Do you know what an EVP is? If you answered ‘no,’ it could be the reason there is so much turnover in your IT organization.
Attrition is a major problem in a tight tech talent market, but many organizations have only themselves to blame when employees leave for better opportunities.
“Turnover rates tend to increase when the economy is strong, because tech professionals are more confident in their ability to secure a better position, higher pay or a better cultural ‘fit,'” says Bob Melk, president at Dice.com. Turnover rates have been rising since 2012, according to Dice.com data, and it’s an increasingly large headache for HR professionals, recruiters and hiring managers.
“Turnover costs companies thousands of dollars in hiring, training, lost productivity and lost knowledge. When talent walks out the door, it impacts the workload of everyone else who’s left behind, as well as overall morale,” says Melk.
Leaders need to take action
An October 2015 Retention and Engagement report from IT talent management and staffing firm TEKsystems revealed that of the more than 400 IT leaders and 1,500 IT professionals surveyed, 42 percent of IT leaders and 43 percent of IT professionals say their organization struggles to retain IT talent. But while both groups acknowledge a retention problem, many have not taken action to manage the situation.
The TEKsystems data indicates organizations are not making an effort to define expected time-in-job, nor putting infrastructure in place to extend or replace skill sets, says TEKsystems research manager Jason Hayman.
Only 9 percent of IT leaders and 12 percent of IT professionals expect people to stay with their employer for more than five years, and 34 percent of IT leaders and 29 percent of IT professionals have no specific expectations for how long an employee will stay with the company.
“Retaining IT talent, in a market where the unemployment rate is under 3 percent for most IT roles, is incredibly difficult. It’s just too big a challenge for most organizations. While they want to retain their talent — and in some cases they believe they have programs in place to help mitigate turnover — most of those efforts are lackluster, at best,” says Hayman.
While 87 percent of IT professionals in the TEKsystems survey cite compensation as a motivation for turnover, there are other factors that can impact whether an employee stays or goes, says Hayman. Workers also want generous benefits packages, vacation time, work-life balance, professional development and continuing education, company equity ,and other programs – but those don’t do any good if employees aren’t aware they exist.
Just 32 percent of IT leaders and 41 percent of IT professionals say their organization has a clearly articulated employee value proposition (EVP), which goes beyond compensation to take into account all of the elements a company has to offer its employees-not just compensation, but also opportunities for career development, career path progressing and succession planning, work-life balance, culture and other company differentiators, Hayman says, but many don’t look beyond compensation and vacation time.
It is surprising that a higher level of IT professionals feel an EVP has been articulated – leading to the possible conclusion that IT professionals limit their definition of an EVP to compensation and benefits while discounting other factors. In addition, there are significant gaps in IT professionals’ awareness of benefits programs that could raise an organization’s standing and lead to improved retention, says Hayman.
For example, 78 percent of IT leaders reported there is an education/training/professional development benefit available in their organization, compared to only 38 percent of IT professionals. Seventy-one percent of IT leaders were aware of flexible and/or alternative scheduling options, compared to only 31 percent of IT workers.
“There might be programs in place to address retention issues, but these programs aren’t being communicated to employees. The gap between the percentage of IT professionals who report benefits and talent management programs exist in their organization, compared to the percentage of IT leaders who say the same, indicates communication is a serious problem,” says Hayman. In other words, while IT executives may believe they’re doing all they can to retain talent, those efforts might not be reaching the employees they’re targeting.
Show ‘em the money
Of course, compensation is still important, and businesses should make sure they are offering a competitive salary that’s in line with their industry and their local market, taking into account cost of living and to reduce the chance that workers will be poached by competitors who can pay more.
“A competitive salary is extremely important, and IT hiring managers must have a good understanding of the local market supply and demand for IT skill sets. Remember, you’re not just competing with other IT companies for talent-you’re competing with all companies who are hiring for IT skills, so salary bands must be competitive in the local market,” says Hayman. Even if compensation isn’t a major motivating factor, consider that opportunities for growth, employee development and continuing education are also critical for IT workers, he says.
“IT workers must constantly acquire new skills and refine their current ones in order to stay relevant in their field. Organizations that provide well-defined career paths and training and development opportunities will improve their ability to retain their top talent,” Hayman says.
Some workers will leave regardless
That said, human beings can be unpredictable and, despite your best efforts, they may leave anyway. The TEKsystems survey revealed that 80 percent of the IT professionals surveyed are willing to hear about new job opportunities, even when they are happily employed. That makes it all the more difficult for organizations trying to retain talent.
“This data indicates that when it comes to retention, organizations are their own worst enemy. While they’re experiencing the pain of attrition, they’re not doing the work to improve retention. IT organizations have to first accept that turnover is a reality and work to clearly articulate and implement a strong EVP that goes beyond compensation to encompass development and other factors. If they don’t have the capability to deal with that reality, they may need to rethink their workforce planning strategy,” Hayman says.