Inc. Query

Q. We're in the information-technology consulting industry, where employee turnover is at least 50%. We've kept ours at about 15%, and we're committed to finding and keeping superior people. But our competition is catching up. How can we stay one step ahead?

--Jim Mohs, vice-president of sales and marketing Born Information Services Inc., Wayzata, Minn.

A. You know you're in the midst of a booming IT-employment market when industry insiders joke that anyone who can spell JAVA can command a sizable pay hike. As a consequence, the cost of replacing consultants doesn't show any signs of slowing down. While you can't fully insulate yourself from the escalating salary wars, experts agree that you can reduce the negative impact turnover has on productivity, morale, and ultimately, the bottom line by investing for the long haul.

To really stay a step ahead, you must cultivate a sense of common purpose and trust among your employees. "Our people want to feel as if they're a vital piece of something larger," says Brenda Wilbur, chief operating officer of CompuWorks, a four-time Inc. 500 computer-systems-integration company based in Pittsfield, Mass. "They want to feel as if their peers rely on them to do their best, day in and day out." In an industry rife with fast-paced employee turnover, CompuWorks has beaten the odds. According to Wilbur, annual turnover has never exceeded 5%. Cultivating such intense loyalty in any workplace isn't easy, but here are a few easy-to-adopt tips from CompuWorks:

  • Pile on the personal and team recognition. The Wizard of the Week award is presented to the employee who goes beyond the call of duty. Employees nominate peers, and the winner is chosen by the reigning Wizard. The award: a quirky statuette, a book, and a $50 gift certificate. Team incentives are based on operational improvements, and accomplishments are applauded in staff meetings.
  • Offer flexibility. CompuWorks has a unique accrued-time-off system, dubbed the Time Bank. Every month, 10 hours of free time is deposited into employees' individual accounts, which can be used for vacation, sick leave, or personal time.
  • Involve employees in decision making. An advisory board of 20 convenes every other month to address pressing business issues. Board members, roughly one-third of whom are employees elected by their department members, are paid $50 per meeting. Charitable-giving efforts are managed by the community-involvement group; the annual "fun" budget, which covers everything from nights out at the movies to the annual family retreat, is controlled by the social-activities group. "This level of involvement gives people a real say in what's happening," notes Wilbur.
  • Communicate, communicate, communicate. "Ask Al" is an area on the company's intranet where president Alan Bauman fields anonymous employee questions and posts his responses for debate. A biweekly newsletter lists in-house seminars on more personal topics, such as relieving stress and getting a better deal on auto insurance. "Work and life should collide," says Wilbur. "We try to blur those lines when possible."
  • Train like crazy. CompuWorks teaches employees how to read key financial statements and then challenges them to work on fictitious statements to become familiar with the process. Once that's clear, they start developing their own departmental scoreboards, which some departments update weekly. Service and software employees, for example, chart billable hours. Software trainers watch occupancy rates in their classes. The administrative staff watches cash-flow levels. Eventually, most sales reps' commissions will be eliminated so that everyone can focus on the big picture: profits.

The results speak for themselves. CompuWorks employees not only receive regular bonuses based on company profits but also gain a palpable sense of personal achievement. "Individuals can see clearly how valuable they are to our organization," says Wilbur.