Viscious Cycle - Retention Strategies Part II 24

[swearingen]

For the first round on this topic see thread731-168675.

There's another twist to the crazy job market here. It goes something like this:

1. Company lands good sized project - why? They were low bidder. They forecasted costs based on job market, current salaries and end-of-year raises and bonuses.
2. Job market goes nuts. Companies are stealing workers from each other due to the limited talent pool available.
3. Wages skyrocket.
4. Company lands other projects based on new salaries of the folks it has to bring in plus raises and bonuses.
5. Folks brought in for new projects go to lunch with the folks working on the older project and the subject of salary comes up.
6. Folks on older project choke on their food when they find out how much new employees are making.
7. Those folks march into the boss' office and demand money.
8. Boss can't budge - the older project costing was based on old salary info before the wage spike. He offers what he can, but he still has to stay profitable.
9. Those folks leave for the next company for a gargantuan sum, only to have the cycle repeated at that firm.

It's just nuts and, quite frankly, it's scary. As I said in the former post, project continuity is shot and morale stays low. Any thoughts?

 

[CarolinaPE]

So what would you propose the existing employees do once they found out their co-workers were making a bunch more for doing the same job? Competition makes the world go 'round.

 

[zdas04]

In this month's Journal of Petroleum Technology (the monthly magazine of the Society of Petroleum Engineers

http://www.spe.org/spe/jpt/jsp/jptmonthlysection/0,2440,1104_1585_0_6376603,00.html)

the current SPE President has an article on the real impact of treating people like meat. The Oil industry recovers approximately 35% of the original oil in place with current techniques. His thesis is that the only way to improve that abysmal record is to engage the creativity and imagination of a motivated work force. He thinks that the prize is on the order of doubling ultimate recover (think of the industry making as much oil as they made in the first 100 years without new wells).

If enough people start thinking of people as an asset instead of a liability then the future of engineering looks pretty darn bright (where are my shades).

David

 

[prohammy]

Comcokid,

Excellent Post!!!!

I believe that in the new Western business culture that we are now seeing has its roots in the late 80's/early 90's 'yuppie' culture. In the Western world, we entered a new phase that has left a very different working relationship between employers and employees.

Employers (who had previously taken the long term outlook) now saw that there were significant gains to be made by changing there focus on short term gain. Short term profit became the benchmark for the Western stock exchanges, a company's long term security was not seen as a selling point to the ever more hungrey stock markets. With this change came ever more agressive company stratagies to decrease project length, project cost etc. As you said 'Companies have become mercenary and employees have had to respond in kind'. Employees reactions are based, I think, on very real feelings of insecurity. Employees started to feel less like workers and more like financial numbers, to be played with on spread sheets.

My own case (don't get me wrong in the following diatribe) is a consequence of this new culture. I worked for 5 companies in a 7 year period as a permanent employee. When times were good, money was spent on projects (but all were short term focus), when times were hard I was left go. I began to see myself/job as a luxary item for these companies. I now work as a contract design engineer, selling myself as a commodity to the companies I know work for. My general outlook is that I work for companies in 3 to 6 month periods and expect no more. I have learned to treat the companies in the way they have treated me.

Just to clarify. Contracting has been good for me financially. I like that I can 'choose' who I work for. There is enough work in the UK that I can do this. But always at the back of my mind I worry (mild sense of disquiet) that this will all fall apart and we will find a very chaotic end to the modern business culture.

Kevin Hammond

Mechanical Design Engineer
Derbyshire, UK

 

[SWComposites]

newfella - simple: demand a raise to market levels and if you don't get that, look for a new job that pays better.

 

[HDS]

swearingen

If that is the way your business is run you should not try to isolate your employees from it. Hire them as contractors with the contract term match to the project. They agree to fixed amount for a fixed term but know they can bid again for market rates on the next job.

 

[JStephen]

"If you think you have it tough, try to hire engineers with top secret security clearances in the post 9/11 era.
Here, they advertise even in metro stations for people with TS security clerance and can't get them."

A number of years back, I was talking to one of the aerospace companies. They needed people with those clearances, and pretty much didn't care what your skills were if you had the clearance- but still couldn't find enough people. And conversely, they didn't care how skilled you were if you didn't have the clearance. They also said the clearances took a long time to get.

This seemed like an awfully shortsighted way to do business. Here was a high-dollar industry desperately needing people, but evidently doing ZERO to bring anyone in from the outside. In six months or a year, they would still have the same problem. The only employees that could meet their requirements were either working for them or the competitor across town. And then they have the nerve to complain about a shortage of qualified people.

 

[mechmama]

I'm also in an situation where there are multiple companies in the same general line of work competing for the same employees. My experience has been that the companies pay in the same range and I know that at least two of the companies made across the board raises to keep people from hopping to other companies. I don't think money is necessarily the prime motivator for most people leaving. I think opportunity has a lot to do with it. People who are not in the 'circle of trust' at company X usually feel slighted because the best assignments always go to the other people, etc., and I think these are the employees that typically leave for competitors.

A couple things that I see working to keep people from leaving:
- Year end bonuses that are ~25% or more of your total compensation. If you leave mid-year, you forfeit the bonus. It at least forces people to a narrow time frame that they can leave w/o losing money.
- 401K and profit sharing vesting. If I left my company right now, I'd a lot 401K matches because I've been here >2 yrs and my company matches 6%.

Another point - isn't it best practice to put escalation into project cost estimates so the project can afford to pay higher salaries in the future?

 

[tripleZ]

To add some additional food for thought to Comcokid's post, there's one crux in the whole market equation, namely there are more of "us" heavily invested in it (directly that is). How many of the posters on this board are personally involved in the market? I'd weather a guess at 90% or more. For those of us in the US, our 401(k) plans are oftentimes our only source of income for retirement. As a result, we choose both investment services and individual companies that offer the highest rate of ROI. Why wouldn't we? The more we make, the more comfortable we are. So we as investors truly drive the short-term insight of companies. Does an executive get a bonus? Sure. But what board voted for the compensation plan? If the stockholders see a 200% gain in investment income, they generally aren't screaming and looking for a scapegoat "greedy exec". Now, focus on the fact that there are more people today in the market, all looking for quicker returns. Especially many of the boomers who woke up at 50 and said, "Guess I need to start saving for retirement now."

Point is, we can complain about companies only seeking short-term gain, yet much of the desire for that short-term gain comes from the investor looking to make the same. To me it's a double-edged sword. Larger companies bear some of the brunt, but so do the investors who place the pressure on the executives of said company.

 

[PSE]

tripleZ,

I agree with you in theory. I have known few individual investors though that are directly capable of influencing a companies practices (stock price etc). Most of them have been founders that subsequently stepped aside for others to run the business. They still seem to have the longer term vision in mind as they want to protect their main source(s) of wealth. Institutional investors (banks etc) on the other hand do control enough leverage to influence business actions. They also seem to be more interested in short term gain. After all, when was the last time you saw a decent interest rate return on a savings account.

Regards,

 

[IceNine]

PSE-

4.5% @ ing-direct.com

 

[Pulpboy]

I could take a wild guess - are you in Alberta? It's crazy alright - my companies trying to compete with a whole other sector (oil & Gas versus Pulp & paper). They've been trying their best but still people leave.

All I can offer is hold on tight - the ride isn't finished yet.

 

[MedicineEng]

We had the same problem here (not US). The economy just boosted and some persons left. Well, persons leaving is not always bad at least in my case it wasn't. When a person is leaves my department(either by it's own foot or "invited"), I make an assessment on the need of that person and the work that he/she was performing. And I can tell you that we managed to survive and IMHO, perform a much better work with less 30% of the persons. From one side, we started outsourcing much more and now we only concentrate in critical equipments and installation. In the other hand, and much more important, it gave me an opportunity to rethink the organization and work flow. I only realized the ammount of completely meaningless work some of my staff was doing when by default the work was transfered to me, as head of the department. I remember one particular case where one of the staff left and I started receiving literally hundreds of calibration records in my tray to verify/sign. When asked why the other staff was doing this work when he was not even in the Instrumentation section, I was told since he was from the Quality Assurance he needed to verify all calibration records. I argued that nowhere in the standards was stated that rule and that I wouldn't continue with the practice. As such, I managed to agree with the QA department that I would only sign the calibration records when the respectve calibration failed (of course the head of instrumentation still signs and verifies each calibration record, but it is his job). With this, I reduced the ammount of signatures from literally hundreds/year to less than 10/year. If the other guy was still around he would be still signing calibration records and most probably not questioning...
Going back to the thread, what we did once to try to retain staff was when we decided that a position would not be filled in the workshop, we had his salary distributed among the other staff in the workshop as an extraordinary raise. Now I have less staff but earning more.

 

[JStephen]

"I only realized the ammount of completely meaningless work some of my staff was doing when by default the work was transfered to me, as head of the department."

That line is a classic.

 

[Heckler]

I was just identified as being on the critical skills retention program at my company.....along with that status comes a nice little year end bonus.

Best Regards,

Heckler
Sr. Mechanical Engineer
SWx 2007 SP 2.0 & Pro/E 2001
Dell Precision 370
P4 3.6 GHz, 1GB RAM
XP Pro SP2.0
NVIDIA Quadro FX 1400
o
_`\(,_
(_)/ (_)

(In reference to David Beckham) "He can't kick with his left foot, he can't tackle, he can't head the ball and he doesn't score many goals. Apart from that, he'

 

[zdas04]

Good for you!

When I was in that position, it only meant that they let me carry some of my vacation from year to year instead of losing it (since they wouldn't let critical skills be out of contact while on holiday). Management sure didn't want to hear "if I can't take time off for 5 weeks vacation this year, how will I be able to take 9 weeks next year?".

All in all it had more disincentives than incentives.

David

 

[ExRanger]

The thing I don't like is how engineers get angry at other engineers because of how much they make - typically without even knowing exactly how much the other engineers make, but having only an idea.

Its a big thing in my company. There are daily diatribes against contractors and engineers who have changed jobs and come back. Engineers see themselves as logical, but they aren't in this case. If money is taken away from the more highly paid engineers, will it be distributed to those who feel they are underpaid? Highly unlikely. Instead of doing what it takes to raise thier own salaries, they just sit around and feel sorry for themselves and abuse anybody who they pronounce as being overpaid.

They simply don't understand, and maybe don't want to understand, how the system works.