Addressing the ProblemBy Gary Perman | Posted 06-27-2008
Why Retaining IT Executives Matters
Businesses usually shed talent to reduce overhead during an economic slowdown. Despite the subsequent infusion of talent into the employment pool, many companies hunt for skilled workers at a frenzied rate and, surprisingly, cry that they can't find the talent they need.
One reason for this contradiction is that many employers have not groomed and trained their employees for larger roles. As a result, they've created a chasm between employees and management.
Another problem is losing valuable employees to advancement opportunities at other companies. Recession or not, employees are jumping ship for better opportunities.
Lack of advancement is one of the primary reasons for employee turnover--a fact exploited by headhunters looking to "poach" disenchanted employees stuck in dead-end jobs. When I ask employees and business leaders what they look for in a new opportunity, rarely is "money" given as the reason someone considers leaving their employer. The answer is almost always the lack of career advancement opportunities.
"I have left a job and have known many who have left their jobs because the hope for advancement was limited or nonexistent," says Pete Murray, formerly a technology service manager with Goodyear. "It just doesn't have to be that way!"
Small firms feel the pain, too, particularly when they begin to grow. For years, Brian Dixon, health IT manager, and his colleagues at Regenstrief Institute, an Indianapolis healthcare organization, explained the risk to top management, but only now are they starting to listen.
"We started with an employee survey of our programmers, analysts, software engineers, project managers, IT support and help desk folks," Dixon says. "We asked a lot of questions about staff satisfaction (job, morale, if one is listened to by others, compensation, if the organization is a good place to work); management (whether our management team has made decisions that positively affect the organization, responds to internal issues appropriately, provides leadership); training and skills (access to opportunities for improvement and the tools needed to do your job); equity (I am treated fairly); communications (too little, too much); and environment (harassment, diversity). For each area, we used a five-point Likert scale to measure responses."
This brought the issue to the surface very quickly. In response, Regenstrief had several meetings with managers to discuss the outcomes of the surveys, and established a committee to work on solutions. "We are now working to change annual reviews to include career paths," Dixon says, "and top management is listening to our ideas on how to foster an environment that allows employees to grow into new roles in order to stem the tide of unhappy campers."
If this is such a widespread, common issue, why do companies shed their training experts during tough times? The simple answer is that executives believe they must drive down costs; everything else is secondary, as far as they're concerned. Pressure from investors to see a return on their investment--no matter what the cost to the overall health of the organization--also drives executives to make these short-sighted decisions. Amazingly, 60 percent of all companies have no succession planning of any kind, according to the Society for Human Resource Management in Alexandria, Va.
Addressing the Problem
Addressing the Problem
Some companies recognize this danger and proactively work to solve the problem. At Portland, Ore., software firm Coaxis, executives identified a specific gap in their internal staff development, including leadership development and succession planning. They have since developed a plan and a program to address these issues.
Coaxis is building these capabilities on the fly. It started a leadership and management development program and is working with director-level employees, with plans for subsequent phases for managers, supervisors and high-potential employees. "I don't think we're a company that currently exhibits best practice," says Mary Carvour, director of human resources for Coaxis. "But we are one in which management has recognized the need and has put a strategic HR department in place to do the planning and execution necessary to achieve best practice."
Before Owens Corning shut down three divisions due to the housing industry decline last year, Tony Friday, then the vice president of sales and marketing of the Homeowners Services Division, implemented a performance management system to reward all employees, regardless of title or position in the company. At the beginning of each year, every employee works with their supervisor to develop individual goals and metrics that support the organization's goals for the year.
Employees who meet or exceed their goals receive a bonus, generally in the form of a percentage of their annual salary or wage. If the company meets its goals, all employees receive additional compensation. If employees are not meeting their goals, their supervisor meets with them for coaching. Employees who continue to underperform are let go.
"The functional costs associated with high turnover can kill your business and send the wrong message to customers and job seekers," Friday says. "Rewarding the right behaviors is the key to any incentive compensation plan."
Friday's emphasis was on bringing in people with the right skills. One of his successes was the creation of a university-style in-house training program that gave employees a career path and helped create an aspirational culture within the organization. An added bonus was a partnership with local community colleges and universities, which helped employees gain credits toward a degree.
"We identified high performers within our departments and put them on a performance track," Friday says. "We worked to bring them up, focusing on their knowledge gaps and skills, such as increased training in software, programming, networks and team leadership skills. That meant putting them on a four-year plan to bring them up the ranks."
Other Owen Corning divisions soon took notice: The success of the program created a buzz throughout the organization and created a positive culture. Career advancement was taking place where it had been stagnant. "My focus is always on people," Friday says. "If you treat people well, they will take care of your customers. I implemented morale-boosting events, such as quarterly barbeques for employees and their families. People from other divisions looked at our division and wanted to get in, rather than our division's employees wanting to get out."
Another example: When Owens Corning switched from Timberline Software to SAP, it set up focus groups for employees to find out how this transition was affecting customers, employee workload and work groups. The company designated a champion--the go-to person--in each SAP team to oversee its implementation. The champions received special training in Kaizen Workstream, a lean manufacturing process that also works in service organizations.
"This process created a great amount of employee buy-in, because their opinions were valued," Friday says. "We looked at how this transition to SAP was going to impact employees' workloads and developed an internal help desk for employee support." This process contributed to the success of individual employees--not only as a positive retention-building effort, but also to reduce succession gaps.
By planning for succession, companies can reduce or even eliminate gaps that cause them to scramble for talent. Growth will always create more opportunities for hiring from the outside, but by using internal talent and resources first, a company is in a far better position to reduce turnover and increase profits.
Gary Perman is a certified recruiting professional and owns PermanTech, which specializes in recruiting technology executives, managers and engineers.
Tips for Grooming
Here are some steps that can help you reduce management gaps in your company:
Look for shortfalls. If a manager or executive were to leave the company tomorrow, is there someone who can step in and take his or her place? If not, you have a potential gap.
Evaluate whether all individuals are pulling their weight and adding value. Has each supervisor identified subordinates who are motivated by career advancement?
Identify high-performing employees who exhibit characteristics that justify advancement.
Seek employees who exhibit leadership traits and the ability to tackle additional responsibilities.
Establish career paths. Creating effective career paths requires two components: knowing the requirements for advancement to the next level and creating a clear definition of the skills necessary.
Deliver high-quality succession training programs, which align with business objectives. Take a hard look at the programs offered. How well do they align with the two universal goals of every executive: increasing revenue and cutting costs? Clearly, any training that improves employees' critical skill sets will add value to the organization. So will compliance programs and other mandated training initiatives, since they allow you to stay in business.
Mold employees by offering a mentorship program. Training time is expensive. Combine training programs and development assignments into experiences that focus on developing specific skills. This can help shorten the learning curve necessary for success. An in-house mentor can save a company a tremendous amount of expense both up front and in the long run.
Help employees develop their careers by allowing them to transfer into other areas and expand their skill sets when promotions aren't possible. This makes them more valuable to a company in the event an upper-level job opens. Many employees feel their careers are not stagnating when they are learning new skills and transferring into other areas of the company.