Lance Reid is CEO of Telcion Communications Group, a provider of IT solutions and managed services for the healthcare industry.
People might be surprised to discover that my company does not offer cost-of-living raises. If I were running a manufacturing firm, a retail store or a shipping company, my stance on raises would likely be different. But I run an IT services company, where workers grow their pay based on growing their skills. Workers with more certifications and proficiencies are more valuable to me, and I’m happy to pay additional wages as employees gain competencies that our valued clients are demanding. Here’s why we’ve taken this approach and why it might work well for your company, too.
The Challenge Of Finding And Keeping IT Employees
Finding and keeping IT staff is particularly difficult, and there are two factors influencing the situation:
Global Skills Gap
In 2024, ISC2 found a global gap of nearly five million cybersecurity jobs, a 19% increase from the previous year. Analysis shows that cybersecurity jobs take 21% longer to fill than other IT jobs, which reflects the demand for workers with cyber skills. Between September 2023 through August 2024, only 83 cybersecurity workers were available for every 100 cybersecurity jobs.
Cybersecurity aside, IT specialists in general are in demand at a pace that outstrips workers in other industries, according to the U.S. Bureau of Labor Statistics. Between 2023-2033, the BLS projects 4% job growth, but demand for many IT jobs is well above that figure.
Higher Turnover
When a new IT person is hired, the first several months can be exciting as the employee learns new skills and the particulars of the job and the company. But unless the fully trained person is challenged with new tasks and additional competencies, boredom can set in, which can lead to lower productivity or that person seeking other employment. Every time this happens, it costs the company.
Benchmarking data from the Society for Human Resource Management (SHRM) shows the average cost per hire is $4,700, but many organizations say the total cost to hire is three to four times that person’s salary. On the hiring side, think about the time busy executives and potential peers take out of their work to assess potential candidates, conduct multiple rounds of interviews and meet to select candidates. Other “hidden” costs include lower productivity as the new employee comes up to speed and the costs of any training/certifications that the person may need.
How To Keep IT Employees Engaged
Because turnover in IT services is high, I think there’s great potential for leaders to develop employees and keep them engaged in their own careers. The average tenure at my company is 8.5 years, and we have non-founding employees who have been with us for more than 20 years—a significant feat at a company started in 2002.
For 15 years, we’ve given each employee an annual individual performance plan which shows where the employee is in terms of skills, plots a potential career path based on acquiring new/enhanced competencies and outlines the next steps to get there. The individual performance plan may recommend a new credential, a certification or a specific training. It also shows the salary we will pay once these items are complete. We pay for any training, tests, materials, etc., that the employee needs—our investment in their success.
The employee can proceed at their own pace, but they recognize that their future salary is tied to the individual performance plan. Maybe someone has become a new dad and wants to go slowly through the next steps. Someone else may be eager to improve their skills and immediately sign up for the necessary classes. Each scenario is perfectly acceptable. What’s not acceptable are employees who aren’t growing in their skills and their jobs, because that doesn’t align with our values. Those people usually get weeded out in two or three years.
A skills-based pay structure has helped my IT services company maintain an average employee tenure that far exceeds industry norms. Our individual performance plan fosters long-term engagement, reduces costly turnover and ensures employees continually develop in-demand skills. By investing in training and certifications, I believe you can also create a motivated, stable workforce that delivers high value to clients.
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