Bob Witte, Business Team Manager, Hewlett-Packard
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 17
FEBRUARY 1998

RETENTION TACTICS—PERSONAL DEVELOPMENT

TACTIC #9: INDIVIDUAL LEARNING ACCOUNTS

Personalized training accounts devolves upon employees the autonomy of personal development with
corporate subsidization

Practicing Companies: “Cedar Company”29 (Information technology company that employs 5,200
people and generates $850 million in annual revenue)

Profile of Tactic: In the model of cafeteria-benefits, accounts represent reserves of time and money
provided by the organization that IT employees may use for classes,
certification, internships or other educational experiences of their choice.
From the employer perspective, learning accounts constitute—beyond the
paycheck—a recruiting/retention lever. From the employee perspective, learning
accounts promote skill development and future employability.

Because IT professionals place high value upon staying marketable across time,
the opportunity to learn new skills is highly attractive. Individual learning
accounts strongly recommended for individuals in positions in which:
; Rapid skill obsolescence is a major concern
; Retention is crucial to business competitiveness
Sample Individual Learning Account Process:

January

$ February

March

Manager and employee discuss

Organization allocates timing and nature of experiences
learning time and money

ILA
Contract:

Across the next

90 days I will
perform the
following…
Employee documents Employee participates Employee draws up scope
experiences and shares in different “stretch” of learning assignments
with organization experiences into contract

Cafeteria-style Although it is difficult to quantify

Value of a Training Dollar
budget is cost savings with precision, it is $6,000
leaner: Cost of easy to conclude that a tailored $5,400
accounts approach to development yields $2,160 “wasted”
$4,000 40% Not
actually lower better results at a lower cost. The Applicable
training dollars
$3,000
than those of following example assumes only
traditional 60% of classroom training—but all $2,000 60% Applicable
to Employee 100% Relevance
training self-directed learning—meets Needs for Employee
Dollars Spent
programs employee needs.30 on Training

Employee Attending Standard Self-Directed

Training Courses Learning
(Estimate: 3 courses at a cost of
$1,800 per course)
 BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 18
FEBRUARY 1998

RETENTION TACTICS—PERSONAL DEVELOPMENT (CONTINUED)

TACTIC #10: INNOVATION BANKS

Foster entreprenuership by funding internal enterprises proposed by IT staff members

Practicing Companies: 3M, Eastman Kodak

Profile of Tactic: Corporate headquarters invites innovation through the ranks by “bankrolling”
and supporting employees’ ideas for new products or market opportunities.
Organizations with state-of-the-art research and development functions allow IT
professionals to pursue new ventures, while insulating them from the risks
associated with such projects if those employees attempted on their own.31

Funding internal enterprises establishes multiple benefits for both parties:

For the organization…

; Large ventures may be supported within the company as a
separate business
; Encourages employees to satisfy intellectual and/or
entrepreneurial cravings without leaving the organization

For the IT Professional…

; Presents the opportunity of large financial rewards if proposed
ventures succeed
; Provides valuable resources not available through conventional
means

Employee obtains research

grant to explore market
readiness for a new idea

$
$
Product
Champion
$50,000 $ $ $125,000 Product
$100,000 Champion
$75,000

Product Product
Champion Champion
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 19
FEBRUARY 1998

RETENTION TACTICS—PERSONAL DEVELOPMENT (CONTINUED)

TACTIC #11: PERSONAL GROWTH LEAVES

Sabbaticals or leave programs offer IT professionals the time necessary to pursue individual
development…or just some time to “recharge.”

Practicing Companies: Apple Computers, Silicon Graphics, Intel, Tandem Computers, Xerox

Profile of Tactic: A paid or unpaid leave of absence with full benefits and a job guarantee.32 For
IT professionals, an abridged eligibility period of generally less than five years
translates into absences of between six and twelve weeks. With disability costs
related to stress estimated at $75 billion annually in the United States alone33,
companies tend to offer sabbaticals as "burnout prevention.”34

Sabbaticals are a good alternative for companies that do not have extensive in-
house educational and development alternatives, yet need to retrain their IT
professionals to combat the skill obsolescence spurred by rapid technical
innovation.35 According to Hewitt Research Group, the primary reasons for
offering sabbaticals include the following.

; Avoid technical obsolescence

; Reduce job burnout
; Reward longevity on the job
; Use as a carrot to retain senior employees

Sabbaticals typically fall into one of two categories:

• Personal growth leave—Allows employees as much as a year off to

pursue an activity of their choosing. Educational activities such as IT
certification programs or extensive training on emerging technology
might be most appropriate for IT professionals.
• Social service leave—Allows employees a chance to work on a project
that will benefit the community. For example, Xerox’s Social Service
Leave (SSL) allows employees to work for a nonprofit service agency
for up to six months, with full pay and benefits.36
 CORPORATE LEADERSHIP COUNCIL
THE ADVISORY BOARD COMPANY
__________________________________________________________________________________________________

600 New Hampshire Avenue, N.W. Washington, DC 20037 Telephone: 202-672-5600 FAX: 202-672-5700

BIBLIOGRAPHY

Beyond the Pay Raise: Retention Tactics for IT Professionals

February 1998

Alexander, Steve. “The Best of the Best: Sears, Roebuck and Company.” Computerworld,
Date unknown: 18 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Austin, Nancy K. “Why Sabbaticals Make Sense.” Working Woman, March 1994, 19+.

Author unknown. “Computer Survey Reveals that Good Training, Good Boss Retain In-Demand
Information Technology Personnel.” PR Newswire, 6 February 1997: page unknown
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Author unknown. “Salary Incentives Alone No Longer Enough to Recruit, Keep Software Employees.”
Software Industry Report, 21 July 1997: 1
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Author unknown. “Turnover Soars in Information Technology Field,” EIU ViewsWire, 12 June 1997:
page unknown.

Bachler, Christopher J. “Workers Take Leave of Job Stress.” Personnel Journal, January 1995, 38+.

Baker, Stephen. “The Global Search for Brainpower.” Business Week, 4 August 1997: 46
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Bellinger, Bill. “Shortage Spurs Meeting.” Electronic Engineering Times, 23 June 1997
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Corporate Leadership Council. Forced Outside: Leadership Talent Sourcing and Retention.
Washington: The Advisory Board Company, (1998): 85-109.

Corporate Leadership Council. “Tactic #3: Individual Learning Accounts.” Compelling Careers:
Workforce Management Structures of the New “Employers of Choice,” (1996): 55+

Corporate Leadership Council. “Practice #2: Non-Managerial ‘Star Tracks’.” Perfecting the Labor
Market, Washington: The Advisory Board Company, 39+.

Crenshaw, Dana. “Breach of Faith.” Computerworld, 24 February 1997: 89

(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Caudron, Shari. “Motivating Creative Employees Calls for New Strategies.” Personnel Journal
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS
BIBLIOGRAPHY
FEBRUARY 1998

(May 1994). (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Deloitte & Touche. “Leading Trends in Information Service (1995)” quoted in Cafasso, Rosemary.
“Satisfaction Guaranteed.” Computerworld, 20 November 1995, and Ettore, Barbara.
“How are Companies Keeping the Employees They Want?” American Management Association
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Inc.).

Earls, Alan. “Retention Getters.” Computerworld, 9 February 1998: 82

(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Fillon, Mike. “Skills Retention Tension: How to Keep Your Star Staffers?” Client/Server Computing
(January 1997): 82 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Gaw, Jonathan. “Perks and Pay are Keys in Staffing the Digital Age.” Star Tribune (Minneapolis),
12 January 1998, 1D (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Gomez-Mejia, Luis R. et al. “Rethinking Rewards for Technical Employees.”

Organizational Dynamics, 22 March 1990: 62+
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Greco, Susan. “Unusual Incentives Help Boost Engineers’ Motivation.” EDN, 28 June 1990: 111
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Harrison, Lee Hecht. Survey ’97: Are You Using Technology to Recruit?
http://www.careerlhh.com/hrama97.html.

Higginbotham, Julie S. “1997 Career Satisfaction & Salary Survey.” R&D Magazine (September 1997):
R-V (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

King, Julia and Robert L. Scheier. “Want Training…Just Sign Here…” Computerworld,
24 February 1997: 89 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Ladendorf, Kirk. “Patents on Upswing: Austin Inventors Led Texas in ’96 Registering.”
The Austin American-Statesman, 13 January 1997.

LaPlante, Alice. “The 100 Best Places to Work in IS in 1997.” Computerworld,

http://computerworld.com, 6 June 1997.

Levering, Robert and Milton Moskowitz. “The 100 Best Companies to Work For In America.” Fortune,
12 January 1998, 84+ (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Lissy, William E. “Currents in Compensation and Benefits.” Compensation & Benefits Review,
January-February 1993, 3 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS
BIBLIOGRAPHY
FEBRUARY 1998

Messina, Judith. “Firms Boost Tech Pay in Heated Effort to Foil Rivals’ Search Engine.”
Crain’s New York Business, 14 July 1997: 17
(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Ristelhueber, Robert. “What’s Behind Management Pay?” Electronic Business Today

(December 1995): 42 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Roberts, “Wooing Wizards: Recruiting and Retaining Software Engineers.” PC Week, 30 October 1995:
A1 (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Rosa, Jerry. “VAR Shows How Common Sense Can Help Good Employees.” Computer Reseller News,
7 October 1996: 47+ (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Solomon, Charlene Marmer. “Keep Them!” Workforce, 9 August 1997): 48

(Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Vohra, JS Lakinder. “Online Recruiting Fills Positions.” Denver Business Journal,

9 August 1996: 27A (Obtained through LEXIS-NEXIS, a division of Reed Elsevier Inc.).

Working Council for Chief Information Officers. Stemming the Flight of IT Talent. Washington:
The Advisory Board Company (September 1997).
 CORPORATE LEADERSHIP COUNCIL
THE ADVISORY BOARD COMPANY
__________________________________________________________________________________________________

600 New Hampshire Avenue, N.W. Washington, DC 20037 Telephone: 202-672-5600 FAX: 202-672-5700

END NOTES

Beyond the Pay Raise: Retention Tactics for IT Professionals

February 1998

1
Stephen Baker, “The Global Search for Brainpower,” Business Week 4 August 1997: 46.
2
Bill Bellinger, “Shortage Spurs Meeting,” Electronic Engineering Times, 23 June 1997.
3Jonathan Gaw, “Perks and Pay are Keys in Staffing the Digital Age.” Star Tribune (Minneapolis), 12 January
1998, 1D.
4 Judith Messina, “Firms Boost Tech Pay In Heated Effort to Foil Rivals’ Search Engine,” Crain’s New York
Business 14 July 1997: 17.
5 Author unknown, “Turnover Soars in Information Technology Field,” EIU ViewsWire 12 June 1997: page
unknown.
6
Lee Hecht Harrison, Survey ’97: Are You Using Technology to Recruit?
http.//www.careerlhh.com/hr_ama97.html
7
JS Lakinder Vohra, “Online Recruiting Fills Positions,” Denver Business Journal, 9 August 1996 :27A.
8
Corporate Leadership Council, Forced Outside: Leadership Talent Sourcing and Retention (1998): 85-109.
9
Charlene Marmer Solomon, “Keep Them!,” Workforce (August 1997): 48.
10
Working Council for Chief Information Officers, Stemming the Flight of IT Talent (September 1997).
11
Author unknown, “Computer Survey Reveals that Good Training, Good Boss, Retain In-Demand Information
Technology Personnel,” PR Newswire 6 February 1997: page unknown.
12
Julia King and Robert L. Scheier, “Want Training? Just Sign Here…” Computerworld 10 March 1997: 1.
13
Dana Crenshaw, “Breach of Faith,” Computerworld 24 February 1997: p. 89.
14
Author Unknown, “Salary Incentives Alone No Longer Enough to Recruit, Keep Top Software Employees,”
Software Industry Report 21 July 1997: 1.
15
Robert Ristelhueber, “What’s Behind Management Pay?,” Electronic Business Today (December 1995): 42.
16
Steve Alexander, “The Best of the Best: Sears, Roebuck and Company,” Computerworld: 18.
17
Alan R. Earls, “Retention Getters,” Computerworld 9 February 1998. 82.
18
Shari Caudron, “Motivating Creative Employees Calls for New Strategies,” Personnel Journal (May 1994).
19
Susan Greco, “Unusual Incentives Help Boost Engineers’ Motivation,” EDN, 28 June 1990: 111.
20
Ibid.
21
Shari Caudron, “Motivating Creative Employees Calls for New Strategies,” Personnel Journal (May 1994).
22
William E. Lissy, “Currents in Compensation and Benefits,” Compensation & Benefits Review January-
February 1993: 9.
23
Corporate Leadership Council, “Practice #2: Non-Managerial ‘Star Tracks’.” Perfecting the Labor Market
Washington: The Advisory Board Company, 39+.
24
Bill Roberts, “Wooing Wizards, Recruiting and Retaining Software Engineers,” PC Week, 30 October 30 1995:
A1.
25
Ibid.
26
Robert Levering and Milton Moskowitz, “The 100 Best Companies To Work For In America,” Fortune, 12
January 1998, 84+.
27
Julie S. Higginbotham, “1997 Career Satisfaction & Salary Survey,” R&D Magazine (September 1997): R.
BEYOND THE PAY RAISE: RETENTION TACTICS FOR IT PROFESSIONALS PAGE 2
ENDNOTES
FEBRUARY 1998

28
Ibid.
29
Corporate Leadership Council, “Tactic #3: Individual Learning Accounts,” Compelling Careers: Workforce
Management Structures of the New “Employers of Choice,” 1996, 55+
30
Ibid.
31
Luis R. Gomez-Mejia, “Rethinking Rewards for Technical Employees,” Organizational Dynamics March 22, 1
1990, 62+.
32
Nancy K. Austin, “Why Sabbaticals Make Sense,” Working Woman March 1994, 19+.
33
Christopher J. Bachler, “Workers Take Leave of Job Stress,” Personnel Journal January 1995, 38+.
34
Nancy K. Austin, “Why Sabbaticals Make Sense,” Working Woman March 1994, 19+.
35
Luis R. Gomez-Mejia, “Rethinking Rewards for Technical Employees,” Organizational Dynamics March 22,
1990, 62+.
36
Christopher J. Bachler, “Workers Take Leave of Job Stress,” Personnel Journal January 1995, 38+.

Professional Services Note

The Corporate Leadership Council has worked to ensure the accuracy of the information it provides to its members.
This project relies upon data obtained from many sources, however, and the Council cannot guarantee the accuracy
of the information or its analysis in all cases. Further, the Council is not engaged in rendering legal, accounting or
other professional services. Its projects should not be construed as professional advice on any particular set of facts
or circumstances. Members requiring such services are advised to consult an appropriate professional. Neither The
Advisory Board Company nor its programs is responsible for any claims or losses that may arise from any errors or
omissions in their reports, whether caused by The Advisory Board Company or its sources.