Magazine Articles by Alan Darling or Kimball Shaw

Solving the Turnover Problem
A structured human resource management system can help solve the people problem.

by Kimball Shaw, Charles D. LaBelle and Leslie J. Hallenack

- originally published in Datamation Magazine.

When you come right down to it, the DP industry could well do with an old-time miracle---one that would give all DP managers enough human resources to satisfy the demand that exists for systems and programming people. However, since we're probably going to have to settle instead for hard work and common sense, we'd like to suggest that there are solutions to the problems of attracting, motivating, and retaining superior computer talent. Some of these solutions have been tested and are working. Others, still in the embryo stage, merit consideration.

The focus of the major solution is project planning and implementation. Systems life cycles, steering committees, and project variance reporting are all part and parcel of everyday DP life -- and yet, the key ingredient of projects, people, has been left out in the cold. Precious little has been done for the care and feeding of the DP professional. And so he or she becomes a nomad, moving to where the action and money are.

If the DP wanderers could state their cases collectively, they would probably include such comments as: "The politics in that place were too much" … "I couldn't believe it -- they brought in consultants for that new development project and left me doing maintenance" … "They're not interested in my job development--the project's the thing" . . . "If only they'd fire a nonperformer so that I would know they cared about me" … and so on.

In most cases, what triggers a good performer to consider leaving is something other than money. And when the interest dies, it's almost impossible to rekindle it; alternate opportunities abound.

Consider some of the characteristics of the DP professional's utopia: a place where politics are at a minimum, where good opportunities and challenges go to deserving employees, where there is a conscious and systematic development of each person's skills. It would be a place where performance is evaluated on an objective basis, where equitable rewards are distributed, and where educational opportunities are available and attainable.

At Manufacturer's Hanover Trust, over the last eight years we have developed a structured human resource management system. We have found that there are some very tangible actions that can be taken to solve the people problem, and we have been successful. For example, we have met corporate goals through the implementation of major on-line systems for retail, wholesale, trust, corporate, and international divisions; we have seen a dramatic surge in user requirements as a result: we have had an uninterrupted string of management stability for seven years, including the ability to fill management positions almost totally from within for the last three years; and we have had definitively positive results on a detailed attitude survey of all DP personnel conducted by an independent firm. These results put MHT above the norm for DP organizations in practically every category.

STEPS TO BUILD A SYSTEM

The first step in building a structured human resource management system is the creation of a foundation analogous to a project life cycle -- one that portrays details and descriptions of each job and the interrelationships of all jobs so that the DP person has a career road map (Fig. 1). The plan should also define the skills that can be attained by working in the installation. This definition, a skills glossary, should be detailed by further defining the various levels of proficiency within a skill. Additionally, the levels of proficiency for each skill should be correlated to the job descriptions so that a standard is formed (Fig. 2). A person then knows not only what is required in the job but also the skills that can and should be acquired along the way.

At Manufacturer's Hanover Trust, this process has been applied to both systems and programming people, and people in computer operations in our 1000-person data center. The standard of skills is then stored as a data base so that each individual's status can be recorded, updated, and reported (Fig. 3),

In addition, the ranges of educational opportunities available are correlated to the various levels of skills proficiency. The Skills Profile Report can also suggest educational courses available to acquire needed skills. Performance ratings of each person are also important, and are included with the skills information.

Another ingredient is a strong human resource department that reports to management high enough in the hierarchy to be independent and effective. This department should consist of informed, humanistic people who are able to understand and communicate with the line organization. The department's function should include hiring, mobility, use of contract programming, performance appraisal, career development administration, education, and personnel administration.

Search firms lure away DP professionals by somehow knowing the good ones, and either contacting someone who is unhappy in a present job, or selling an individual on a "better" opportunity.

Why not set up a similar system within the organization? An internal search firm can seek out deserving employees and offer them the choice of other opportunities within the company if they so desire. What we are proposing is an aggressive, ongoing process designed only for deserving employees. A cardinal rule should be: only completely adequate or superior performers should have access to the mobility system.

The procedural setting of this mobility system has been tested and improved upon by Manufacturer's Hanover over the last six years. It starts with a job requisition that details the job and the skills needed.

A search is then performed on the database of employee's skills. Qualifying candidates are reviewed for performance criteria, and dossiers are compiled on deserving candidates and given to the requesting manager. At this point, the managers of these candidates are not aware that their persons may be drafted.

The manager with the requirement Iists the candidates in order of preference, and the draft takes place. The "search firm" meets with the candidate's manager and the manager may say yes or no to the draft. If it is a no, a reason is requested. If it is because of a critical assignment, the manager has one refusal right. Six months hence, he cannot refuse a draft for that individual, the assumption being that no one is indispensable for an indeterminate time, and managers must plan for succession.

If the manager allows the draft to proceed, the employee is told of the job and has the choice of accepting or rejecting the position. If the position is rejected, the next candidate is selected.

This internal mobility process has had a positive influence on the working environment at MHT because an individual knows that if he performs he will have access to the mobility process. When this process was initiated, most individuals would accept the draft. Now we have an equal number who elect to stay in their present positions, largely because their managers are doing a much better job of planning futures within their own departments.

PLANNING CAREER GROWTH

With the foundation we described above, managers have a better set of tools with which to plan each individual's career growth. Formalized career counseling sessions can not only elicit and document short- and long-term employee goals but can also use the detailed job descriptions and skills profile reports to plan specifically for job experiences and skills deveIopment. Since education has been tied to the skills, a manager and an employee can agree on an individualized education plan.

The plans are then submitted to the education department and monitored. This is the beginning of a pact between employer and employee on detailed career development. Variance reporting reveals those managers who are best fulfilling employee development plans.

The timetable for this process has thus far best been executed by appraising performance, and setting objectives on an employee's anniversary. A career counseling session with revised objectives is held six months later. The human resource department administers this process and performs a quality control check on the results.

The name of the game is to minimize turnover and maximize hiring. There is little dispute as to the enormity of this job. With these processes MHT has experienced a better control of turnover and an increased capacity to hire (Figs. 4 & 5).

However, it is critical that the game outside the company be played aggressively. Current employees must see that qualified people are being hired and are being given appropriate positions and salaries. This can better be done by instituting a controlled procedure of interviewing by technical people from the line organization. By developing questions tied to levels of skills proficiency, the process becomes more standardized. Candidates are required to complete abbreviated skills analyses forms and are questioned on their perception of their skills.

These interviews produce a document that pinpoints the job and skills assessment of the candidate. This document is passed on to the appropriate management for further screening.

Peer evaluation is the key to hiring from the outside. It is likely, however, you still will not be able to fill requirements with enough experienced people. Hiring entry level personnel and training them is an excellent strategy -- provided they can be retained (Fig. 6 shows MHT's experience since 1973). We have found three sources of people who are particularly appreciative of the opportunity and have a greater tendency to remain with the organization.

First are qualifying individuals from within the company. Particularly desired is a career path from computer operations.

From the outside, a program at MHT for training handicapped people (including the blind) has resulted in 20 programmers, and in five years, only one has left for another company.

A final source for meeting your requirements is the contract programming firm. Judicious use of this source can yield positive results if your employees understand the purpose of the firm's presence.

Some simple rules:

1. Deserving employees must have access to challenging opportunities before outsiders.
2. In systems and programming, legitimate uses of contract programmers should include assignments that are nonchallenging, such as maintenance and conversions, assignments for temporary use until a permanent resource can be found, and assignments of hard-to-find skills until your own people can be prepared.
3. All bidding for jobs by outside organizations should be competitive, and technical interviews should be given to their staff. Rate negotiation should be administered by the human resource department and line management, and choices made on a best price/performance basis.
4. Managers should not be allowed to rely too heavily on contract programming firms. Excesses occur where turnover is high, hiring is low and/or the manager is not motivated to develop people but is interested primarily in the project.

SOME NEW CONCEPTS

Finally, here are the embryonic concepts to which we alluded in the beginning of this discussion.

Setting Up a Consulting Subsidiary. Recognizing the profound changes that have occurred in people's thinking over recent years, companies will have to rethink human resource strategies . . . and of prime importance are salaries and benefits. More flexible arrangements in these areas will be needed in the computer business because of the pressure exerted by consulting companies. More and more, salaries are escalating. Subcontracting has become more popular as individuals realize they can get a bigger slice of the pie without a high risk. Companies may be able to moderate this impact by creating a DP consulting subsidiary to service the parent company. In this subsidiary, the salary-benefit ratio could be modified. Rather than benefits being, say, 30% of the salary total, certain benefits could be eliminated, and the difference transferred to the salary base. Later, the employee could be transferred to the parent company and the missing benefits could be substituted for an increase in salary.

Human Resource Accounting. By portraying the salaries and benefits of a company's human resources as an asset at the beginning of an accounting period and by adding plus factors while subtracting reductions (Table I), one can determine how much the value has increased or decreased. Likewise an expense statement can be constructed that reflects the costs incurred (Table II).

By so doing, and by applying on departmental levels, management can get a better handle on how managerial performance in human resources correlates with project and production results. Points of high turnover and low educational development tend to yield less satisfactory results.

Strategic Planning. While many people would argue that human resource planning exists in a number of firms, it is our experience that very few organizations include medium- to long-range (two to 10 years) human resource planning in the corporate planning process. Thus, large amounts of development and training investment are wasted. In fact, intelligent investment of these funds is impossible without strategic planning. Companies that do not place new and concentrated emphasis on the human resource considerations of their organization will be candidates dependent on consulting and facilities management firms; companies that develop successful systems for human resource management will be better able to cope with the DP challenges in the years ahead, and will retain strong DP capabilities.

The choice is clear.

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