Free BMWs and Porsches, massage therapists who come to your desk, gourmet lunches prepared by an in-house chef, ski trips to Lake Tahoe. Join a dot-com or technology company and at least one of these perks is likely to come your way. These companies are grabbing headlines left and right with the flashy, seemingly expensive perks they use to recruit and retain employees.
While the dot-coms and technology firms are getting the press, mainstream companies are not standing on the sidelines. As competition for IT staff has reached record levels, retention strategies have become critical to the success of an IT department. In 1999 alone, 722,158 requisitions for IT workers were created, 60% of which were in non IT-industry companies, according to International Data Corp., a research analyst firm in Framingham, Mass. In 2002, there will be 846,000 requisitions overall. As retention has increased in importance, so have the number of ways to keep employees happy.
If you work in the IT department at an insurance company's corporate headquarters, you probably will not be able to wear your well-worn college T-shirts to work or have your dog hang out in your cubicle. However, you probably will get to dress casually, and you might even earn extra days off, get fancy dinners out with a date, receive $6,000 employee referral bonusesand possibly even win trips to Hawaii and Disneyland.
|Keys to retaining IT employees |
Good compensation packages are always key, but fun and nonmonetary items are becoming increasingly important to valuable IT staff. Which is most important? It depends on your workforce. A younger workforce will want more social events and compensation packages with higher risk and reward factors. A 30- to 40-year-old workforce is more likely to be concerned with job security and perks such as childcare and a training institute. Good leadership. The biggest key to retention is the quality of your management and leadership, says Paul LeFort, CIO and senior vice president of United HealthGroup in Minneapolis. Of his 3,000-person IT staff, about 10% are in leadership roles. Employees want good mentors and leaders they can learn from, he notes. Lifestyle issues. Offer casual dress. Consider childcare. Provide alternate work schedules and locations. For example, offer three- and four-day work weeks and telecommuting. Education and training. Technologies change quickly and so do the skillsets required to keep up with these changes. "Companies need to spend a lot of time making sure that their employees are getting a lot of training and are being used in a way that their current skillsets will not become outmoded," says Harris Miller, president of the Information Technology Association of America in Arlington, Va. Corporate mission. Offer stock options in the company to encourage corporate buy-in. Executive support. Make sure corporate leaders--CEOs, CFOs, and other nontechnical managers--are committed to and support IT. Recognition. Provide recognition for being creative and doing a good job. "If a boss or organization is really acknowledging creativity, employees won't leave that place--even if the place down the street pays $40,000 more," says Dick Dooley of the Dooley Group Inc. in Riverwoods, Ill.
Keeping IT employees happy does not have to break the department budget. While trips across the country might cost a bundle, IT managers are also using a number of inexpensive benefits to retain employees. Among these are casual dress (the further your office is from the company's CEO, the more casual you will likely be allowed to dress), alternative work schedules, book clubs, and recognition rewards.
"Retention always was important, but now it cannot be ignored," says Al Borenstine, president of Synergistics Associates in Chicago. Borenstine, who recruits CIOs, says retention is now among the top five functions of an IT executive's job. It's time to get imaginative
Retention used to be a twofold task, notes Harris Miller, president of the Information Technology Association of America in Arlington, Va. In the past, IT managers had to make sure their compensation packages (salary, bonuses, and stock options) were competitive and try to create some sense of corporate spirit within the department. Now, says Miller, HR and IT executives also must focus on employee lifestyle issues and education and training--and be creative at it all.
As an IT manager in a corporate environment, look at what you're competing with. One IT manager, who asked that she and her company remain anonymous, says her department occasionally awards Atlanta Braves tickets to recognize hardworking individuals. A bonus during busy times is a goody basket consisting of Surge cola, candy, and stress balls, along with a certificate for a "mental day off."
The manager, whose company is based in the South, recently sent her employees "applause" cards--digital pictures of the team with adjectives each employee's team members had used to describe the individual. Free key chains and pizza lunches are routine. IT folks also enjoy the corporate workout facilities, cafi, store, ATM, and soon-to-arrive dry cleaner and video store. While most of these are provided for employee convenience, the workout facilities are subsidized by the company and employees pay a nominal monthly fee.
Appreciation is big at her company, says the manager. Her boss even bought the book 1001 Ways to Reward Employees
, by Bob Nelson and Kenneth H. Blanchard, for each of his managers.
Google Inc., a search engine company located in Mountain View, Calif. (right in the heart of Silicon Valley), has an in-house chef. He provides free gourmet lunches and dinners, and was once a personal chef and caterer to the likes of the Grateful Dead. Google also has two massage therapists (part-time contract employees) who will come to your desk and work out the kinks you get in your shoulders when you've been working at your computer for too long. Employees can bring their dogs to work. The entire company took a ski trip to Lake Tahoe in February 2000.
The perks appear to be working. Cindy McCaffrey, director of corporate communications at Google, says the company has had zero turnover since its inception in September 1998. That's far below the national average of between 15% and 16%, as calculated by IDC.
|At a Glance |
Carlson Companies Inc. The company: Carlson Companies Inc. has about 1,000 IT employees in the Minneapolis area. The $31 billion company specializes in corporate and consumer travel, hospitality, and marketing. Its brands include Radisson, TGIFridays, Thomas Cook, and Wagonlit Travel. The problem: The company suffered from an extremely competitive IT marketplace--what some view as negative unemployment in the Minneapolis metropolitan area. The solution: Carlson adopted new strategies to attract and retain its staff: focus on retention; institute alternative work schedules; build a technology center with separate cafeteria and workout facilities catering to the long hours of an IT employee; offer a more casual dress policy than that allowed in other buildings on the corporate campus; provide employee-referral bonuses with retention incentives; give workgroups or teams budgets for fun--at least twice a year cover the cost of a golf outing, fancy dinner, boat ride, or other activity. The company is also considering flexible benefits that allow employees to choose their benefits based on a predetermined budget for each individual. If the employee's spouse already has benefits, then the employee could use these budgeted dollars for additional vacation time, optional insurance, or other benefits.
On the mainstream corporate side, IT workers might not get free gourmet lunches every day, but food often plays a role in keeping IT employees happy. Having food on-site offers the basic benefit of convenience, especially for companies like Google that are off the beaten path, but it also fosters employee morale and camaraderie.
If you're an IT worker at Carlson Companies Inc., for example, you can grab a quick breakfast or lunch at the Mega-Byte Cafeteria in the company's tech center. Separate dining and workout facilities (open 6 a.m. to 7 p.m. in order to accommodate longer IT schedules) are only a few of the benefits available to the 700 IT employees in the two-year-old building that houses Carlson's central infrastructure group. Dress is more casual in this building than in others on the Minneapolis-based corporate campus. Pricey and priceless strategies
Dave Zitur, CIO and vice president of finance for Carlson Leisure Group and interim CIO for Carlson Companies, says the company has concentrated on retention for the last five years. The approach is multipronged, he says. A variety of career paths and leadership training are important parts of the equation, as are alternative work schedules--from four-day weeks (either 32 hours per or four ten-hour days) to working from home.
The company has IT forums--basically semi-annual meetings where IT employees from Carlson's five operating divisions get together to hear about new initiatives, activities in different groups, and current business. At one recent forum, the division CIOs and CTOs cooked and served barbecue for meeting attendees. Carlson's recognition awards, called the WOW program in the tech center, offer monthly winners everything from movie tickets to airline passes. Winners also receive pins, which they can display in their offices. The pins are about the size of a tie tack and are either bronze, silver, gold, or diamond stars.
Deep in the trenches, workgroups have budgets for fun. "We try to make sure employees have the time and money to do something fun at least once or twice a year at the group level," Zitur says. These activities include group bowling, boat trips on Lake Minnetonka, golf outings, and, of course, meals out.
While he has not heard of any employees asking to bring their dogs to work and take time out to walk them, Zitur says that is not out of the question at Carlson. "If it works out between the employee and his manager, then it's OK," he says.
|CIO Dave Zitur added "fun" to Carlson Leisure Group's workgroup budgets. |
Like Google's strategies, Carlson's also appear to be working. Turnover among the 1,000 IT employees in the Minneapolis area has hovered around 12% for the last few years, several percentage points below the national average calculated by IDC.
And who better to recruit new IT employees than happy Carlson IT folks. The travel, leisure, and marketing company's bonus referral program pays $2,000 up-front if a recommended candidate is hired. For the next four years, workers receive $1,000 each year on the referred employee's anniversary date. It's better than paying a headhunter, notes Zitur.
For Karen Bruns, director, IT, in the office of the CIO, the retention strategies have been a success. Bruns joined Carlson five and a half years ago as an IT project leader in the marketing division. Bruns is the recipient of several WOW awards and sports her pins on an 8"x10" bulletin board in her office. For Bruns, the number one retention program is alternative work hours. "I usually don't come in until 9 a.m. unless there's a meeting," she says. Bruns is also a fan of the corporate eating facilities, noting she eats lunch at one of them every day. Training, recognition, and rewards
Like Carlson, United HealthGroup, the parent organization of managed care company United Healthcare, relies heavily on training and recognition rewards to keep its 3,000-person IT department happy, according to CIO and senior vice president Paul LeFort.
The Minneapolis-based company has a learning institute that delivers between 60,000 and 70,000 hours of professional and leadership training. That's about 20 hours of education each IT employee per year. United HealthGroup also offers IT workers management and technology training through distance-based learning. Through a video network, select individuals can earn their masters degrees from the likes of Stanford University. There are technical courses, such as Java, C++, and other programming languages; professional development courses, such as project management, giving presentations, and managing people; and leadership training through the Center for Creative Leadership.
|Lessons learned about employee retention |
Industry estimates put turnover costs at between $5,000 and $100,000 per employee. Framingham, Mass.-based analyst firm International Data Corp. (IDC) estimates the cost of IT worker attrition in 2002 will reach $7.6 billion. Recruiting is expensive. Headhunter's fees average 30% of an employee's annual salary. Ensure your compensation package is competitive. Look at salary, incentive bonuses, and stock awards. Retention should be a top priority. Don't just give it lip service. Get corporate buy-in. Bend the rules a little--i.e., extend corporate policies and perks down the IT ladder to lower-level managers. Set aside more money for incentive bonuses in the IT department. Set aside a budget for fun activities and training programs. Provide top-notch training. Technology changes quickly and IT workers want to keep abreast of these changes. Recognize a job well done. Set up an awards program. Pick monthly winners and have an annual raffle or party to celebrate all the hard work. Award prizes. Put winners' pictures in a prominent spot in your office or on your Web site. Have some fun! Take the staff to a ball game. Cater dinner from a gourmet restaurant. Take a boat ride. Go bowling. Give each team member a stress kit (a basket filled with cola, sweets, and stress balls).
The company's Star Award program offers recognition and, ultimately, the chance to win trips to Disneyland and Hawaii. Awards have been given for successful system conversions, new Web site designs, helping another group achieve its goals, or for working above and beyond the call of duty in order to make a delivery date, notes LeFort. The big prizes are awarded annually at a drawing held during a department wide social event, but IT individuals and workgroups are recognized monthly through the program. In addition to having their pictures on the Web site, monthly winners in this peer-recognition program are eligible for prizes such as dinners out or an American Express gift certificate.
Monthly winners from United HealthGroup's 10 IT sites, from as far away as Ireland, link up via video to participate in the annual Star Award celebration. Hi-jinks have included a step-dance demonstration from the folks on the Emerald Isle. The company gives away between $25,000 and $30,000 worth of prizes at the annual party. Along with big trips, IT employees can win checks for $500 or $1,000.
LeFort says these programs and others have kept his turnover to about 14%. His department spends several million dollars annually on the learning institute, masters programs, Star Award, and other retention programs. More employees are benefiting
While perks for IT departments are on the rise, not all companies single out these hard workers for benefits. At Textron Inc.'s corporate headquarters in Providence, R.I., the 16 IT employees enjoy the same perks as other HQ workers, says John Lincoln, director of information management contracts and services. These include free use of a fitness center (which also provides freshly laundered workout shorts, shirts, and socks free of charge), corporate parties and picnics, and recognition through the manager spot award program, a recognition program for all corporate employees. A group of IT employees received the reward earlier this year for their hard work (including over the New Year's holiday) on Year 2000 issues. Textron has aircraft, automotive, industrial, and finance businesses.
Whether or not IT employees enjoy special perks depends on how critical IT is to the company's overall mission. Data-rich industries such as insurance and retail are more likely to offer perks beyond the norm, says H. Michael Boyd, Ph.D., a program manager in the human resourcing strategies program at IDC.
Boyd says large companies have been providing many "fun" perks for awhile, but only recently have begun extending them deeper within the IT ranks. For instance, while a top IT executive may have been driving a company car and getting reimbursed for her children's private-school tuition all along, these benefits are now being provided to IT managers further down the corporate ladder. Today, IT leaders can often send more staff to conferences, distribute more discretionary income than managers in other departments, and reimburse for more tuition than generally is allowed in other areas of the company.
"IT people are prima donnas
in the market," Boyd says. "That's life. Companies have to do these special things." // Lisa Gandy Wargo is an Atlanta-based writer who has been covering IT and business issues for the past decade. She can be reached at email@example.com.
You don't have to spend a million bucks to retain IT employees. Here's a sampling of some low-cost programs being instituted in IT departments across the country.
Retaining IT employees does not have to be an expensive proposition. While trips to Hawaii are nice, you likely will only be able to award such a perk to a handful (or fewer) of employees each year. Some of the most popular retention programs are also the least expensive. Here's a sampling of some low-cost programs being instituted in IT departments across the country: Casual dress.
At Carlson Companies Inc., 700 IT employees in the central infrastructure group enjoy a more casual dress policy than groups working in other buildings on the Minneapolis corporate campus. Khakis and collared shirts are standard Tuesday through Thursday, jeans allowed on Friday. In the summer, these IT folks can even sport denim shorts on Fridays. Alternative work schedules.
Carlson has implemented alternative work arrangements for IT employees--everything from 32-hour weeks to telecommuting. "The retention program that is most popular with me is flex hours," says Karen Bruns, director, IT, in the office of the CIO. Bruns started as a project leader in another Carlson operating group over five years ago. Recognition rewards.
While not quite as cheap as allowing your workforce to stagger its hours, these rewards more than pay for themselves in employee loyalty and morale. Winners usually receive a certificate or some trophy-type trifle. At United HealthGroup in Minneapolis, they often get a dinner out or an American Express gift check, and their picture appears on the company's Web site. The company takes the program a step further by giving monthly winners the chance to win big prizes at an annual drawing--this is where the trips and large cash prizes come in. Dinners, tickets to sports events, and free lunch.
Don't think you have to take the whole department. One IT manager in the Southeast, who asked to remain anonymous, buys a pair of Atlanta Braves season tickets and gives them to hardworking employees as a sporadic bonus. Personal pats on the back.
These can range from saying "good job," and really meaning it, to cards with all the reasons you value an employee noted. Book clubs.
At Fujitsu Network Communications in Pearl River, N.Y., one employee took it upon himself to institute a weekly book club meeting during lunch. The fiber optics communications systems company pays for pizza or sandwiches while employees discuss not the latest bestseller but technical books and journal articles. Mentoring programs.
These pair new employees with experienced IT folks who have been through similar circumstances. At Fujitsu, the emphasis is on employees coming from other countries. Carlson has the IT Foundation program for college hires and the Smarts program for anyone in the company's IT department who is interested.