Staff turnover is recognised as expensive and problematic across all industries, but it’s arguably more so in the critically important and specialised field of information technology. However, studies have shown IT staff are more inclined to make a career move than others.
A recent survey by the Australian Human Resources Institute put staff turnover in IT at 20.6%, against 18.5% across all industries. At the same time, there’s a reported IT skills shortage in Australia. Yet, as noted at the Australian Council of Professors and Heads of Information Systems (ACPHIS) annual meeting in Perth in late 2011, 9.5% of Australian IT workers are unemployed – well above the national unemployment figure of 5.2%.
To some extent these figures reflect the nature of the business, says Aybüke Aurum, an associate professor in Information Systems at the Australian School of Business, who points out that changing technologies constantly generate new requirements and the upshot may be staff turnover. With the trend for systems to migrate towards mobile devices, for instance, the industry has an ongoing need for staff with the requisite skills.
And there are positive and negative aspects to IT job changes, she says. “[Individuals] need to move around to have different experiences. And from an organisation’s perspective, you need ‘fresh blood’ from time to time. The challenge for employers is to form a balance between the two.”
Common reasons why IT staff quit their jobs include role ambiguity and role conflict, finds new research by Aurum and colleague Amir Hossein Ghapanchi, who have conducted the most extensive literature review on the topic to date. It encompasses 72 studies undertaken from 1980 to 2008.
Their paper, Antecedents to IT Personnels’ Intention to Leave, classifies the distinct drivers of IT employee turnover into five broad categories – individual, organisational, job-related, psychological, and environmental – and finds better communication, improved training and knowledge, and more focus on the design and definition of tasks can make a significant contribution to the retention of key IT professionals. The research findings are important for IT managers, as many of the drivers of turnover are largely within a manager’s control, emphasise the researchers.
The skills offered by IT job candidates may not reflect the needs of potential employers, Aurum suggests. “What employers in Australia want [from IT staff] are communication skills, interpersonal skills, and a strong understanding of the business environment – more of a management skill set. And not just the ability to manage people, but also to manage technology,” she says.
A distinguishing factor of the IT workforce and staff turnover is the high proportion of contractors in the industry, notes Peter Acheson, chief executive of Peoplebank, a recruiter that places more than 3000 contract and permanent IT staff across Australia each year. “Major organisations use contractors because they can turn [staff levels] up and down, depending on project activity,” says Acheson. “Typically, between 20% and 40% [of an IT workforce] are contractors.” But the way the IT industry has evolved over the years has led to a higher turnover of staff. “Typically the emphasis has been on whether a person has got really good technical skills,” Acheson says. “These people have filtered to the top – but they’re not always strong in people skills.” Acheson notes that a similar phenomenon is seen in other industries, including engineering.
However, this has changed dramatically over the past five years. Many companies are undertaking a big push to develop IT specialists for management and leadership roles, in an attempt to keep their best people and reduce staff turnover. “Good, high-performing IT people are invaluable, and (are) major contributors to shareholder’s value creation,” says Acheson. “The understanding of this is growing across the industry, as IT is now seen as underpinning all areas of business.”
Acheson observes two specific kinds of initiatives across the industry are aimed at increasing staff retention. “Some organisations that spend a lot of money on IT are now developing strategic plans – categorising IT people for performance and potential, and what they need to do to prepare people for future roles. Four or five years ago, the focus was simply on system uptime, and delivering projects on time and on budget,” Acheson says.
Another initiative is around IT employer engagement, a more holistic approach about notions of what makes a particular company a good place to work. “Most companies understand this in general, but the focus on employee engagement is now carrying over to IT,” Acheson says.
The reasons behind staff turnover in IT are not fundamentally different from those in any industry – the issues include a person’s experience in the workplace, opportunities for advancement, variety and recognition at work. “It’s about motivation and being treated as a human being. In surveys of staff turnover, across all industries, between 72% and 80% of people cite their relationship with their immediate manager or supervisor as their reason for leaving,” says Acheson. “IT has gone from being the ‘geeks in the back office’, to being front and centre in what every company does,” says Acheson. “Five years ago, IT was seen as a necessary evil – ‘I don’t know what they do, and it costs us a lot of money’. Now it’s seen as a key driver of all areas of a business. And so we have to get better at managing the people who do it.”
“Staff turnover is always on our radar, but fortunately is not a big problem for us,” says Joris Luijke, vice-president of talent and human resources at software development company Atlassian. “Our total turnover of approximately 10% per annum is significantly less than the national average.” HR consulting firm Aon Hewitt recently measured Atlassian’s staff engagement at 86%, and this year the company was named in the top five best places to work in Australia, by the Great Place to Work Institute.
Luijke and Atlassian’s approach to staff retention draws on the ideas outlined in Daniel Pink’s book Drive, a study of what motivates people. It boils down to three basic areas – autonomy, mastery and purpose. Autonomy is about the freedom of an individual to determine how they manage their own work. “How do we leverage people’s creativity and trust their capabilities to make great decisions?” asks Luijke. One way in which Atlassian is harnessing the creativity of its staff is through what has become known as FedEx Days.
“Every quarter, we give employees 24 hours to work on anything that relates to our products, and deliver it within 24 hours,” Luijke says. (These are called FedEx Days, after the length of time it takes for the courier company to deliver a parcel.) Atlassian encourages its staff to spend time on pet projects and to foster their creativity. “Our philosophy is that people don’t have to work to a product road map all the time. A lot of the projects from FedEx Days are turned into features that have made it into our customers’ hands,” Luijke says.
Mastery for Luijke is all about an individual’s intrinsic motivation to advance their skills. “And what’s better than to start by focusing on areas people naturally love doing? Through monthly coaching sessions, we purposely make an effort to find what people love to do – and loathe to do – in order to help people find their ‘sweet spot.'” The company strives to increase what a staff member loves to do by an hour a week, and to decrease what they loathe by the same amount. “You only attain mastery in an area that you’re truly passionate about,” says Luijke.
Lastly, Luijke insists ‘purpose’ is a higher-level vision that every company should have, on how their products or services will change the world in some sense. He cites an example of a company, such as Facebook, where the impact that the company is having on the world of social interaction is obvious to everyone who works there. “Atlassian makes it really clear to staff that we’re about changing the way in which technical teams collaborate, and helping them build awesome software products.”
For Luijke, having that sense of purpose helps people rally around a common goal. “Many organisations don’t have a clear idea on how they are changing the world or how they differ from their competitors. Often, the organisation’s ‘purpose’ is really clear amongst senior management, but isn’t communicated to staff.”
Short-term financial incentives are rarely the most important factor in motivating and retaining staff, Luijke says. While the company offers salaries in the top percentiles, it doesn’t have a system of personal performance bonuses. It does offer stock options to all staff, from the reception desk to senior developers – a practice that is unusual in Australia. “Managers need to understand how to motivate and engage their reports,” says Luijke. “A supervisor who manages based on these philosophies has a better chance of retaining staff.”