With tech workers in higher demand than ever before, individuals who possess the right skillset are able to leverage their own experience and knowledge to gain the upper hand on employers. Retaining these workers is one of the biggest challenges for tech companies in 2022.
In a recent poll, we asked tech professionals who had moved jobs in 2021, if they would feel confident about moving to a new job now. It came as no surprise that 75% said they would feel either confident or very confident, reinforcing the severity of the skills shortage and highlighting the confidence about easily landing another job should they want to switch at any time.
The UK's tech sector is growing at 2.5 times the rate of the rest of the economy creating exciting jobs that require a range of skills and talent - but the UK is still facing a major digital skills shortage. To effectively prepare our workforce in an ever-changing digital economy, we need to inspire and support people into digital roles.
The costs of employee turnover in IT and tech have always been high. One study conducted by the Society for Human Resource Management (SHRM) found that replacing a salaried employee costs between six to nine months’ salary on average. In today’s environment, employee replacement costs, even as high as those just cited, might not come close to reflecting the “real” costs associated with losing key IT and tech talent. For organisations looking to leverage new technologies or develop new products around high-demand skills in mobility, Internet of Things, security, analytics, social media, etc., retaining the crucial talent necessary to meet their goals is critical.
The cost and opportunity associated with missed deadlines, reduced productivity, and diminished sales/revenues may even dwarf the out-of-pocket costs of replacing an employee. Companies are increasingly realising the importance of employee retention. The results from a recent Gartner Survey revealed that 91% of HR leaders are concerned about employee turnover in the immediate future. In tech, this number is probably closer to 100%.
It’s never been harder or more expensive to hire new people, yet you also have to defend who you already have, because they’re seeing the bright lights — being hit up on LinkedIn and hearing stories of friends attracted by big salary packages.
An enormous imbalance exists between recruiting expenditures compared to retention.
For technology companies, part of the explanation probably lies in the mismatch between the rapidly expanding demands for skills in the emerging technologies mentioned above versus the supply of such talent. If you need a Java developer today, you’re probably going to try to quickly hire one and not spend time training an existing employee. If successful, this approach might solve a short-term need, but in the absence of a well-conceived employee retention plan, the cycle will likely only be repeated the next time there’s a need for a specialised skill — and any assumption that such a need can be quickly filled might prove unrealistically optimistic.
Companies that have developed and implemented employee retention programmes have been successful at significantly reducing their turnover rates — but it isn’t easy. Smaller firms and non-profits often find themselves at a disadvantage when it comes to retaining hard-to-find talent. Part of what makes developing effective employee retention plans so difficult is that there is no standard template. A tactic that might work for one firm might not for another — there is no “one-size-fits-all” approach.
All too often, companies opt for developing retention plans that focus on what they perceive their employees want — rather than on what they actually want. Plans that emphasise compensation, benefits, and advancement might work for some, but the workforce has changed, and it’s now necessary to incorporate those changes into fashioning retention plans. Characteristics of proven retention plans include the following elements:
- Accommodation of generational differences in the workforce. For example, Millennials and Boomers have vastly different attitudes toward the world of work — plans that fail to acknowledge and address these generational differences run the risk of implementing misdirected tactics.
- Feedback and input from employees foster higher levels of engagement.
- Flexibility and choices in rewards/compensation, career paths, and working arrangements.
- Transparency in corporate goals and employee compensation.
- Training of line managers on how to understand and adapt to the attitudes of the people who directly work for them.
The way we compete for talent is to offer ‘stickery things’ such as share options, more recently now that we are in a position to do so offer more advanced benefits such as pension schemes. One thing that has gone down quite well is the offer of a ‘menu’ of benefits to our employees and enable them to prioritise them into say a list of ten.
The bottom line is that retaining valued employees is difficult and is likely to become even more so over the next few years. It’s imperative that organisations recognise and attempt to plan for an environment in which the demand for and availability of highly demanded talent is not in equilibrium. This will entail new approaches to getting work done, including new thinking about employee retention.
- For more information on how to retain tech talent, download our whitepaper ‘Re-evaluating your recruitment strategy post-covid’ to find out how market leading tech sports garment company, Kymira are using new techniques to prevent valued employees from resigning.