Finding The Secret Sauce For Employee Retention

Solution providers spend oceans of time finding " and then training -- the right people for particular job openings, and then, in an instant, they are gone. Sometimes it's a poor culture fit, other times they think they've hit the jackpot elsewhere. It's enough to make many CEOs wonder: Why do other companies seem more attractive? Retaining employees saves time and money spent recruiting and training new staff, offers customers more continuity and provides more stability for fellow workers. It's therefore crucial for executives to figure out the "secret sauce" for holding onto their workforce. For many, the answer may lie in benefits packages, according to the CMP Channel group's 2007 Salary Survey. The survey compares the average tenure of employees in the IT partner community to the presence or absence of certain benefits and policies in their companies. In other words: On average, how long do employees work for a company that offers certain benefits or has certain policies in place, and how long on average do they work for companies without the same benefits and policies? Topping the list of valuable benefits employees can offer employees are retirement plans. For example, approximately 69 percent of companies that hire sales staff offer retirement fund contributions to them. Sales staff stay at those companies about 40 percent longer than at the companies without this benefit. The study looked at a variety of employee entitlements, including: paid sick time, paid vacation time, paid family leave time, commissions tied to deals or sales, bonuses tied to individual performance, bonuses tied to company performance, overtime, health insurance, life insurance, domestic partner coverage, retirement contributions, free or subsidized certifications, college tuition reimbursement, technical training reimbursement, adoption reimbursement, a formal review process, and the use of clear, measurable goals for employees to strive toward. To participate in the survey, companies had to be at least five years old. Retirement benefits are clearly the top of the list for many employees: 70 percent of companies offer retirement fund contributions to technical, engineering or consulting. Those that do offer such "perks" retain these employees 31 percent longer than those that don't. Further, at the 72 percent of companies that contribute to retirement funds of their customer support staff, those workers remain at their companies 56 percent longer. Other benefits that aren't as ubiquitous can sometimes make a significant difference in how long employees stick around. College tuition reimbursement, at least partial, is offered to tech staff at 46 percent of channel companies. This benefit is associated with tech staff who stay 28 percent longer. Bob Cox, president of Nothing But Net (CRN Fast Growth #37), said offering help paying for college has differentiated his company, because employees perceive that the company cares about them enough to further their education. "Nothing But Net has found that the typical individuals whom we are hiring are of the younger age group and benefits such as medical, retirement, etc., are not enticing enough to bring them on board and/or to retain them in a competitive situation," he noted. "We incorporated a tuition re-imbursement policy through which our employees can further their education (preferably in the field of technology or business) and we will re-imburse them up to 100% of the cost once they pass the course. This has helped us from a retention level as it provides us with a positive and motivating offering for our employees." Offering career direction through reviews and constructive criticism is also another means of educating the workforce " a policy that is popular among employees. "Everyone understands the importance of a formal review process, but even with the best of intentions, this doesn't always happen as planned in many organizations," notes Laurie Benson, CEO of Inacom Systems (VARBusiness 500 #319). "Our management team spent time and focus to optimize this process at Inacom. The first step was to make it easy for everyone to give feedback." Inacom's formal review process has been incorporated into its payroll system. The process lets each manager and employee set goals and review them, with the results linked to payroll. The notification process includes reminders for important milestones, such as first 90-day feedback, which might occur when specific shortcomings are being addressed. Such clear-cut goals and formalized review processes can help solution providers retain employees, because they feel their accomplishments are recognized, and they have a well-defined growth path, while employees with weaknesses are put on an improvement plan. For example, Inacom had relatively low turnover of 6% in the last year according to David McLean, HR Manager at Inacom Information Systems, Madison, Wis. According to CMP's survey, the effect of a formal review process on talent retention is very small to nonexistent. However, what does make a big difference is whether the company "provides (employees with) clearly articulated, documented goals with measurable standards of achievement." Where management does this, sales staff stay 30% longer, tech staff stay 19% longer and customer support staff stay 14% longer. Only 30% of surveyed companies have such an inclusive policy. Other benefits, including insurance and lifestyle benefits, are becoming more commonplace, and while they are appealing to employees, many take for granted that employers provide them. Those that do not, had better ante up in other ways to make up the difference or risk losing the very investment they've worked so hard to attain: the employee. On October 15, CRN and ChannelWeb.com will release a larger analysis of the 2007 Salary Survey results.