Today, you don’t compete for talent against local organisations, you compete with everybody; Silicon Valley included. There aren’t enough quality candidates, and they are bombarded with offers. Building a team is not a cakewalk, but there’s plenty of advice on that (we’re lucky).
As a leader, you want to:
- Get the best hires as fast as possible and within the budget,
- Get them to speed,
- Retain them.
None of this is easy, but the last is the most painful because you have already done the hard job of sourcing and onboarding. It’s a problem I hear about constantly from CTOs, Directors of Engineering, VPs, or other tech managers. If I were one of them, I would indeed check out what other companies do to fight back against retention, hoping I could learn something from it.
I decided to explore that matter and check what information was available. Then, in the spirit of “doubt everything”, I thought we could do a little experiment with what I found.
One of our promising marketing juniors – Magda – went through a few hundred websites with advice on retaining IT talent, and collected the top 10 most common. Then we wanted to verify how the advice she found on the Internet stood against reality. So, we asked our software developers what they thought of them and if they hold true.
Here’s what the Internet advice looks like:
- Provide high-tech technologies and tools
- Career growth opportunities
- Upskilling/learning
- Good company culture
- Recognise their awesome work
- Flexible work arrangement
- Variety of project tasks and challenging tasks
- Empower employees
- Good salary
- Good relationships in the team
Initial findings
All the above factors hold true and are considered essential for software developers. However, they’re vague, e.g. what does good company culture mean? Or how is “recognise their awesome work” going to help you when retention is high? It’s very general. None of these give actionable advice on software retention.
In contrast, let me share a quote from one of our developers that is actionable:
“Frequent contact from founders (or other higher-ups) – info about company growth, new faces, targets, accomplishments, successes (failures too!). We are all people (not drones :D) and want to see progress and how our actions impact the company.”
Can you see it? There are certain things that you could do based on that. Is this the most important? That’s another story that we’ll explore in a second (actually, right now).
Before diving into the details of our homemade retention test, I think it’s essential to first understand how we found what we found. So, we asked the developers to rank each factor in order of importance. Then they scored them on a Likert scale, ranging from 1 (not important) to 5 (very important), and there was also an optional open-ended question. Here’s what we found:
The No. 1 factor in retaining IT staff is a good salary.
47% of all developers pointed out that salary is critical. However, I should point out that some senior developers favour good company culture and good relations with the team over a high salary, but the numbers are not high. Still, ~35% of them declare that compensation is the most critical factor. There’s a pretty big gap in scoring between the 1st and 2nd factors, emphasising the importance of compensation in retaining talent. One could conclude that all the lovely stories about developers at Netflix who make $455,000 a year and then quit, are outliers.
Work environment
For many companies, it’s hard to compete on salary caps, so they could focus on the work environment before they figure it out. Based on our test, we couldn’t select the second most important factor in talent retention because the difference between the following five factors was minimal. However, they do relate to each other, so it made sense to boil them down to one category: the work environment.
Here they are:
- Good relationships in the team
- Career growth opportunities
- Flexible work arrangement
- Upskilling and learning
- Company culture
Yet again, these are generic terms and are not actionable.
“One of the best feedback which an employer can get is when former employees want to come back and work with us again. It’s a sign that he trust us, and that we create a better workplace than similar companies. Sometimes it happens that after a few weeks or months we get a message from someone who left Idego to try another job opportunity, with the question if we have any project for them. After trying something new, they appreciate a lot our work environment, where they feel important and respected, where they can have impact and where people care about each other. We are always happy to invite our alumni again to Idego, and continue our work style, where we are mostly focused on individual approach. We value trust and independence, but also do everything to support those who have worse moment and celebrate together successes. Regularly we send also little (or bigger ) gifts to our employees, to make sure that even if someone works remotely, they have a chance to feel as a part of Idego.”
Variety and technologies
Next, come high-tech technologies and tools and a variety of project tasks. I’m pretty sure that many tech leaders are familiar with the scenario of when a software engineer comes to you and says that they want to work with technology “X” (whatever the latest cool thing is). Still, sometimes there’s no place for technology “X” in a project. So, now you know if you don’t do something about it, sooner or later, this person will search for a new workplace. But you don’t want to increase the technological debt by introducing any technology, at any time.
Yet again, what the Internet suggests doesn’t solve the hypothetical problem above. Actually, it doesn’t solve any problems.
BTW, to solve it, you could shift that person to another project with this technology, but not all organisations have that option.
Relation with management/supervisors
Recognition of work and empowering employees was ranked as the least important factor for software developers to stay in their current jobs. Actually, 49% of them have rated empowering employees as the least important: 10th position. So, I’m not sure if we have asked the open-ended question of what matters to them, that empowering employees would appear. Why might that be? Of course, I don’t know the answer to that question. I can just speculate. It does matter, but when it’s done right, it’s not visible as “my manager empowers me” but rather as good relationships in the team, growth opportunities and company culture.
Conclusion
The most straightforward answer to the question of how to improve employee retention rates is the money. There are two good reads on that:
- There are some interesting concepts on how to approach it, such as the one ConvertKit implements. They pay salaries based on the national average for each role at the 70th percentile, regardless of the employee location (read more in this Twitter thread).
- Also, a post by Jade Rubick is an excellent primer on compensation – What do great engineering managers need to know about compensation and equity?
On the other hand, labour costs account for up to 70% of all business costs. That’s a high number, so not every company can compete on salary caps. If that’s the case, or you want to add another layer to the retention fighting crusade, you should invest in creating a great place to work (like we do).
The Internet doesn’t help much on how to do it in the IT industry, but I reckon you could use good practices from other industries. But, in the end, being a software developer is a job, not an identity. Software developers are just in a better negotiating position than the rest of us, but still want the same things that other people want.
But there’s another option. (Shameless plug warning.)
You could use Idego Team Extension – it’s like your in-house team but with more flexibility, and retention issues are our problem, not yours. But don’t kid yourself that the cooperation with us will go smoothly. At some point, somebody won’t deliver. That’s just a reality. The good news is that, in our case, it’s a benefit that creates the tension for us to provide a quality service. So, if you feel that could be interesting, you know what to do (click that DAMN Get in Touch tab).
P.S. Please remember that I’m not a tech leader myself, so I could get something wrong. Feel free to destroy me in the comments 🙂
Idego • Feb 01