CIO challenge: IT retention

When it comes to talented IT staffs, midmarket CIOs have to guard their flock against bigger game.

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Is poaching back in season? After a four-year lull, midmarket CIOs are worried again about losing valuable employees to larger or more competitive firms.

"What we're finding over the last few quarters is a lot more midmarket CIOs have raised concerns about retention," said Mika Yamamoto Krammer, an analyst at Gartner Inc., who covers the small and midsized business market.

A big issue at the height of the tech boom, retention problems are on the radar screen again as some technology markets improve and increase demand for skilled professionals, Krammer said.

Many medium-sized firms are willing to invest scarce resources to train their IT staffs to handle many tasks.

Dawn Dillon, a CIO at Salem Five, a mutual bank based in Salem, Mass., with $2.3 million assets under management, said her situation is a case in point. "I have a very lean staff and I pay huge dollars to keep them trained, because I can't afford to have them be a mile wide and an inch deep. They have to be a mile wide and a mile deep," Dillon said. "These people are hugely valuable. Are we concerned about retention? Constantly. We worry about it every day."

Salem Five requires its IT staff to attend classes and pass tests, not because it wants the certifications on their resumes, Dillon said, but because it is "evidence of their comprehension and forces them to pay more attention in class." The bank's network person, for example, has four or five professional certifications in addition to his Microsoft systems certification. However, the bank's extensive investment in its IT workers is a Catch-22. "They are much more marketable with those certifications," Dillon said.

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A fear of losing staffers can affect management style. Dillon said she gets "very nervous" when she has a disagreement with a staff member, as she did that morning. "It would not surprise the daylights out of me if she came in and resigned." But the bank's willingness to work around doctor's appointments and family responsibilities "makes people think twice about leaving."

Indeed, employees who decide to defect often are motivated by more than money, Gartner's Krammer said. Those employees fall into two camps: those who are looking for more balance between work and personal life and those who are concerned about career advancement. Krammer suggested that CIOs think more about flexible work models and job sharing, but concedes that a benefit such as telework is often not realistic for many midmarket companies, because a lot of the IT work has to be done on site. "And I would question anyone looking for a job change for those reasons, how going to a bigger firm would be better," Krammer said, noting that the IT market is demanding no matter where you go. "The IT department at a General Mills or Bank of America is demanding in a different way than a midmarket company, so I would urge people thinking of making a change for work-life balance to really investigate that."

Howard Roundy, director of IT for the New Hampshire State Liquor Commission, lived through the high-flying days of the New England tech boom -- but not happily. Before the bubble burst, he was losing people left and right. He went through three assistant directors in a few years and several very good Unix technicians. "None of them was really looking. Every one of them went because they got a significant raise, as much as 40%," Roundy said.

In New Hampshire, the state sells the booze. The New Hampshire State Liquor Commission, a $450 million business, is the state's third largest revenue producer, contributing $120 million in profit this year into the general fund. Roundy oversees a staff of 14 and a budget of about $2 million.

Although the state provides excellent medical and other benefits and offers the luxury of a 37.5-hour work week, salaries lag private sector pay. Roundy, who joined the state commission in 1982 and has headed IT operations since 1997, earns just under $70,000. His lead developer and technical help people make around $55,000. "As a state government office, I can't open up a checkbook and say, 'Gee, I'd really like you to stay, here is another $10,000.'"

Defections can cause major shifts in IT policy. With the exodus of his Unix people -- and the dearth of Unix training at local schools -- his department is now totally a Windows shop, even though his POS software runs better on the preferred Linux platform.

Like Dillon, Roundy said his strongest ally in the retention wars right now is the depressed New England market. "Since the bubble burst, it is not as easy for people to move on," he said. He also credits his management style. "I treat them all like reasonable human beings."

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