Retention Strategies for Hot Skills - G. Evans & D. Johnson TRENDS IN RETENTION STRATEGIES FOR...

Retention Strategies for Hot Skills - G. Evans & D. Johnson

TRENDS IN RETENTION STRATEGIES FOR

HOTSKILLS

March 19, 1998

Gail EvansThe Wynford Group

Daryl JohnsonErnst & Young

CANADIAN COMPENSATION ASSOCIATION

CCA Seminar - Calgary

OIL & GAS Exploitation Rotating Equipment Engineers Process Engineers Exploration - Prospect Generator Land Records Administration Engineering Technologists

What the ‘HOT SKILLS’ Are

Trends in Retention Strategies for HotSkill by G. Evans & D. Johnson


INFORMATION TECHNOLOGY Progammers Network and INTERNET Software Developers Integrated Business Application -

SAP, PeopleSOFT, Oracle

Systems Architects Legacy Systems - Y2K - COBOL




OTHER AREAS Project Managers Accountants, Controllers Tax Accountants Marketing/ Business Analysts Human Resources

Compensation

Construction/Trades Journeymen




ADVANCED TECHNOLOGY Hardware Engineers - Telecommunications Electronic Engineers Specialized Research Scientists -

Biomedical Drafting/Graphic Designers




Why These Skills are Hot

Restructuring of organizations and work

Core Competencies - basis for competitive advantage

Lack of graduates in 5 - 8 year range

Changing TechnologyTrends in Retention Strategies for HotSkill by G. Evans & D. Johnson


You think there’s a problem now …

North American Information Technology Work Force

1994 2M workers2005 3M workers

North American Job VacanciesToday 205,000Year 2000 290,000*

CANADIAN I.T. Job Vacancies1996 12,0001998 20,000*

*number under upward revisionSources: U.S. Office of Technology Policy Canadian Software Human Resource Council



Critical Issues for Retaining Technical Employees

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

Turnover

CompetitiveCompensation

Attracting SkilledResources

Training

Work Environment

Burnout

from Alberta Information & Advanced Technology Survey - Fall 1997



Retention TrendsCompensation & Rewards

Employee Referral Bonus becoming increasingly common

Signing Bonuses

recent graduates seasoned specialists , in-lieu of bonus, stock etc.

comp

Special Hot Skills Bonuses -e.g.: SAP, Project Mgmt, Eng. Trends in Retention Strategies for HotSkill by G. Evans & D. Johnson


Frequently Used Reward & Recognition Programs

0 5 10 15 20 25 30 35

Employee Referral Bonus

Signing Bonus

Project Milestones

Special HotSkills Bonus

Retention Bonus



Key Components Of Incentive Compensation

• Relevant to individual or team

• Alignment of goals and outcomes

• Influence on outcomes

• Balance of risk and reward

• Retention of valued employees

• Motivated by intrinsic value

• Alignment of goals

• Empowered employees

• Continuing performance

• Short-term motivation

• Specific behavior reinforced

• Rewards specific performance

RESULTS

RESULTS

Short Term

Incentives

Longer Term

Incentives

Specific Goal

Effort ValuedReward

Results

ValuedReward/Feedback

Effort

© Gail E. EvansAligned Goals

IMPACT OF REWARDSResults



Short-term Incentives

60% of employers have short-term incentives in place.

8% will implement in 1998.

Cash bonuses preferred

30% Providing Profit Sharing

Common for professional employees and above.



Short-term Incentives

Rewards based upon performance :

of Company 60%of individuals 50%of team/BU’s 35%



Long-term Incentives

30% already have in place.

5% plan to implement in 1998.

Stock preferred approach.

Gradually being provided to lower levels.



Stock Plans

Stock options preferred

Also employee stock purchase & phantom plans

Rewards earned primarily upon individual performance, except Sr. Mgmt.

Company performance typically reflected in stock price.



Retention Bonuses

Hottest long-term trend

Particularly for long-term projects, R & D Based upon:

time alone achievement of specific performance

targets e.g. budget, safety Structure - payout in 2-3 years



THE EMERGING ORGANIZATION

Workers

Project Managers

Staff Functions

Mid-Mgmt

EXEC

Core Staff

EXEC

Coaches

Project Managers

Knowledge Workers



The New and Emerging Workforce

Greater Workforce Diversity Aging Population “Free-Agent” Employment Status Home/Work Life Balance Increasing

Priority Increased Expectations of the

Employment RelationshipTrends in Retention Strategies for HotSkill by G. Evans & D. Johnson


The Social Contract

Job SecurityBenefitsCareer LadderIncomeBig OfficeOther Perks

A reasonable day’s workLoyalty and dedicationCommitmentWillingness to obey

Challenging WorkTraining and learningFair Compensation

Work in proportion to remunerationConstant skills upgradingHonesty and loyalty

OLD

NEW



Why Companies Lose Hot Skills

Poor project management Job restructuring Better opportunities Too many hours away

from home Quality of life suffers “our industry is not a ‘sexy’

one” Lack of

leadership/frequent change

Lack of career direction More money Technology is not a high

priority Opportunity to work as a

contractor Internal opportunities Desire to work in a

smaller, more entrepreneurial organization



IT Best Practices: Career Effective technical recruiting methods include

website postings and partnerships with universities/technical institutes

T&D opportunities are considered a high priority

Longer-term career paths are a concern for those dedicated to projects



IT Best Practices: Job Content Change of focus from job to role

Performance Management processes now often multi-rater

Professional development opportunities and project assignments are increasingly replacing pay as important consequence of performance



IT Best Practices: Affiliation The IT workplace is becoming more

responsive to the balance between work and personal life telecommuting job sharing part time work

IT titles are being simplified to reflect more dynamic, project-oriented roles

Increasing number of contract workers



Usage of Work Environment Strategies

0 10 20 30 40 50 60 70 80

Flexible Work Hours

Casual Dress

HomeOffice/Telecommuting




Strategies For The Future

Cash is key Control base salaries Increased use of variable pay Signing bonuses continue Retention bonuses tied to performance Alignment with organization Career development opportunities



Reward Strategy Trends

Role/Person-Based PayJob-Based/Internally Equitable Pay

•Relevant Market-Based•Pay for Development•Skill/Competency-Based

Reward Customization

”One-Size-Fits-All” •Personalized Risk Levels•Pay based on Individual Value of Rewards


KEY SUCCESS FACTORSKEY SUCCESS FACTORS

BASE PAY

COMPENSATIONCOMPENSATIONSTRATEGIESSTRATEGIES

VALUED BY INDIVIDUAL EMPLOYEEVALUED BY INDIVIDUAL EMPLOYEE

ALIGNING REWARD STRATEGIES FOR KEY ALIGNING REWARD STRATEGIES FOR KEY KNOWLEDGE WORKERSKNOWLEDGE WORKERS

INCENTIVE PAY

STRATEGIC ORGANIZATIONALSTRATEGIC ORGANIZATIONAL GOALSGOALS

SATISFIED EFFECTIVE SATISFIED EFFECTIVE EMPLOYEESEMPLOYEES

DEVELOPMENTDEVELOPMENT STRATEGIESSTRATEGIES

CORE COMPETENCIESCORE COMPETENCIES

KEY KNOWLEDGE WORKERSKEY KNOWLEDGE WORKERS

THE WYNFORD GROUP

Retention Strategies for Hot Skills - G. Evans & D. Johnson TRENDS IN RETENTION STRATEGIES FOR...

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