So, it's that time of year again, Fortune has listed the 100 best companies to work for. Ranjan D Sakalley is making statements about developing talent. I'm currently taking a MBA class on Organizational Behavior. All this is building up to a commentary on business and IT that I hope is Joel Spolsky-like
There are some very serious problems in the business world today. Most of them apply to all the workers out there, but since I'm an IT guy I'm going to focus on IT. All the problems I'm going to address boil down to one final conclusion that should have employers very concerned:
There is almost no incentive for loyalty in corporate america
A bold and troubling statement! Now I have to back it up. Recent polls have shown that somewhere between 35 and 40% of workers plan on changing jobs. That is a troubling figure for any company, given the following information:
According to an anecdotal cost-per-hire survey by SHRM's Employment Management Association, the cost per hire in exempt positions is $10,400 through an agency, $2,100 via print, $1,000 by means of a job fair, and $392 via an employee-referral program. For nonexempt positions, the overall cost per hire is $14,498. (Office.com)
Basically that means that if your IT department has high turnover and your employees aren't happy, you can end up paying tens of thousands of dollars to replace staff. This doesn't even include the amount of time a developer will spend on the job getting acquanted with your systems and fitting into the team environment. IT workers are not 100% effective when they walk in the door so you are losing money there too.
So now I have established a definate cost to staff turnover. This doesn't cite why turnover is so high in the first place however. Here are what I believe are the main culprits of job disatisfaction and the relatively low average tenure of employment for workers in my generation.
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Elimination of pension plans
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Overtime Exemptions / Overwork / Burnout
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Declining benefits
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Shareholder (stock market) pressure
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Executive Compensation
Elimination of Pension Plans
This is a pretty simple one to piece together. Back in the day, a company had a nice pension program so that you knew that by staying with your employer you were going to get benefits after retirement. In today's market, your retirement funds are for the most part based upon your own contributions so the loyalty incentive has been replaced with another incentive: Making as much money as you can as soon as you can.
To their credit, many employers do some form of 401K matching to help you out with your retirement savings but the problem is that 401K matching is a fairly standard benefit. That means that 401K matching has almost no impact on employee retension because the next company down the line will probably offer that benefit as well.
Overtime Exemptions / Overwork / Burnout
If you are a white collar worker, it is likely that you are exempt from overtime pay. What this sets up is a system that rewards companies for poor planning and inefficiency. If your employer can agressively schedule a project and not have to pay you for extra hours you put in when the project gets behind, why should they bother trying to schedule things properly? Add the perception (reality?) that employees are not loyal and embracing the idea that your turnover will be high regardless and you breed an environment where management seeks to squeeze every drop of productivity out of their workers before attrition kicks in. In my very humble opinion a great way to make American businesses better managed is to increase the penalties of poor management!
Also, our paid time off is some of the lowest figures in the world. How come companies like Airbus in Europe can give 3 times the time off that American companies do and still remain competitive? I've wrote it before and I'll write it again: After a certain point, the number of hours worked has an inverse relationship to the amount of productivity.
Declining Benefits
When you get to the point where medical coverage contributions are costing you out of pocket almost what it would cost you to buy your own and become a contract worker... enough said. This is something of a national problem than a corporate problem... but when you think about the above cost of over $10,000 to hire a new employee through an agency, don't you think it's worthwhile to kick some extra money into benefits?
Look to companies like SAS for an example of a company that treats its employees very well. SAS, if you're in need of .NET developers, you can call me anytime.
Shareholder (stock market) pressure
I see a definate trend between publicly held companies and declining benefits. This is because of a stock market system that demands gains in the short term. Executive compensation is deeply tied to the market. All this adds up to motivation to be short-sighted as far as company goals are set. Hurting your employee benefits just to drive costs down so the company can make an extra cent per share is a horrible long term strategy and eventually it will come to haunt management and investers both.
It is already well documented that the demographics of the employment landscape are shifting and after the baby boomer generation is unable to work anymore there are going to be some enormous holes in organizations. Without having built a culture of satisfaction and loyalty companies are going to be paying enormous fees to attract the talent they need to survive. The retension process needs to start very soon, or you'll be left behind.
Executive Compensation
Yeah, you guys are the head honchos. You've worked hard to get to the top positions in the company and you certainly deserve a robust salary. But come on, it's getting a little ridiculous:
In 2003, the average CEO of a major company received $9.2 million in total compensation, according to The New York Times.
Think about it, that's average, some CEOs are making more than that amount. Just think about the impact on job satisfaction if every CEO took a 50% paycut and dumped that money right into employee benefits programs.
*** End Transmission***