Overcoming limits to success

August 2008 » Business
The difficulty in recruiting and retaining talent in the A/E industry continues to be one of the biggest limitations to our success. Not surprisingly, the most difficult positions to fill are professionals with three to 10 years of experience. This seems to beg the question: What are firms successful at retaining junior level staff doing differently?
Michael A. Zmugg

Best firms to work for offer lessons for retaining junior staff

"We shouldn’t invest in junior staff, they are just going to eat up our training dollars and take their newly acquired skills to a competitor." This sentiment is all too common among senior leaders in the A/E industry. After all, we have all seen a large percentage of our younger employees get their feet wet for a couple years at our firms, learn the basics, and then leave us for more money or a vertical career move.

It is a given that there will always be a certain amount of turnover among those with zero to four years of experience, but it is also evident to many of us that the sentiment mentioned earlier is a self-fulfilling prophecy. The key to success with this group of employees is not to keep everyone we hire, but rather to keep the ones we really want!

The difficulty in recruiting and retaining talent in the A/E industry continues to be one of the biggest limitations to our success. Once again, staff recruitment and retention ranked as the biggest challenge facing firm principals in the ZweigWhite 2008 Principals, Partners, and Owners Survey, outranking other challenges such as business development/marketing and ownership/leadership transition. Not surprisingly, the most difficult positions to fill are professionals with three to 10 years of experience.

While these positions have been among the most difficult to fill for quite some time, during the past several years it has become even harder. Positions that once took three months to fill now take more than nine months or even a year. What were once targeted searches of local candidates have now become national searches involving signing bonuses and relocation packages—and it doesn’t appear to be getting any easier.

As a result of these challenges, many firms have changed their staffing strategy away from a recruitment-centered approach toward retention and internal development of talent. The cost of hiring recruiters coupled with the opportunity cost associated with the time and resources that hiring managers spend on finding the right candidate has made filling vacant positions with external hires a very expensive endeavor.

This seems to beg the question: What are firms successful at retaining junior level staff doing differently? To explore this further, we analyzed employee satisfaction data obtained for the 2007 CE News Best Civil Engineering Firms to Work For ranking. We explored the key areas where satisfaction ratings for employees with zero to four years of experience in the firms ranking in the top 10 were considerably higher than those in all other firms that applied. Of the firms that ranked in the top 10, 2,243 employees responded to a 90-question employee satisfaction survey. Of all remaining firms that entered the contest, 21,393 employees responded to the survey.

Through analysis of the data, we identified three key areas in which employees with zero to four years of experience from the top 10 firms consistently indicated a higher rate of satisfaction than their peers in other firms. These include compensation and benefits, training/professional development opportunities, and general firm-wide management. Further evaluation of the findings and recommendations for each of these categories is provided below.

Compensation and benefits
Compensation stands out as the area in which there was the largest disparity in satisfaction between our two sample pools. Satisfaction ratings were consistently 14 to 23 percentage points higher in the top 10 firms versus all other participating firms. Satisfaction regarding distribution of company profits, amount of raises, compensation for extraordinary effort, and frequency of raises are all at least 20 points higher in top-10 firms. Interestingly, satisfaction of compensation for overtime was actually lower in the top 10 firms than in all other firms. On the benefits side, medical insurance, retirement plan, and the belief that the firm strives to improve the quality of benefits offered stand about 15 percent higher in the top ten firms.

So what does this data indicate? At first glance, one would assume that these firms are simply paying higher salaries and offer more comprehensive benefits. Upon closer analysis, however, another explanation seems likely: These firms tend to spend a considerable amount of time communicating the value of the firm’s total compensation package, clearly explain the benefits package, often evaluate salaries for junior level employees more than once a year as roles and skills change, and implement a clear and consistent incentive compensation/bonus program throughout the organization.

Training/professional development opportunities
When we speak with A/E firm leaders regarding turnover of staff with zero to four years of experience, one of the most common reasons cited in exit interviews is the employee feeling that they have limited opportunity for growth. Not surprisingly, this is a key area where top 10 firms differentiate themselves from all other firms. An emphasis on training, career planning, and professional development opportunities was evident in employee satisfaction ratings for junior staff. Specifically, employees in these firms believe that performance is effectively evaluated and recognized, training is available, and career growth and advancement opportunities exist.

Performance management is likely a key driver of these significantly higher satisfaction rates among the employees of the top 10 firms. Performance management in these firms tends to be an on-going process of communication between a supervisor and an employee that occurs throughout the year, in support of accomplishing the strategic objectives of the organization.

The communication process includes clarifying expectations, setting objectives, identifying goals, providing feedback, and evaluating results. Through establishment of these expectations and goals, and the frequent feedback regarding their performance in these areas, career development plans tend to follow naturally.

General firm-wide management
Finally, the data indicates that top 10 firms appear to be much more effective at communicating relevant firm-wide information to junior staff than other firms. Employee satisfaction in these firms is 10 percent to 15 percent higher regarding communication of important firm-wide financial information, communication of project budgets and schedules, a well-organized management team, and fairness and consistency in policies and decisions.

Why is this significant? Employees, particularly at the junior level, who have an understanding of how their firm, their group, or their projects are performing also tend to have a greater understanding of how their role may impact success on each of these levels. This can be an important connection for employees to make, especially when we are pulling our junior level employees from project to project, sometimes weekly, without providing the greater context of why their role matters. Without this connection, junior level employees may eventually feel "pigeon-holed" and leave for a competitor that promises exposure to different elements of a project cycle.

Michael A. Zmugg is a consultant in ZweigWhite’s strategic and financial advisory services group. He can be reached at mzmugg@zweigwhite.com.

Learning event will help you create a better workplace
Author of this article, Michael A. Zmugg, will present, "10 Cornerstone Elements for a Powerful Incentive Compensation Program" at the upcoming Best Firm To Work For Summit. Taking place at the Hyatt at Fisherman’s Wharf, Sept. 18-19, 2008, in San Francisco, the event includes keynote presentations, focus sessions, and "best firm to work for" best practices from industry experts, as well as networking opportunities. Go to www.bestfirmsummit.com to learn more or to register.




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