Turnover is expensive and painful for businesses of any size, but especially so when it comes to losing IT employees. In some of our other posts about the trends affecting America’s IT climate, we’ve touched on how increasing IT spending across the board (which drives higher demand for IT talent)—coupled with a short supply of available, qualified people—has resulted in a candidate’s market for IT specialists. This is especially true for those with the rare combination of technical skills, collaborative spirit, and the drive to conquer the next big challenge.
Top-performing IT consultants can demand higher salaries, be more selective about their assignments, and walk away from contracts, knowing more options are waiting just around the corner.
The Land of (Too Many) Opportunities?
Jobs are pretty much like everything else—we want what we can’t have and the grass is always greener. Although exacerbated by the rising demand for technology resources, these high turnover rates are reflective of a broader overall workforce trend in the US. With dozens of free websites for every industry that post new positions by the minute and even deliver openings to our inboxes that are matched on skillsets and locations, job searching is a fairly effortless process these days. According to a Jobvite survey, nearly two-thirds of America’s workers are passive job seekers ready to consider a move, and in 2011 there was a 5.2% voluntary turnover rate within one year of hire.
“Now that the U.S. recession is over and the economy is moving in the direction of a recovery, voluntary turnover will reemerge as a critical component of workforce planning,” says SHRM Customized Benchmarking Database. “High performers will see opportunities to switch jobs and take their in-demand skill sets with them.”
In addition, many developers are launching startups and becoming wildly successful on their own. Take Pusher.com, which was started “accidentally" by two developers communicating over Twitter—and is now supporting global companies to create a new generation of online apps.
The Effect on Business
High turnover rates—especially on time-critical initiatives like IT projects—can really hurt a business’ ability to maintain a competitive edge. According to the Houston Chronicle, it may cost as much as $150,000 (or three times the annual base salary per position) to replace an information technology employee who earns a salary of $60,000 a year. Much of the expense is in indirect costs such as loss of training, loss of institutional knowledge, productivity losses, consulting fees and overtime expense.
As a direct effect of this trend, contractor hiring has increased so that the workforce (lately referred to as the “freelance economy” by the press) can engage with employers in a number of flexible ways (telecommuting, part-time, compressed hours, etc). Freelancers, contract workers, and consultants now number nearly 17 million—12 percent of the workforce. The number of temps has jumped more than 50 percent since the recession ended four years ago to nearly 2.7 million— the most on government records dating to 1990. In no other sector has hiring come close.
Companies that are experiencing unsustainable amounts of turnover in their IT departments are not alone. Many are turning to blended staffing models of full-time, outsourced and contracted talent. They can depend on staffing firms to access a bigger, better pool of talent, and to pipeline around the clock by networking, recruiting passive job seekers, and using proprietary applicant tracking tools to source millions of candidates. Partnering with a staffing firm also gives an organization the chance to “Try Before You Buy,” which decreases retention (both voluntary and involuntary) in the long run.
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