At 1.3%, the unemployment rate for technology occupations has hit the lowest level in 20 years, according to a CompTIA analysis of recent Labor Department jobs data.
While good news for recent college graduates and others looking for work, the tight technology labor market is a real concern for employers in all industries and one that could have a lasting impact on all business sectors.
“There is now the very real prospect of tech worker shortages affecting industry growth,” said Tim Herbert, Executive Vice President for Research and Market Intelligence at CompTIA. “Firms seeking to expand into new areas such as the Internet of Things, robotic process automation or artificial intelligence may be inhibited by a lack of workers with these advanced skills, not to mention shortages in the complementary areas of technology infrastructure and cybersecurity.”
As employers compete for tech workers, top talent looking for a change is taking advantage of the market and moving on to new job opportunities. In fact, the employee turnover rate in the tech sector, at 13.2%, is higher than for all other sectors, 10.9%, according to LinkedIn. Within tech, certain areas show even higher turnover rates.
“The computer games (15.5%), Internet (14.9%) and computer software industries (13.3%) drive tech turnover the most — but these rates pale in comparison to the churn you see within particular occupations,” writes Michael Booz in the LinkedIn Talent Blog. “User experience designers have extremely high turnover at 23.3%, with both data analysts and embedded software engineers at 21.7%.
Nearly of half of departing tech employees take another job within the tech sector, the LinkedIn data show. The top reason people leave is a lack of opportunities for advancement (45%). Other reasons people jump include being unhappy with leadership (41%), being unhappy with the work environment (36%) and a desire for more challenging work (36%).
Turnover in tech can be costly for employers—as much as 2.5 times an employee’s salary, depending on the role. And there are soft costs that show up in lowered productivity, decreased engagement, training and cultural impact.
More and more, companies are relooking at their overall retention strategy acknowledging the tight tech talent market coupled with the decline in H-1B visas, down approximately 25% since the middle of 2015 and more than 15% since last year. Workforce requirements are also changing, highlighting the need to have a better understanding of workforce capabilities and identifying which resources the company needs to further invest in whether it be through compensation raises, career path progression, or training to upskill/reskill.
According to PayScale.com, two strategies adopted by the private sector include compensation increases from 1% to 3%, essentially keeping pace with inflation and improving benefits. Additional retention tactics to consider, include Five Ways to Retain Employees Forever, according to the Harvard Business Review.
Employee retention leading practices
What can managers do to retain workers? Follow the 5Rs of employee relationships
- Responsibility. Show your employees you trust them by giving them responsibilities that allow them to grow.
- Make it a priority to show outward respect for employees regularly, which leads to a strong and enduring workplace culture.
- Revenue-sharing. Tie a part of employee wages to company performance. This will align their interests with the company’s revenue and profit goals and serves as an inherent incentive to stay with the company as it grows.
- Recognition before the company, department parties, service projects, lunches, handwritten notes can all contribute to a positive culture and build morale as well.
- Relaxation Time. Be generous with time off. You should expect and demand high-quality performance, but it is unreasonable to expect a continual level of pressure at 100%.
Having an employee retention strategy in place can result in such organizational benefits as capitalizing on the institutional knowledge and experience that the employee has gained which on average can take a minimum of 6 to 9 months to develop in a new employee. Other benefits include: increased performance, better productivity, higher employee morale and improved quality of work, not to mention a reduction in turnover, says the Society for Human Resources Management. But just in case, managers may also want to make sure they have a clear succession plan in place for key roles. Genesis10 will address succession planning in a future blog.
Also read Ami’s blog: Three Stats to Know from ADP's May 2019 National Employment Report.
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