paper) attracting and retaining is staff

Foundation Operational Excellence Report© Computer Sciences Corporation 1998

The scarcity of IS staff has reached crisis proportionspage 4

and is likely to get worse. The ‘downsizing’ business

environment of recent years has exacerbated the

situation, and there have been radical changes in

costs of both permanent staff and contractors.page 5 IS now needs to develop

a coherent strategy for the six-stage staffing lifecyclepage 6 so as to closely

integrate recruitment and retention practices. This will only work if corporate

management sees IS staff as a critical asset for business success.page 7

IS must seek staff beyond the traditional sources,page 8 and improve its search

processes, as is being done by General Electric Medical Systems.page 9 The

Internetpage 10 is developing as a recruiting tool, but has yet to live up to its

promise.page 11 To ensure that quality standards do not drop, IS must find new

ways of attracting high-calibre peoplepage 12 and innovative ways of making

contact with them. Cisco Systems is a prime example of good practice in

this area of recruiting,page 14 as is Texas Instruments.page 16

The hiring process is best aimed at long-term fit rather than short-term

need.page 18 The recruitment procedure needs to be speeded up to capture

the most sought-after people. A US-based energy company gets good

results by involving many IS staff in recruiting, Yahoo! sharpens its selection

process with the use of best employee profiling,page 19 and IPC successfully

deploys its Assessment Centres as an evaluation tool.page 20

Attracting and Retaining IS Staff

Guide

to the

Report


Where resources are scarce, retaining them becomes a serious issue.

One of the key retention factors is providing staff with interesting and

exciting work.page 22 Rabofacet Spectrum and Union Fenosa ACEX have

both created, in different ways, challenging work for IS professionals.page 23

Staff are also less likely to leave if they feel that the work environment is

organised to treat them as individuals.page 24 SAS Institutepage 26 shows what

can be done to provide a comfortable work environment, and Merrill

Lynchpage 27 demonstrates the improvement in staff satisfaction that

telecommuting can bring.

Escalating remuneration is a problem in most IS organisations. A financial-

services company in the United Kingdom has been successful in

dissuading staff from becoming contractors by finding creative ways to

determine employees’ priorities and getting staff onto competitive pay

scales.page 28 Compensation and reward policies need to be made more

dynamic and flexible. The UK Post Office has a range of bonus schemes

in place and is developing a ‘Psychological Contract’ based on the

‘cafeteria-style’ benefits concept.page 30

Another important factor affecting retention is the opportunity for learning

new skills. Companies furthest advanced in this field are investing in long-

term career development through Centres of Excellence and Coaches,

rather than episodic training.page 32 IS professionals appreciate efforts made

to encourage them to take responsibility for their own career

development.page 34 IBM is changing its culture in this direction, and already

has a structure and procedures in place to support it.


When improvements have been made to the retention factors – the

work itself, the environment, the compensation and the learning

opportunities – recruiters should select the features that appeal to each

type of IS candidate.page 36

Managing people moving out is an underdeveloped area of retention

policy.page 38 There are several ways of retaining staff who are thinking of

leaving or keeping the door open for rehiring them at some future date.

IS should maintain a good performance in the seven key factors that

motivate staff to stay,page 40 and combat scarcity with an integrated

recruitment and retention strategy that follows best practice at every

stage in the staffing lifecycle.

The design of this report anticipates electronic access, and is available on CSC’s

Research Services Website at <http://www.csc.com/researchservices/>. A copy

of the report will also be contained in the next release of Foundation’s

CD-Rom. All files may be copied onto your own intranet.

For further information, please contact:

Keren Monk: +44 (0)171 344 7890 [email protected]

Mark Malone: +1 (617) 520 1081 [email protected]


4Foundation Operational Excellence Report

© Computer Sciences Corporation 1998

The IS staffing scene has changed radically

Over the past three years, the media have continually flagged IS staffing

shortages. Surveys have reported unfilled vacancies (“190,000 in the

United States in 1997” – ITAA), the insufficiency of the education system

(“level of graduates in technical disciplines not keeping pace with

demand” – National Research Council), the effect on pay scales (“IS

groups paying 15 to 70 per cent premiums for ‘hot’ skills” – Meta

Group) and the impact on business (“one in ten companies will fail to

complete Year 2000 fix due to staff shortage” – Cap Gemini). One cynic

commented: “Unemployment among professional IS workers is so low

that the ‘unemployed’ are probably just stuck in traffic en route to

higher-paying jobs”.

Our research has shown that the IS staffing shortage is not just media

hype. Every single one of the organisations we interviewed puts the

problem of obtaining and retaining staff at the top of its agenda. None

has a shortage of all classes of IS staff, but they are all experiencing

difficulties in finding and holding some types of staff. It varies by

company and geographical region, but business analysts, project

managers, architects, network managers, package implementers

(especially SAP and Oracle) and networked computing developers are

particularly scarce.

Is the staffing shortage a temporary phenomenon? One school of

thought relates the shortage to the Year 2000 and the Euro, and believes

that when these are past the staffing scene will revert to normal.

Foundation disagrees. We see a strong demand for IS services continuing

post-2000. This will be in part because of the backlog that is building up

as organisations cope with Year 2000 and the Euro; in part because as IT

becomes ever more pervasive and a source of competitive advantage, new

technologies stimulate demand from the business. IS will face this

demand with a balance of skills that is inappropriate – too much legacy

knowledge and too little new technology experience. A Stanford

Computer Institute project concluded that the increasing demand for

software is accelerating the IS staff shortage, and the US Bureau of Labor

Statistics predicts a 90 per cent plus increase in computer jobs by 2005.

The IS staffing crisis is real, it exists worldwide, and it is likely to get worse.

This report proposes a rethink of IS staffing strategy in response to the

staffing crisis. Fundamental changes have already taken place in the

staffing scene. Staff shortages have always occurred from time to time, but

were temporary episodes – now they are chronic. Salary scales were

relatively stable over the years – now they are highly volatile for some


5Foundation Operational Excellence Report© Computer Sciences Corporation 1998

classes of staff. Freelancing used to be a risky venture – now the demand is

such that it is virtually risk-free. Freelancers used to be resented by internal

IS staff – now they are admired, and previously-contented permanent staff

are drawn to the contractor’s way of life. Systems maintenance was

regarded as a dead-end job populated by ‘legacy people’ – now they are the

heroes who will save the organisation from Year 2000 disaster. IS was

regarded as a young person’s profession – now the retired are being lured

back to work to help with the staffing crisis.

One aspect that has been largely ignored is the extent to which recent

corporate policies have contributed to the problem. The last seven years

have seen a lot of downsizing, outsourcing, divestments and acquisitions.

This has indelibly affected the attitude of staff towards the organisation.

IT staff were never known for their loyalty to the corporation, but now

they feel indifferent or even alienated from the business world in which

they operate. As one CIO put it: “Loyalty has gone out of fashion. The

young people we are hiring saw their loyal parents fired in downsizing

exercises.” Corporate attitudes to IS staff also exacerbate the situation.

Where IS is not seen as a core competence, IS staff are viewed as a non-

critical resource that can be bought and sold like a commodity. IS staff in

these organisations see much better conditions elsewhere, and are highly

likely to leave. Often, the only way to fill the gaps is with contractors. As

contractors’ rates rise, more staff are tempted to leave and become

contractors, which forces the organisation into a bidding war. This

downward spiral soon escalates a skills shortage into a full-blown crisis.

Staff treated as commodities

Skil ls shortage develops

Contractor rates skyrocket

Loyalty erodes

Staff begin leaving

Shortage becomescrisis

Bidding war eruptsMore staff leave

Staffing logic:Staff are an abundant,non-critical resource

The staffing shortage is not only a

supply and demand problem.

Corporate policy can make matters

worse if it puts a low valuation on IS

and assumes that IS staff are

expendable. This drives the scarcity

problem into a downward spiral.




A strategy for the entire staffing lifecycle is needed

Our research has led us to see recruitment and retention as two sides of the

same coin. Good retention practices help recruiters attract high-calibre staff,

and good recruitment practices avoid false promises that lead to staff

frustration and subsequent defections. These two are therefore intimately

linked, and yet in many IS departments there is no policy that connects them,

nor are they associated in practice. There needs to be strong integration of

the activities that take place at each stage in the staffing lifecycle.

This lifecycle starts with identifying candidates who have the qualifications to

work successfully in your organisation. The next stage is finding ways to

attract those candidates so they want to join you. These two steps have

become much more important in the current climate of demand exceeding

supply. The third stage is hiring the right people. Many organisations have

had to streamline their procedures to move as fast as the marketplace

requires. The fourth stage is creating an attractive working environment

into which the new recruit will be integrated. Then comes the challenge of

developing productive and committed employees, by attending to their

career development needs. The final stage is managing the process of

leaving your organisation. If done well, this enhances your corporate image

and can prevent defections or encourage good people to return.

Unless these six stages are managed under a single coherent staffing

strategy, there will be disconnects that lead to high turnover rates. Most

companies we spoke to could give us examples: recruiters attracting

people by promising training, for which project leaders would not release

Staffingstrategy

1. Identifying qualifiedcandidates

2. Attracting qualifiedpeople

3. Hiring the rightpeople

6. Managing peoplemoving out

5. Developingproductive andcommittedemployees

4. Creating anattractive workenvironment

A holistic staffing strategy is essential.

If those responsible for recruiting are

not closely coordinated with those

responsible for retention (project

managers, coaches, office managers,

mentors and so on), staff will feel

deceived, frustrated and tempted to

leave. Each step in the staffing

lifecycle must be consistent and

mutually reinforcing.



Staffing logic:Staff are treated as

scarce, critical assets

Sustain relationships

Develop staff

Incorporate employees

Hire better people

Lure hig her-calibre applicants

Broaden candidate search

Lower turnover

Happy, productiveemployees

Staff fit better

Better candidates

Bigger pool

them; human resources hiring staff with the promise of work on new

technology, but systems managers allocating them to long-term projects

on obsolescent platforms; temporarily unassigned staff given

management training to fill vacancies on a booked course, but then no

opportunity to use their newly-acquired skills.

Here, too, corporate attitudes to IS staff are critical. Unless the staffing

strategy is implemented in a favourable corporate environment,

employees will not be convinced that they are valued citizens and will not

become committed and fully productive. The downward spiral described

in the previous section can only be avoided if the business recognises IS as

a core competence, and stops treating IS staff as commodities. Corporate

management must be seen, and felt, to regard IS as a critical asset for

business success, and IS staff as a scarce, valuable resource. With this

mindset, the business will aim to develop and nurture these human assets,

rather than buy and sell them; and make available an appropriate budget

for all stages covered by the staffing strategy.

The result is an upward spiral. IS will be able to broaden the search for

candidates, combatting the scarcity by developing a bigger pool from

which to pick. It will be able to keep the quality up by developing

attractive conditions that will lure high-calibre applicants. It will hire the

better people into an agreeable working environment and incorporate

them successfully into the teams. Its strong emphasis on training and

careers will develop the staff into happy, productive employees, and staff

turnover will steadily reduce. Even when staff leave, IS will take steps to

sustain good relationships with them.

This is much more than good theory – it is the sum of the best practices

we observed in organisations around the world. The following sections

describe examples of best practice in all six stages of the staffing lifecycle.

If corporate policy defines IS as a

critical asset and IS staff as a scarce

resource, the business will provide the

investment that drives an upward

spiral of recruitment and retention

activity, leading to a stable and

productive workforce.

CASE STUDIES




Become proficient in mining new sources of IS talent

The existing pool of IS talent is becoming over-fished, so many

companies are exploring ways to widen the pool. For example, CSC’s

UK Technical Services Unit, in addition to its regular graduate

recruitment, has set up an apprentice programme for 17- to 18-year-olds

that includes training in core IT skills.

IS departments are recruiting business experts as well as IT experts, to

help absorb the workload. IPC, the UK publishing company,

successfully incorporated marketing and circulation specialists into IS,

where their knowledge of the business has been invaluable.

In the face of the difficulties of recruiting externally, some departments

are seeking out IS talent that is lurking in other areas of the business.

Motorola in the United Kingdom found Degree-qualified employees

working below their professional potential on the manufacturing lines,

and in the last 4 years has taken 12 of them into IS where all but one

have blossomed into loyal and effective members of the team.

The search for Year 2000 and Euro skills is bringing long-retired

programmers back into the field. The father of one CIO told him: “You

never forget Assembler, son!”.

More and more organisations are spreading their nets not just nationally

but globally. IBM, Motorola, Texas Instruments, Oracle and Novell all

have development centres in India, and in 1997 the FI Group, the UK

IT-services company, invested $35 million in a new development centre

in New Delhi. India now produces more computer graduates a year

than the United States. Indian contract rates have become high so

employers are looking yet further afield.

One promising source of staff is the armed forces, where well-qualified

technical people are taking note of military cutbacks and starting to look

for employment elsewhere.

Perhaps the most intriguing source of workers we found is the prison

service. ICL is negotiating with the UK Prisons Authority to employ

prisoners as contractors – one hopes they will not be working on

financial systems!

Many organisations have had to extend their search methods or employ

new ones. They are getting into partnerships with contracting and

search organisations, exploiting new employee-referral schemes,

CASE STUDIES



developing school and university intern programmes, using best-

employee profiling, starting ‘grow your own’ programmes, setting up

focus groups and searching the Internet.

General Electric Medical Systems (which designs and manufactures

hospital equipment) hires about 500 technical workers a year. It took its

expertise in materials procurement as a model and revamped its

“procurement of the human asset”. It developed a skill-requirement plan

aligned to its multigenerational product plans. Then it started measuring

its recruitment and retention performance using measurements inspired

by manufacturing techniques: “first-pass yield” is the percentage of CVs

received that are invited to interviews; “second-pass yield” is the

percentage of interviews that result in offers. The findings led to three

successful initiatives to improve its recruitment success.

First, the organisation fired all but the 10 best search companies it was

using, and gave those 10 performance targets and bonuses. It also

supported them more fully – for example, with an annual “supplier

week” gathering to help them get to know the company better, and by

faxing explanations when a candidate is rejected to help the recruiter to

learn what is needed.

Next, GE Medical Systems tripled the size of its summer intern

programme with local colleges after discovering that former interns are

twice as likely to accept a job offer as other candidates.

Third, it doubled the number of referrals after discovering that 10 per

cent of employee referrals result in a hire. New employees are asked for

referrals as soon as they join. It gives a gift certificate for each referral

and $2,000 if the referee is hired – $3,000 if he or she is a software

engineer. This may seem a lot, but GE Medical Systems views it in the

context of a headhunter’s fee of $15,000 to $20,000. The revamped

programme has had impressive results. The cost of hiring has been cut

by 17 per cent, the time needed to fill a position by 20 to 30 per cent,

and the percentage of failed new hires has halved.

<http://www.ge.com/medical/>




The Internet has not yet lived up to its promise as a recruiting tool

The Internet has been hailed as revolutionising the way in which

companies recruit new applicants, particularly new technical talent, but

there is scant evidence to support this. While the Internet seems to have

vast potential as a means to identify and attract technical talent, most IS

departments have done little to exploit its capabilities. Currently, most

IS organisations do no more than post vacancies on the corporate

website. This is inexpensive and easy to do but rarely yields any return,

mainly because few do anything to draw potential candidates to the

website in the first place.

A much more effective approach is to set up an IS department webpage

on the corporate website and structure it as a selling tool. It should

provide candidates with as much relevant information about the

organisation, its technologies, people, projects and culture as possible,

as well as about the jobs on offer. Giving the URL in conventional job

advertisements, and inviting those interested to check out the website,

can then be a very effective way of pre-selecting appropriate candidates.

It will also allow you to monitor the effectiveness of your ads and

discover which aspects of your organisation appeal most to job

candidates. The Texas Instruments casepage 16 shows an especially

creative example of an IS department’s website.

The main job-recruiting sites offer their

services on a subscription basis, but

many sponsors are dissatisfied with

the value they are getting.

<http://www.occ.com>



A second and rapidly growing use of the Web is job-recruiting sites.

These have sprung up in several countries around the world, but the

majority operate in the United States. Several of these recruiting sites,

such as Online Career Center and CareerWeb focus on recruiting

technical people. They offer searchable databases of candidate CVs,

with the ability to target candidates based on geography and experience,

and trigger electronic-mail alerts when new candidates meeting your

search criteria register with the database. However, many of the

sponsors we spoke with have been disappointed with these services. The

cost per candidate was high, the quality of candidates was mixed and the

number of responses low.

Lastly, very advanced search techniques are now being employed by

specialist organisations to identify individual people over the Internet –

headhunting rather than collecting CVs. The search companies are

becoming adept at broadening the scope of their hunt for candidates.

One we spoke to has developed detective-like techniques for finding

potential candidates on the Internet. It uses a variety of methods to

locate websites and pages that are not publicly listed in directories,

including meta search engines, host and domain commands that reveal

links to home pages, URL peelbacks that lead to lists of employees, and

keyword searches of seminar attendees.

Some headhunting organisations are

prowling the Internet, rather than

merely browsing it.

Tens of thousands of CVs are

available on job-recruiting sites, but

sponsors are often put off by low

quality or lack of focus.

<http://www.careerweb.com>

CASE STUDIES




Seek new ways of attracting highly-sought-after people

Several companies we spoke to were concerned that staff scarcity would

make it impossible to maintain the high quality of their IS departments.

After all, in times of skills shortage, who will be actively job-hunting?

Probably not the well-qualified. Even redundancy programmes usually

shake out the less skilled and productive. A common complaint was:

“The staff we really want are those who are content and effective in their

current employment”.

In these circumstances, we need new ways to attract such staff and

persuade them to consider moving. Our research found that best

practice in this area consists of four steps: developing a detailed concept

of the characteristics of the particular staff you wish to recruit; finding

unconventional ways to catch the attention of people who are not

actively looking for new opportunities; exploiting communications

channels outside of the normal recruiting process; emphasising the

unique attributes of the organisation.

One way to articulate the characteristics of the ideal candidate is by

developing a profile of a notional ‘best employee’. Analyse the qualities

of the most successful people in the organisation to establish the

attributes they have in common. Then hold focus groups with a sample

of these staff to go deeper into their background, living environment,

interests and leisure activities. Armed with the results, IS can then plan

a focused approach to catching the attention of similar people.

Since the people you seek are probably not job-hunting, you need to

catch their attention using methods other than conventional job adverts.

The best approach chooses outlets that will reach the right sort of

person. Examples we found were ‘alternative’ radio stations, art-house

cinemas, in-flight magazines and off-beat websites. Logica, the UK IS-

services company, advertised on cards inside the underground trains

from Heathrow to central London, where it had set up a ‘drop-in’

centre. By this means, it hired several highly qualified IS staff who were

taking a holiday in the United Kingdom and, intrigued by the

advertisement, stepped into the convenient recruiting centre.

Logica also successfully addressed the third step of making personal

contact with prospective candidates, by having an ‘open house’ every

day, rather than occasional hotel events or recruitment fairs. Other

companies have made special efforts to exploit informal networks such

as sports clubs, alumni meetings and student events. Cisco Systems,

whose efforts are described in detail in the next section, makes its

<http://www.logica.com/>

CASE STUDIES



presence felt at the leisure events that target candidates are likely to

attend. It has set up a ‘friends programme’ to help prospects get to

know someone working at Cisco, and find out what it feels like to work for

that company.

Emphasising the unique attributes of your organisation, not just the

characteristics of the position, is the final key to attracting staff. A

company in Brighton, United Kingdom, makes a point of including in

its Web-based job advertisements links to other pages that give

information about local schools, sports facilities, housing, transport,

healthcare facilities, museums, cinemas, theatres and local history. This

helps candidates to overcome the natural resistance to relocation. It

cost very little to set up because much of the information was already

furnished on the Web by the local community.

Exploit new employee-referralschemesDevelop school and university internprogrammesPartner with contracting and searchorganisationsDo best employee profileand focus groupsStart ‘grow your own’ programmesMine the Internet

Fit your approach to the people youseekExploit informal networksTake the pain out of job-huntingGo where the talent isEmphasise unique attributes

1. Identifying qualifiedcandidates

2. Attracting qualifiedpeople

Which of these are you pursuing?How could you improve these?

Which new ones might you consider?How would you initiate them?

Use the questions in this graphic as

an agenda for a focus group within

your IS organisation aimed at finding

new sources of IS talent and attracting

them to join you.

<http://www.cisco.com/>

CASE STUDY




Cisco Systems employs state-of-the-art practices to attract

technical staff

Cisco Systems is a dominant and rapidly-growing provider of end-to-end

networking equipment. The company was named by ComputerWorld in

1996 as the top place to work for IS professionals in North America, and

is renowned as an exciting and attractive employer. Yet the company

continues to pioneer a variety of sophisticated and innovative

techniques to attract and retain top engineering and IS talent in an

industry and geographic region (Silicon Valley) that is as fiercely

competitive for technical talent as any in the world.

Cisco had sales of over $6 billion in fiscal year 1997 and profits reached

$1.4 billion, a 53 per cent increase. To keep pace, it had to double its

workforce in the past 18 months – yet hire only the highest-calibre

people. In each quarter of 1996, it took on more than 1,000 new

employees. Things slowed down in 1997, but the company, now

employing 10,000, remains a voracious hirer.

Targeting prospective job candidates

The secret of Cisco’s success is that the recruiting team identified

exactly the kind of people it wants, devised a customised plan for

finding these highly talented people, figured out how they do their job-

hunting and (most important) changed the hiring process to attract

them. Cisco has also shown a knack for integrating employees of the

many companies it acquires.

According to CEO John Chambers: “Cisco has an overall goal of getting

the top 10 to 15 per cent of people in our industry. Our philosophy is

very simple – if you get the best people in the industry to fit into your

culture and you motivate them properly, then you’re going to be an

industry leader.” Cisco’s recruiters target what they call passive job-

seekers – people who are happy and successful where they are. Says

Barbara Beck, Cisco’s vice president for human resources: “The top 10

per cent are not typically found in the first round of lay-offs from other

companies, and they usually are not cruising through the want ads”.

Catching their attention

Cisco learnt how to lure the people it wanted. It began by holding focus

groups with ideal recruitment targets, such as competitors’ senior

engineers and marketing professionals, to find out how they spend their

free time (lots of movies), what websites they visit (Dilbert Zone is

popular), and how they feel about job-hunting (they hate it).


CASE STUDY



Then it applied this knowledge. Cisco reaches potential applicants

through a variety of routes not usually associated with recruiting, such as

art fairs and home-brewing festivals. Silicon Valley’s annual home and

garden show has been a particularly fruitful venue. The first-time

homebuyers the event attracts are often young achievers at successful

technology companies. Cisco recruiters work the crowd, collecting

business cards from prospects and speaking with them informally about

their careers.

Cisco also uses newspaper advertisements creatively. Rather than listing

specific vacancies, the ads feature Cisco’s website address. There, it can

inexpensively post hundreds of job openings and lots of information

about each one. The company also advertises its site in cyberspace to

reach a self-selected set of candidates – Internet users – worldwide. On

the Web, it can easily monitor and measure important aspects of its

recruiting programmes, such as the number of visits to the site, and

where prospects work (because most visit Cisco’s website while at work).

Thus, Cisco knows exactly which companies and groups it is reaching.

Exploiting new communication channels

Cisco developed its ‘friends programme’ after a focus group asked

happily employed people how they could be enticed to interview for a

job. Someone said: “I’d do it if I had a friend who told me she had a

better opportunity at Cisco than I have at my current employer”. A

thousand Cisco employees have volunteered to be ‘friends’, attracted by

a generous referral fee (starting at $500) and a lottery ticket for a free

trip to Hawaii for each prospect they befriend who is ultimately hired.

Although the programme is advertised only in local cinemas, Cisco

receives 100 to 150 requests each week from applicants wishing to be

introduced to a friend at Cisco. The scheme matches them to

employees with similar background and skills, who call them to talk

informally about life at the company. About a third of new recruits now

come through the friends programme.




The Texas Instruments website provides job-seekers with career-

planning and assessment tools

Texas Instruments lists far more than job openings on its website. It also

provides tools and a wealth of information to help entry-level candidates

to plan their careers and assess how well they would fit into TI’s culture

and work environment.

Engineer Your Career™ is a creative career-planning tool that takes

candidates step by step through key activities in the career-assessment

and -planning process, online. It provides exercises and information to

help job-seekers assess the job market and their career prospects,

develop a strong CV and plan for marketing themselves, search more

effectively for job opportunities, improve their interviewing techniques,

and learn how to ensure success in a new job.

Texas Instruments has gone well beyond

standard recruitment material to offer a

free career-development service.

<http://www.ti.com/recruit/docs/eyc.htm>



‘Fit Check’ assists candidates in determining if TI’s environment and work

content suits their wants and needs. It asks them to rate 32 different

statements about aspects of a job. The data is input online, processed and

then results are fed back immediately to the candidate.

Texas Instruments’ efforts to assist job-seekers gain it respect in the

marketplace, and informal comments about it can attract those who

would not otherwise be looking for a job.

Texas Instruments’ ‘Fit Check’ feature allows

job-seekers to assess themselves,

confidentially, for alignment with TI’s culture.

<http://www.ti.com/recruit/docs/fitcheck.htm>

CASE STUDIES




Reengineer the hiring process for speed and cultural fit

A well-developed staffing strategy includes a policy of hiring for long-term

fit rather than short-term need. Organisations that do this base their

recruitment programmes on building the skills required to fulfil the

corporate plans and the related IS plans. A skills analysis shows where

the gaps are and the recruitment plans are devised to close the known

gaps and staff up for estimated future requirements. Apart from urgent

short-term needs, they try to avoid recruiting for a narrow set of skills.

For example, one of the major UK banks recruits into an IS resource

pool of 1,200 staff. Each year, it hires around 40 graduates and gives

them 3 months’ induction training. It cannot specify in detail the

particular job that any recruit will be working on, as it does not know

how and when staff will be deployed from the pool. Likewise, Champion

International, the US paper corporation, has 250 IS staff and does not

recruit for specific positions. Instead, it tries to hire the best people

available then fit them into the most appropriate position. Because of

this policy, Champion’s main hiring emphasis is on cross-functional

teamworking experience and skills, not on technical expertise.

Many organisations are reviewing their recruitment process in order to

speed it up, because good candidates are snapped up fast. One study

estimated that the average IS candidate is ‘on the market’ for only two to

five days. At Champion International, the recruiter vets the CVs,

forwards the good ones to a telephone screen team of IT project

managers, and advises the candidates of their status. Those who pass the

telephone interview are invited to onsite interviews with up to six

members of the IS department. Champion deliberately involves many of

its IS staff in the recruiting process in order to improve the chances that

candidates will fit into its culture, and to make the hiring process faster.

It can be completed in just a few days.

Involving many IS people in the recruitment process is generally good

practice. A US energy company assigns a mix of different IS people to

interview new candidates. First, it sends selected IS staff to a ‘new

employee interview training session’ to ensure they are competent to

participate. This formal one-day seminar teaches interviewers about

hiring strategy, interview techniques and areas to focus on. The

behavioural and critical thinking skills parts of the interview approach

were developed with the help of an external consultant, and are based

on the belief that previous behaviours and experiences are the best

indicators/predictors of future behaviour. So, candidates are asked a

series of questions related to real-life situations, such as “Give an

<http://www.championpaper.com/>

CASE STUDIES



example of a situation where you had to hold back from speaking

because you didn’t have enough information about a problem”, or

“Which was the toughest group or individual for you to get cooperation

from and how did you handle it?”.

The emphasis on ‘soft’ skills is well illustrated by the best-employee

profiling used at Yahoo!, the Internet software company. It identifies the

key attributes of successful employees and incorporates them explicitly into

the hiring process. A Yahoo! spokesperson said: “We will not add new staff

unless they make the grade on the four attributes of great Yahoo! people”.

One of these is interpersonal skills because, with the company’s fast

growth, any person it hires will soon be responsible for managing others.

Another, related to the corporate culture, is passion for life – people who

are passionate about their subject area, but who also have a passion for

something specific in sports, arts or culture. This brings a broader

perspective to their work. The third is what it calls ‘zoom in, zoom out’.

“We need people who can get so tactical it hurts – who can do the blocking

and tackling to make a project happen. That’s ‘zooming in’. But these

same people also have to ‘zoom out’ – to look at the big picture.” Finally,

Yahoo! looks for spheres of influence – people who have their own

shortlists of great talent and can recommend good candidates.

When candidates are rejected, it is important to give them open and

honest feedback about why they are rejected, and give them counselling

to help them in their future job-seeking. The candidate will form a good

impression of the organisation, which will enhance its reputation in the

marketplace, and the organisation will benefit from the candidate’s

honest feedback, which will add value to the hiring process. This is

particularly important when the candidates are personal referrals.

http://www.yahoo.com/

CASE STUDY




IPC’s Assessment Centre gives both speed and depth to its

hiring process

The IS department of IPC, the UK magazine-publishing company, has

had good results from its Assessment Centre recruiting method. A

recruiting agent vets CVs and sorts out suitable candidates by interview,

then sends them to a full-day offsite to do a series of exercises and

mingle with the management team. The exercises test problem-solving,

presentation, team dynamics and personality. Groups of about 10

candidates are given a business problem to solve (for example, choose

the best of three options for relocating an office) and present their

solution to ‘management’. They then have a leaderless discussion

around a table about a scenario that is presented to them. After that,

there is a standard personality test, and an interview with two of the IPC

management team. When the day is over, the IPC and recruiting agency

staff discuss the candidates and classify them as Green (direct offer),

Amber (may do second interview) and Red (out). The recruiting

agency, who has been present throughout the day, then makes the offers

and debriefs the losers. The IT director of IPC participates in these

days. One of the reasons that people want to join IPC is the impact of

meeting the IT director, who is a good leader and maintains a high

profile both inside and outside the company.

The first Assessment Centre was not too successful, as three of the

accepted candidates left soon after joining because they did not ‘gel’

with the IPC team. IPC adjusted the focus of the assessment day to

emphasise the cultural side of things rather than the technical, and

recruits from subsequent Assessment Centres have all stayed.

When hired, the candidates go on an induction course, organised by a

corporate human resources member dedicated to central services

training and development. After a “Welcome to IPC” and a “Welcome

to IS”, two further courses are run in-house by an external training

company but customised for the IPC environment. These are

“Introduction to IT”, focused on the platforms that IPC uses, and

“Business Analysis”, also adapted to the IPC environment. This

demonstrates to recruits that the company is interested in providing

proper training and goes to the trouble of tailoring the courses.

To help retention, IPC is thinking of setting up a Development Centre

along the same lines as the Assessment Centre, but focused on the real

situation and the prospective promotion prospects of the participants.

The concept came from IPC’s advertising department who uses it to

hone the skills of high-flying sales executives. IS intends to use it for the

majority of the staff, not just for the chosen few.

Use the matrix of staff types against skills

as an exercise for a focus group within

your IS organisation aimed at raising the

awareness of HR staff, and IS staff

involved in recruitment, by identifying the

key skills appropriate to the different roles

in IS. The selection of staff types can be

extended to include those that are critical

to your organisation.

<http://www.ipc.co.uk/>



The value of ‘ABC analysis’

The cases we have cited all emphasise the shift of focus in recruiting

from applied skills, needed for the short term, to behavioural and

cognitive skills, needed to adapt and grow as the IS department develops

and changes. As an aide-memoire to the differences in these types of skill,

we show below the examples that we quoted in a previous report,

Reskilling IS, incorporated in a matrix that can be used in an in-house

workshop to sensitise human-resources staff, and IS staff involved in

recruitment, to the different classes of skill required by different types of

IS work. Applied skills are the ones that are put on the CV; they are

usually product-focused, such as Visual Basic skills. They are the most

easily taught. Behavioural skills describe how a person acts and are

learned early in life; examples are action orientation, or being very

interpersonal. Behavioural skills are learned, therefore they can be

taught (but are more difficult to teach than applied skills). Cognitive

skills describe how a person thinks; many believe that these skills are

largely innate, therefore cannot be taught. This being the case, it makes

sense to make hiring decisions based largely on the candidate’s cognitive

and behavioural skills, and teach any missing applied skills later.

Examples

Examples

Examples

ExamplesConsultation

Systems integrationPrototypingModellingSimulation

Project managementBusiness knowledge

Object orientationTechnical fluency

ExamplesResults orientation

Risk toleranceResourcefulnessSelf-confidence

Thoroughness andfollow-through

VersatilityHigh energyCollaboration

HumilityArticulateness

ExamplesSystems thinkingProcess thinking

AbstractionInvention

LogicLateral thinking

Pattern recognitionSynthesisCuriosity

Anticipation

AA pplied skills BB ehavioural skills CCognitive skills

Networkmanager

Chiefarchitect

Helpdesksupport




Provide interesting work, as well as flexible work arrangements

Once the right staff have been recruited, three factors affect retention –

the work itself, the work environment and compensation. In the

following sections, we deal with each of these in turn.

Interesting and intrinsically rewarding work is the most powerful

determinant of whether people stay in a job or leave. Most IS staff find

that the ‘buzz’ they get from doing exciting work far outweighs perks

like a casual dress code. A boring, unfulfilling job is still a boring,

unfulfilling job no matter when you do it or what you wear. Yet we

found in our research that many organisations are taking steps to

improve the work environment, but paying little attention to making the

work itself interesting.

One way to increase the level of excitement is to make IS systems and

services as integral to the business as possible. This gives staff the

feeling that their work will make a real impact on the success of the

organisation. IS management should also work at creating excitement

around projects. In our recent report, Breaking the Rules of Systems

Delivery, we showed how the key to success in a ‘skunkworks’ project was

exceptional leadership that could fire up the team by clear and frequent

articulation of the mission, backed by visible enthusiasm from the

sponsor. In the inevitable cases where the project cannot be depicted as

other than boring but necessary, IS management should ensure that

staff are rotated out of the project within a reasonable time, and moved

to a high-profile one.

Another strong motivator to stay is the availability of a range of interesting

technology platforms. (Larger corporations reported that this was also a

potent factor in attracting candidates.) Even if its range of technology is

stable and not leading-edge, IS should organise the allocation to projects

so that all members of the department have the opportunity to work with

all the available technology. With a few exceptions – and these people will

be less and less useful in the fast-changing future – IS staff are eager to

extend their technological skill base. ‘Pigeon-holing’ staff may make

management’s task easier, but it dampens employees’ enthusiasm.

IS people want to feel that they are contributing directly to the success

of the business, that they are part of the line, and not in a staff-support

role. One way to accomplish this is to create special units in IS, focused

on exciting business-critical areas. Another approach is to operate IS as

a standalone business.

CASE STUDIES



Rabofacet Spectrum has created a dynamic, developing environment

Rabofacet is the shared-services company of Rabobank, a Dutch banking

cooperative, and Spectrum is its IT service unit, with 350 staff. Its policy is to

attract people looking for interesting and exciting work and opportunities

for career development and learning, rather than those primarily interested

in money. Spectrum places a strong emphasis on providing alternative work

options. Staff are encouraged to work on different projects and in different

areas of the business. For example, a senior-level ‘expert’ may work as a

junior on a project outside his area of expertise.

IT is managed by Pierre van Hedel, whose vision for Spectrum is to make

it an IS innovation and knowledge centre in which people are rotated in

and out of other parts of the business. He wants the staff to become

more comfortable with trying new things and taking risks. He accepts

that not all projects will succeed, but hopes to achieve a 70 per cent

success rate. He is constantly seeking ways to broaden people’s skills and

experience. For example, he wants his staff to be externally focused, and

so encourages them to attend conferences and training courses.

Union Fenosa ACEX has created an exciting and unique place for

IS professionals to work

Union Fenosa ACEX is a profit-making subsidiary of an electrical utility

in Spain and provides systems and consultancy to both internal and

external clients. It supplies new processes and advanced systems for its

own electricity business, then exports them to many countries around the

world. In this environment, the staff find exciting opportunities to work

on leading-edge applications and international projects. They feel

themselves to be in line (rather than staff) positions with direct

responsibility for the profitability of the enterprise. There are numerous

opportunities for career progression either vertically (up to

management) or horizontally (across to a new technology or another

country), and promotion is mostly from within. The company has

maintained a low staff turnover, while consistently hiring new staff away

from large consultancies and IT service providers.

In both these cases, the job itself and the environment in which it is

performed have been designed to give staff more freedom in, and

control over, the work they do, how it is done, and the reward received

for doing it well.

<http://www.ufacex.com/>

CASE STUDIES




Make the work environment exciting and agreeable

The work environment is receiving a lot of attention at the moment as

companies vie to retain employees in a sellers’ market. The best

environments combine comfort and flexibility with an exciting

atmosphere. Excitement is engendered principally by the enthusiasm

and visibility of senior management. A remote management team often

creates a feeling of aimlessness, which can push people to move to a job

where they feel that what they are doing matters. We found that

physical comfort (lighting, heating, decor, storage space, desks and

chairs) has to be at an acceptable level, but in itself will not persuade

people to stay. What really counts is that staff feel that the work

environment is organised to treat them as individuals.

For example, Cisco Systems has set up a special initiative, called ‘Fast

Start’, to ensure that staff feel important from the first day. Employee

surveys at Cisco had shown that some new hires felt like lost baggage

rather than the company’s most precious asset. Their telephones didn’t

work, they had computers but no software, they had software but no idea

how to use it, or it took two weeks to get an email address. Today,

computer software tracks the hiring process and alerts facilities teams

just before a new recruit arrives. As a result, every new employee starts

with a fully functional workspace and a full day of training in desktop

tools. In addition, each new hire gets assigned a “buddy” (a peer in the

company) who answers questions about how Cisco works.

Flexible working hours appeal to individuals who have social or travel

reasons to appreciate the opportunity to choose their hours of work.

Flexitime arrangements are now fairly common, but some companies

are taking this a step further. ISCOR, the South African steel company,

introduced flexitime in 1995 and in 1997 started also offering full

employment contracts based on 5, 6 or 7 hours per day, with salary

adjusted down from the standard 8-hours-per-day contract. Overtime is

paid at the adjusted base rate during the normal working day, so that a

6-hour person does not earn more than a regular 8-hour person. The

number of employees who have taken up these contracts so far (20 out

of 400) shows there is a genuine need for more flexibility, and the

company is responding.

Telecommuting is another option that has great appeal to some people.

Many organisations are providing this in a small way, often on a pilot

basis. Other organisations have been considering it, but have still to see

their way around the disadvantages, struggling with one or more of the

following issues – economic justification, management resistance,


<http://www.iscor.co.za/>

CASE STUDIES



inadequate technical support, culture shock, and reduced personal

contact. Some companies are moving into telecommuting in a big way,

as illustrated by the case of Merrill Lynch.page 26

Forums and social events are other ways to engage staff. IBM in Ireland

finds that employees much appreciate the forums that it runs several

times a year. About 60 staff are invited to a relaxed, casual-dress offsite

meeting at which the senior management team explains its strategies

and answers questions in a free and open discussion that is continued

over a buffet lunch. Staff get the feeling that they participate in the

direction of the company and have an opportunity to put forward ideas,

and management gets input on the concerns of the workforce. In

addition, the organisation arranges quarterly get-togethers for around

200 staff on a Friday at 3 pm with live music and refreshments in the

reception area of one of their buildings. Employees enjoy the

intermingling with staff from other projects, which reinforces the

feeling of being in a community of like-minded people.

Most organisations are taking steps to

improve their work environment. This

has to be a continuing endeavour,

because each innovation soon

becomes the expected norm for

candidates.

Self-managed teams

Allowing employees to consult/work with other companies

Time off for study or community service

Sabbaticals

Satellite offices

Part-time positions

Compressed/shortened work weeks

Flexible work times

Examples of alternative work options and environment improvements citedby sponsors include:

Telecommuting

Job-sharing

Casual dress

Contracts for those who want them (to get them on a par with outside contractors)

<http://www.ie.ibm.com/>

CASE STUDIES




Investment in the work environment helps retain staff

The following cases are of two companies that have invested heavily in

the work environment. In both cases, they believe that their ability to

recruit and retain the staff they want is ample justification for their efforts.

SAS Institute spares nothing to make staff happy

One company that has made serious efforts to provide an ideal work

environment for its staff is SAS Institute. It is the largest private software

company in the world, providing a range of products to capture, store,

manipulate, analyse and present information. It started with statistical

tools but is now heavily into data warehousing, data mining and

executive information systems. James Goodknight, the CEO, built the

company up to its current $700 million status. His staff are renowned

for their loyalty, which is stimulated by the extraordinarily generous and

inventive suite of benefits that he has provided. For example, there is a

heavily subsidised cafeteria that is enhanced by live piano music. There

is a fitness centre that also provides a free laundry service. There are two

subsidised childcare centres on the 200-acre campus. There is a free

health centre that is staffed by two doctors and six nurses, and which

includes a bank of massage rooms for ‘stress therapy’. There is a full-

time ergonomics specialist who helps new employees choose furnishings.

There is even an artist-in-residence who paints pictures to hang in the

19 buildings on the campus.

Clearly, SAS Institute spares nothing to make its staff happy. It also

demands productivity and results in return. James Goodknight justifies

the range of benefits by saying: “I like to be around happy people, but if

they don’t get that next release out, they’re not going to be very happy”.

Many organisations would regard SAS Institute as having gone well over

the top in providing a comfortable working environment, were it not for

the impressive staff retention it achieves. The annual turnover rate is

less than 5 per cent, compared with more than 20 per cent for the

industry as a whole.

Merrill Lynch introduced telecommuting to help it become the

‘employer of choice’

Merrill Lynch, the financial-services corporation, is an interesting case of

an organisation that sees telecommuting as a key factor in staff

retention. Three years ago, the company launched a programme that

aims to have 450 employees telecommuting by the end of 1998. “We

didn’t care about cutting costs,” said Chief Technology Officer and

<http://www.SAS.com/>

<http://www.ml.com/>

CASE STUDY



Senior Vice President Howard Sorgen, “our goal was to promote loyalty

and productivity, and make Merrill Lynch the most appealing IS

employer in the market. In order to become the employer of choice, we

had to consider all the things we could be doing above and beyond what

we had in place today to give us the edge over the competition. One of

them was telecommuting.” The venture was estimated to cost $500,000

upfront and $3,000 per year thereafter for each employee. After nine

months of debate, it was agreed that the cost of continually losing IS

staff could be even higher. If the programme could stop the IS

revolving door, it would be much more than an employee perk.

The company established rules and processes to govern work away from

the office. Employees cannot telecommute until they have been with a

new project for 90 days, and are then required to go to the workplace at

least once a week to maintain face-to-face contact with team leaders. Once

employees have decided to telecommute, both they and their managers

must attend a day-long training programme. Employees then spend two

weeks in a telecommuting simulation lab at Merrill Lynch. They

communicate with their managers as if they were already telecommuting,

and prepare themselves for constant distractions by sitting at desks next to

windows overlooking a busy street. Home workspaces are inspected for

safety and suitability. For example, a poorly-lit office next to the washing

machine would fail inspection. Merrill Lynch supplies the computers, but

employees must buy their own home-office furniture (at a group discount

rate). A five-person IT support group is dedicated to solving problems for

remote workers from 7 am until 7 pm on weekdays. The support staff also

carry beepers for out-of-hours problems.

Three years after its inception, employee satisfaction is up 30 per cent,

according to annual in-house satisfaction surveys. The programme has

also enabled the company to hold on to several star employees,

including a woman who telecommuted from Russia for several months

while she was there to adopt a baby. Another valued employee

relocated from New Jersey to Florida and now telecommutes five days a

week, visiting the office once a quarter. Says Sorgen: “It’s a tremendous

retention tool and a phenomenal recruiting tool”.

CASE STUDY




Change compensation practices to combat the drift to freelancing

Fast-rising remuneration, both for in-house and contract staff, is a matter

of deep concern to IS management. Many organisations told us that

they have to uncouple IS salaries from corporate policies or industry

averages and relate them more closely to the market. The standard pay-

rate surveys are not published frequently enough to keep pace with

some of the ‘hot’ skills, so many organisations are commissioning special

market surveys on a consultancy basis, and communicating informally

with other organisations in their locality.

We recommend three actions:

Almost all organisations see some of their best staff leave to go

contracting. Take avoiding action: get a thorough knowledge of

your local market, the going rates, conditions, opportunities and

likelihood that demand will continue; then discuss contracting with

your staff and use this information to counter its attractions.

Carry out staff-satisfaction surveys. Staff will always be impressed that

you want to improve their welfare. Invite their input on the contents

of the survey, run it seriously and use the results as a basis for forums

where working conditions and pay can be freely and frankly discussed.

Get in-house staff onto competitive pay scales. Business managers are

becoming more aware of how vital IT is to their businesses. Prepare a

well-argued case, based on market research, for competitive pay scales

for IS staff, including some exceptional remuneration for exceptional

people (as occurs regularly in the business world).

A financial-services company in the City of London made an active effort

to stem the outflow to contracting. The staffing problem is always acute

in the City where there is much competition for competent staff. The

market is hot – some staff get two to three calls from headhunters per

week. In this company, the CIO cannot find enough analysts with

quality skills, and recently the situation has become even more difficult

as increasing numbers of staff have left to become contractors, attracted

by the possibility of doubling their pay.

The CIO managed to plug this drain on resources. He carried out and

published an analysis of the true difference between contractors’ and in-

house remuneration. He proved that, despite appearances, contractors

only cost the company 10 per cent more than permanent staff and so

persuaded the CEO to allow a 10 per cent increase to permanent staff in

CASE STUDY



order to reduce the drift to contracting. The CEO agreed that 10 per

cent was a reasonable sum to pay for continuity of employment (saving

the costs of training, learning the culture, knowing the systems and

being known to the users).

The calculation is as follows. The base salary of an in-house analyst is

£34,500, on top of which the company has to pay 54 per cent in benefits

and 10 per cent in annual bonus – a total cost of £56,480. An equivalent

contractor’s fee would be £64,400. Although the in-house analyst pays 30

per cent in taxes, he benefits from the company’s non-contributory

pension scheme. The contractor must pay at least 25 per cent in tax and

has to buy his own pension, which effectively cuts his pay to £42,000. Thus

a permanent employee would increase his take-home pay by only 25 per

cent by becoming a contractor – very different to the popular myth that

you can double your pay by going freelance. This calculation has been a

powerful argument in dissuading staff from switching to contracting.

The same CIO has also done a survey of staff attitudes to benefits. The

results are shown below.

On the basis of these survey results, he recommended selected pay

reviews (based on the 10 per cent pay rise described above), market

supplement (tied to market-rate movements and adjusted every six

months) and share options. Although these were rated low by his staff,

he thought they did not appreciate their value and would be grateful

later. He attributed the low rating to general distrust of corporate

management. There have been many mergers and acquisitions in the

City of London and this, together with the downsizing culture of recent

years, has led to a general attitude of cynicism amongst employees. This

is common, not just in this company, but in IS departments throughout

the world. It will need several years of relative stability to generate a

more positive view of continuity of employment.

Market supplement

Work from home

Contract conversion option

Company car

Loyalty bonus

Pay for all overtime

Y2000 golden handcuffs

Training allowance

Share options

Attractiveness

High/medium

High/medium

High/medium

Medium

Medium

Medium/low

Low

Low

Low

CASE STUDIES




Make compensation and reward policies dynamic and flexible

Many IS departments are moving from remuneration systems based on

narrow salary grades to those based on broad salary bands. Traditional

grades are directly linked to job classification, and staff must be promoted

to the next grade to gain higher compensation. This is suitable for

hierarchic organisations, but has been found to be too rigid for IS

departments. Salary bands that are broader and can encompass multiple

roles and jobs provide the flexibility to compensate staff for the changing

roles, responsibilities and performance criteria that typify IS activities.

When the IS department of a major UK bank re-organised two years ago,

it simplified its grading structure into just three bands: P1 = Trainee,

P2 = Developers, Project Managers, Consultants or Technical Specialists,

and MCS1 = Managers. Most of its 1,200 staff are in P2. A minority of

staff who want their status to be recognised are pressuring human

resources to split P2 into sub-bands. So far it has resisted this, as it is

convinced that the broad band structure gives the flexibility that is

needed to deal with the wide and changing range of skills and

aspirations of IS staff. As a response to the pressure, HR is preparing a

career development plan that maps the many different paths that can be

followed to progress from P2 to MCS1.

Another way to improve staff retention is to organise remuneration such

that staff receive pay increases more than once a year. One company in

the City of London pays something extra every three months – the

annual increase, a share scheme addition, a half-yearly increment and a

performance bonus. This makes some potential leavers hesitate before

committing to a new employer.

Our research led us to the conclusion that loyalty bonuses are often

ineffective, because a keen future new employer will offer to match the

bonus – and pay it straight away. That said, loyalty bonuses will restrain

some staff from actively seeking opportunities elsewhere.

An interesting case of the use of bonuses is the UK Post Office IT Services

that has 1,450 IS staff. Staff turnover has grown from 3-4 per cent 5 years

ago to 11 per cent in 1997. The problem is not so much the overall

turnover, but the very high turnover in key skill areas – for example,

18-19 per cent in SAP skills. In March 1997, IT Services developed a

radical retention strategy with two parts – financial and non-financial.

The financial retention strategy identified three groups of employees

who required special attention:

<http://www.postoffice.co.uk/>

CASE STUDIES



Employeeincentive

profile

Jobresponsi-

bilities

Higher priority

Lower priority

Specialperks

Higher priority

Lower priority

Additionaltraining

Higher priority

Lower priority

Flexiblework

options

Higher priority

Lower priority

Specialbonus

Higher priority

Lower priority

Employeeincentive

profile

Additionalpay

Higher priority

Lower priority

MaxSmith

SarahTaylor

Vitally important employees who were already paid 20 per cent over

market rates. It was decided that about 30 of these were worth even

more, so their pay was upped to 40 per cent over market rates.

Good employees who were not key but could cause serious disruption

if many of them left at the same time. They gave 100 of these a

loyalty bonus spread over two years.

Employees working on business-critical projects, including Year 2000

and new product launches. They identified 42 of these who were not

in scheme 1 or 2, and will pay them a bonus of 59 per cent of salary if

they are still on the payroll at 1 June 2000.

These three schemes have been effective in reducing turnover of

key employees.

To get authorisation for these increases and bonuses, IT Services

prepared a full business case, including actual staff turnover, forecast

turnover, cost of recruitment, cost of retraining, effect on ability to

deliver (for example, in the case of SAP it is impossible to get new

people if they lose some – there are none on the market), and a risk

assessment for doing nothing or for taking the proposed steps.

The non-financial retention strategy involves the development of a

“Psychological Contract”. It is based on the ‘cafeteria-style’ benefits

concept that allows individual employees to tailor the job, expectations,

and rewards and benefits they receive. In effect, the employee would

sign a document stating ‘I accept a salary of $xxxxx in exchange for the

following benefits’. The benefits would include: company investment

in staff development (currently five days minimum per year), pension

scheme, accommodation and personal technology, flexible working

hours, special leave (for example, to study), limit to time away from

home, travel conditions, lone-parent facilities, physical security, casual

dress and home-working. In addition to basic pay and benefits, they

would offer a package of “points” for different job categories that could

be used in any combination that an employee desires.

Each employee will respond to a

different mix of incentives. Job

satisfaction is improved if individuals

are given the opportunity to select

from a range of benefits the ones that

most inspire them.

CASE STUDIES




If “people are your greatest assets”, treat them that way

Loyalty and commitment are reciprocal in nature. If “people are your

greatest assets”, treat them that way. IS departments with good retention

records show commitment through their behaviour and actions, not

rhetoric. They give their staff decision authority, provide a work

environment that can be tailored to the lifestyle they seek, and put in a

career development, learning and reskilling process to demonstrate how

much value they really do place in them. A flat organisation that allows

horizontal as well as vertical career paths provides the context within

which individual staff can plan to move forward at a pace that suits them.

The most effective mechanisms for developing skills, fostering learning

and demonstrating to staff that you are committed to them are Centres of

Excellence and Coaches. Centres are groups of people, typically

organised according to a basic competence such as architecture or project

management, who are hired, trained, allocated to projects, evaluated and

nurtured by professional Coaches. Foundation has reported previously on

Centres and Coaches in Reskilling IS and New IS Leaders.

Texas Instruments has employed Centres of Excellence for skills

development and resource deployment since 1992. Centres were

implemented in three phases for a total of about 1,400 people across six

locations. They identified 17 distinct skill sets (for example, Software

QA, Business Process Engineers, Network Operators, Leaders,

Contractors), and coaches are experts in the centres they are affiliated

with. Coaches perform career planning, counselling, mentoring,

resource deployment, performance assessment, work process

development and future skills analysis. Among other quantified

benefits, IT has cut its contractor ratio to 5 per cent (people are trained

in-house for highly skilled technical work). Staff have “a heightened

sense of professionalism, and ownership of their own learning”.

Rabofacet Spectrum, the IS unit of a Dutch banking cooperative whose

work environment we described earlier,page 23 is organised into

competency clusters aligned with the hot skill sets needed to complete

high-impact projects. There are currently 17 centres, including business

consulting, software, knowledge management, Internet, applied maths,

management-support systems, multimedia, the usability lab and

development tools. These competency centres were chosen to reflect

the emerging technologies and applications that fit the needs and

direction of their bank clients. Cluster coordinators find inventive ways

to develop staff skills. For example, they will partner with a vendor or do

a joint venture with another company that will enable people to work

<http://www.ti.com/>

CASE STUDIES



with new technologies. Staff are also encouraged to develop new

clusters. For example, one staff member began setting up technology

seminars for customers of one of the business units and has now turned

this into a new competency within Spectrum. Spectrum is growing

rapidly to meet the great demand for its services, and receives CVs from

all over the Netherlands from people who have heard of the challenging

and exciting work it does.

Ken Taylor, who has HR responsibility for the UK Post Office IT

Services,page 30 believes that one of the most important factors affecting

retention is the opportunity for learning and career development. Skills

centres were instituted about three years ago and address areas such as

project management, networking, HR and technical consulting. Staff are

encouraged to select the skills centre they wish to be affiliated with. This

approach was introduced along with personal development plans for each

individual employee, produced jointly by the skills-centre heads and the

individual workers. Taylor believes these initiatives have helped to stem

the staff turnover rate and also helped recruiting efforts. People want the

opportunity to grow and learn through both formal education and

training, and on the job experience. Taylor believes that the greatest

security he can offer his staff is marketable skills. He wants to ensure that

they do not have to leave the Post Office in order to update their skills.

These are three among many organisations that are pursuing the policy

of investing in long-term career development, not episodic training, and

reaping the benefit of improved retention.

Quality ofjob

‘Great’

‘Lousy’

CompensationPoor Good

‘OK’ line

‘Get stuffed!’ line

Source: Ken Taylor, Director, People and Resources Group,The Post Office IT Services

Ken Taylor, Director, People and

Resources Group, The Post Office IT

Services expressed the trade-off

between quality of job and

compensation in the form of a chart.

An interesting job will make up for poor

compensation, and vice versa, but if

employees feel that they are below the

diagonal line, they will become

restless; if below the ‘Get stuffed!’ line

they will leave.

<http://www.postoffice.co.uk/ >

CASE STUDY




Encourage staff to take responsibility for their own

career development

Many of the recent developments in HR – centres of excellence,

coaches, mentors, 360º appraisals, ‘cafeteria-style’ work options – are

moving in the direction of encouraging people to manage their own

careers. Most IS staff welcome this change. Many had seen contracting

as the only way to exercise greater autonomy.

IBM is engineering a culture change towards a more mature

relationship between manager and employee, promoting the concept

that “your career is your future – you manage it with IBM’s support”.

This is based on “Professions” (such as Project Management, IT

Architect and IT Specialist) that have graded levels of expertise

modelled on the traditional professions such as solicitors and

accountants. Within each profession there are “disciplines” (for

example, an IT architect could be a network architect, an applications

architect, a systems architect or a systems management architect) and at

each level there is an established set of skills (both ‘soft’, such as

customer relations, and ‘hard’, such as DB2). This structure provides

standards of attainment in each skill type against which employees can

gauge their development.

To help them, there is a “Career Route Map” that demonstrates the

development steps along a chosen path, which could be through a

particular profession, or between professions. There is also the

“Personal Portfolio” in the form of a book, designed to help employees

manage their own careers. The portfolio provides a framework for

individuals to collate their career experience and share it. It includes

objectives, development plan, achievements and so on, and serves two

main purposes: in discussions with the business to decide a person’s

suitability for a particular position and to make the business aware of

that person’s aspirations and training needs, and in peer review of a

person’s status in his Profession.

“Institutes” are skill-development events specific to a profession, and

provide a way of connecting the individual to the skill community to

which he/she belongs. It is particularly useful when a person loses sight

of their community when buried in project work. The idea is to

encourage staff to share the intellectual capital they have developed.

Groups of staff in the same skill area are brought together for three days

once a year in a university, and present papers. A competition for the

best ideas is judged by peers. In addition, local Institute meetings are

held every quarter. The advantage to staff is that they get to know each

<http://www.ibm.com/>

CASE STUDIES



other better and get the feeling of belonging to a community. The

advantage to the company is that it gets better-educated people, working

in a better network, who as a result do not waste time reinventing the

wheel, because they are more aware of what other people are doing.

IBM has a worldwide Intellectual Capital programme into which this

activity is fed, enabling the sharing of knowledge and expertise with the

wider IBM community.

One problem that frequently arises is that the skills development

aspirations of the staff do not coincide with the work that needs to be

done to support the business. A German insurance company with

350 IS staff allocated from a resource pool found that the best way to

take the heat out of this conflict is to provide formal rules. The first

time it occurs, the client has priority, the second time, the client and the

resource pool have equal priority, and the third time, the individual

employee has priority.

Another recurring problem is that staff do not find time to go on the

training courses planned for them. In the UK Post Office, attendance

improved dramatically after implementing the policy that anyone who

wishes to get out of a training course has to obtain permission from a

senior executive. Mid-level managers and above have to get permission

from the CEO.

In all the above cases, responsibility for career development is

underlined by tying financial incentives to skills development as well as

to work performance.

<http://www.postoffice.co.uk/>




Recruitment and retention are two sides of the same coin

The previous sections emphasised the importance of making the work

environment exciting and agreeable, by attending to the work itself, the

environment, the compensation and the learning opportunities. This is

especially important to retain staff in the prevailing situation of staff

scarcity, but all the features that aid staff retention can also be used to

attract candidates in the recruitment process.

The panel opposite lists some of the sentences that recruiters could use

to describe the organisation in attractive terms. As we have seen, many

members of the IS and HR departments can be involved in recruiting IS

staff. We recommend holding an internal workshop in which recruiters

discuss which of these sentences they would use to make the

organisation sound appealing to different types of IS people. Too often,

the organisation is presented in the same way to all candidates.

This exercise helps sensitise recruiters to the different needs and

aspirations of IS candidates. For example, when we have run this

exercise, very different sets of sentences have been put together to

appeal to an IT Account Manager, a Chief Architect, a Project Manager,

a Year 2000 Assembler/COBOL programmer and a Java Specialist.

Recruiters often focus on the details of the particular position they are

seeking to fill, and pay insufficient attention to environmental factors.

The Workplace Audit Statements developed by the Gallup Poll

organisation in the United States provide a useful checklist for IS

managers who want to develop the best possible working environment

for their staff. Employees are asked to what extent the following

statements apply to their experience at work:

I know what is expected of me at work.

I have the materials and equipment that I need to do my work right.

At work, I have the opportunity to do what I do best every day.

In the last seven days, I have received recognition or praise for

good work.

My supervisor or someone at work seems to care about me as a person.

There is someone at work who encourages my development.

Use the sentences describing a

position in your organisation as an

exercise for a focus group aimed at

raising the awareness of HR staff, and

IS staff involved in recruitment, to the

different needs and aspirations of IS

candidates. The selection of staff

types can be extended to include those

that are critical to your organisation.

The exercise can also be used by

individual managers to reflect on ways

to improve the attractiveness of their

work environment.



In the last six months, someone at work has talked to me about

my progress.

At work, my opinions seem to count.

The mission/purpose of my company makes me feel my job is important.

My associates (fellow employees) are committed to doing quality work.

I have a best friend at work.

This last year, I have had opportunities at work to learn and grow.

Gallup’s US database of surveys of more than one million employees

shows a clear correlation between positive responses to these questions

and high levels of employee loyalty and workplace commitment.

IT Account ManagerChief Architect

Project ManagerYear 2000 Assembler/COBOL Programmer

Java Specialist

In our culture, IS is deeply integratedinto the business

Hours of work are negotiableAll staff have free membership of the

local leisure centreWe are moving our portfolio onto web-

based systemsOur core systems are mainframe-

centricWe operate a wide range of technologyWe have a packages-only policyOur site includes a range of sporting

facilitiesWe run a nursery service for children

under school ageWe have an excellent non-contributory

pension schemeAll staff are incorporated into our career

development programmeOur projects are developed by self-

directed teamsWe pay performance bonuses on a

team basis

We do 360º reviews and awardindividual performance bonuses

With a very few exceptions, all ourpromotions are from within

Staff are affiliated to Centres ofExcellence run by Coaches

We rotate staff through a varied rangeof projects

We provide 100 hours of training peryear to each staff member

Telecommuting is available on a case-by-case basis

We use advanced RAD processesWe provide a stable, stress-free

environmentOur senior executives are actively

involved in ISWe are exploiting leading-edge

technologyWe offer incentives for skills

developmentRemuneration is at or above market

levels

We carry out regular staff-satisfactionsurveys

We provide a variety of social activitiesStaff participate actively in their own

career developmentWe are currently replacing all our

systems with packagesWe provide a full set of personal

technologyWe encourage technological

innovation and experimentsOur working environment is exciting

and dynamicThe IS systems are crucial to the

success of the businessPromotion exists both within IS and

into the businessWe have a reputation for timely

delivery of high-quality systemsWe have a complex and volatile

technological environmentOur methodologies and processes

are well established

For each of the job titles in the green box:As a group

Select five of the sentences from the list above that will give the best impression of an exciting and agreeable workenvironment for the prospective candidate. Then add two more of your own.

As individualsNote the action you could take to improve the candidate-sensitivity of your own job advertisements, as well as their general

appeal. Note ways in which your own work environment could be made more exciting and agreeable.

CASE STUDIES




Manage people moving out

Our research found little evidence that IS departments have developed

policies to deal with staff who are thinking of leaving, or considered how

best to handle those that do leave. Some staff leave for negative reasons –

dissatisfaction with the work or working conditions, or dislike of

colleagues or management – that might be overcome by improving the

environment. But there are also three positive reasons why staff leave:

to seek wider or more exciting opportunities elsewhere, to gain a

substantial increase in remuneration, or to relocate for personal reasons.

These can also be combatted/overcome.

Those who are hungry for different experiences do not necessarily have

to leave to get them. For example, Rabofacet Spectrum encourages staff

to present at conferences and teach at universities. It seeks joint

ventures with IT vendors to give staff greater learning opportunities. It

allows staff to work their 36-hour week in four days and use the fifth day

to consult with other companies. It welcomes and supports ideas for

new ventures or services. It encourages staff to transfer to other business

units to develop their careers. It has recently sent staff on three-month

secondments to Tanzania, funded by an international organisation.

One response to staff who wish to become freelance contractors and

increase their remuneration is to offer them ‘in-house freelancer’

contracts. Several companies we spoke to are considering offering all IS

employees the choice of a regular permanent employee contract, or a

contract on similar terms to those with outside contractors. Offering

this to all employees removes the resentment that in-house staff feel

towards well-paid contractors, and gives restless members of staff an

opportunity to test the water of the freelance life without plunging

totally into it. At the same time, the organisation benefits from a further

two years of the employee’s service. (Note that there are legal and tax

implications to resolve before this can be adopted as a matter of policy.)

Those who decide to leave because they have to move to a remote

location, perhaps to look after an aged relative or accompany their

spouse who has been relocated abroad, are often regarded as

irredeemable cases. Until comparatively recently, a manager could only

accept these personal reasons for leaving and wish them well. Now, the

employee can become a virtual member of the team, using remote

computing facilities. This great advantage of having established

telecommuting arrangements is only just beginning to be appreciated:

it can be a major help in retention.

CASE STUDIES



If these methods of retention do not work and the employee is

determined to go, the organisation should make every effort to part on

amiable terms. When a manager is angry that someone has rejected all

blandishments to persuade them to stay, that person may depart with

strongly negative feelings. This will only lower the organisation’s

reputation in the eyes of the outside world, where word-of-mouth will

make other people less inclined to join. Wiser managements make

employees feel good when they leave, and take steps to maintain ‘ex-

alumni’ contact with all leavers.

A proper exit interview should be standard practice. The US consulting

organisation Software People Concepts, Inc, goes further than this – it

carries out an exit interview three to six months after the person has left.

It argues that the normal exit interview does not usually reveal the real

reason why the person is leaving, but if the person is happy with his or

her new employer after a period of months, the real reason will emerge

at the interview. If the person is not happy in his or her new job, then

there is an opportunity for re-hiring!

Managing people moving out is an under-developed area of retention

policy. IS departments could take as a model the results of Gensler, a

US construction company that has a staff turnover of 4 per cent, where

the industry norm is more like 20 per cent. Gensler makes firm hire-

back offers to leavers, and in cases where the ex-employee returns,

hangs a boomerang over his or her desk, “as our way of saying Welcome

Back!”. There are plenty of boomerangs, because the return rate of

leavers is a striking 12 per cent.




Adopt best practice under these management guidelines

In the previous section, we discussed the reasons why staff leave. Our

research also identified seven key reasons why staff stay: compensation

and reward, recognition, the work, technology, learning opportunities,

the work environment and leadership. IS departments should adopt best

practice in each of these areas, as indicated in this report. The

employment policy should embrace all of them within a focus on total

career advancement for each member of staff. A minimum threshold for

each factor must be identified and continually maintained for different

categories of staff.

Balance is key, so avoid overemphasising a single motivating factor. The

commonest culprit is compensation and reward. We saw many cases where

remuneration is relatively high but no effort is made to demonstrate

management’s recognition of good individual work. In other cases,

management is taking a series of steps to improve the work environment,

but doing nothing to make the work itself more significant and exciting.

The struggle with scarcity of IS staff is going to be with us for many years. IS

should develop an integrated strategy covering the whole staffing lifecycle,

and adopt best practice under the following management guidelines:

Actively seek out the people you need and explore creative ways to

reach them.

Become proficient in mining new sources of IS talent.

Hire for long-term fit, not short-term need.

Offer ‘cafeteria-style’ work options, not ‘one-size-fits-all’ jobs.

Provide interesting work as well as flexible work arrangements.

Invest in long-term staff career development, not episodic training.

Keep key employees by giving them a measure of freedom.

A prerequisite for success is that the organisation comes to regard IS staff

as a critical and scarce asset, to be developed and nurtured for their

valuable contribution to business results.

Employee motivation signatureNo amount of over-compensating inone motivator can account for a lackin another

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Documents

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union fenosa acex

sas institute spares

contributory pension scheme

uk post office

total career advancement

style work options

competitive pay scales