Losing a good employee, for whatever reason, represents far more than a slight drop in corporate productivity and profits. Employee turnover “sucks knowledge out of companies,” states a recent survey by Teradata, a division of data warehousing company NCR Corp., in Dayton, OH.

Eighty-eight percent of IT executives polled say that increased employee turnover equates to knowledge loss. The executives also report that increased turnover triggers diminished effectiveness in corporations, said Teradata COO Mark Hurd.

After polling more than 200 executives, Teradata learned that the average tech employee tenure is at an all-time low of 3.6 years.

“That means that vital corporate knowledge walks out the door every day for good, never to return,” explained Hurd. “Capturing this knowledge is a new challenge for corporations. Employees’ intimate knowledge—of customers, suppliers, strategic partners, and more—must be captured during their tenure. If it is not, corporate turnover could be one of the greatest costs in business today.”

The Teradata statistics are likely upsetting to any IT leader, but particularly for CIOs who invest time and energy in hiring the most competent candidates they can find. Often, it can take several months to find a high-powered candidate who will be a valued, direct report.

The best way to retain corporate knowledge, said Hurd, is to capture all employee knowledge possible in an enterprise data warehouse.

“Then the data can be retrieved by everyone in the organization, from the CEO to the front-line tactical decision-makers staffing the call center or shipping goods on the loading dock,” he added.

Benefits of capturing and using employee data
Teradata CIO Steven Dippold agrees, and extols the value of the enterprise data. If properly managed, data capture is a strategy from which any company can profit. Over the past five years, “we’ve done many things to centralize important information into our enterprise data warehouse,” explains Dippold.

“Depending on what function of the business you are looking at, one of the byproducts of having an enterprise data warehouse is making information available to all of our departments and divisions.”

All midsize and large companies can take advantage of gathering information about every facet of their business. Employee data, for example, can be used to cut attrition and increase retention numbers.

“We have a data warehouse in which historical data about our customers and employees is stored,” said Dippold. “If you concentrate on the IT function, we’ve seen a tremendous change in our attrition in the course of the last three years. When you look at the 1998-99 figures, attrition in our IT departments was staggering, certainly in double-digit ranges. It was 25 percent or greater in some areas.”

Yet, by 1990, Teradata’s attrition dropped tremendously, largely due to company-wide programs to increase retention and protect its knowledge resources. Here is how Teradata did it:

  • The company partnered inexperienced and experienced workers so both could benefit from each other’s knowledge. The experienced worker may impart technical skills, for example, while the newer ones may bring social/cultural lessons to the relationship. If it works, they both enjoy sharing knowledge.
  • Employees are promised new job assignments. What better reason to stick around than to snare a pending new job or project assignment? Most CIOs are aware of the importance of new job assignments to valuable techies who thrive on projects that get them excited. Many experienced software developers, for example, move around the country in search of those special high-challenge projects that keep them fired up around the clock.  Providing employees with challenge and excitement, makes them more reluctant to leave; they don’t want to risk missing a good opportunity.
  • Employees are offered retention bonuses and stock options. These benefits are certainly not a new concept, and employees at less-than-stable companies may view the prospect of stock options as worthless. Similarly, stock options doled out at once-vanguard companies like Oracle (I won’t dare mention Enron) are not only worthless, but also damaging–thousands of 401k retirement plans have been shattered. Yet, for plenty of companies, stock options are still an incentive for wealth or security, and thus are a magnet-like retention vehicle.
  • The company provides individual development planning. Many companies offer mass development planning. All IT staff members, for example, are expected to attend training seminars to boost skills and learn about new technology. Dippold explained that Teradata (and other companies as well) has development planning strategies for individual employees. “These are separate strategies crafted for each person,” he said. “It’s based upon the employee’s desire for future growth. It may mean keeping certifications up to date, sending employees to seminars, or just providing subscriptions to magazines and journals that can help them. Whatever effort you make to help this person is remembered.” Everyone wants to know that someone cares, even in a massive corporation where the CEO hardly knows the names of the majority of the rank-and-file.

Why strategy is a necessity
Most companies don’t have a retention strategy, Dippold pointed out. Those that do, often have programs that are ineffectual and inconsistent, which is worse than not having one at all.

Jerome Colletti, author of Compensating New Sales Roles, says that when job performance measures are not clearly defined, “job contamination” occurs. Colletti defines job contamination as “impurities that exist in jobs that cause people to be less than clear about what it is being delivered or what they’re getting.” The result is uncertainty, because you never know what will happen next. Employees will take just so much and then leave at the first opportunity. Why suffer?

CIOs as well as all senior executives must take nothing for granted, Dippold advises. The more open executives can be with their managers, the greater the chances of retaining them. By working hard at keeping employees, not only will you cut attrition, but also you’ll build a priceless vault of knowledge. Therein lies the beauty of the enterprise data warehouse.