War of attrition

How to hold onto talented staff in an industry as fast-paced and competitive as the channel

Keeping a handle on staff attrition in an industry as fast paced as IT is a challenge that has vexed vendor and reseller bosses down the years.

While money talks in the channel, heads can also be turned by the promise of working for a more dynamic firm with sexier technology, a more open management culture, better career progression options or a more Google-esque working environment. (Scroll down to the bottom to see our top tips for hanging onto top talent).

Perhaps it's little surprise then that several large vendors and resellers have been leaking staff like a colander in a monsoon this year.

Security vendor Check Point has reportedly lost a third of its UK workforce - about 20 staff - in 2013, while an exodus at Misco has seen dozens of heads desert the VAR in recent months. In both cases, commission structures and management decisions have been blamed.

Staff attrition can of course have an impact on continuity of service and the morale of remaining employees. Worse still, those moving on may take with them key customers or partners. And that's not to mention the yawning recruitment bill that comes with hiring replacements.

Cliff Fox, managing director of SICL, said the Leeds-based VAR's staff attrition rate has improved from the high teens to three per cent since he put in place a retention programme six years ago.

Citing DTI figures, he said the typical attrition rate of similar SMB IT businesses is as high as 26 per cent.

"If you go back seven years, we had similar circumstances that others are suffering, where we were losing our best people," Fox said.

"Staff attrition will always be a problem for the IT industry because of the nature of the people who work in it. They always want to be doing something new and better paid as the IT industry is moving so fast. You only get true longevity with staff if they are completely engaged with the business."

Beyond raising pay to market rate or above and introducing the usual financial and training perks, SICL now offers its staff foreign languages lessons.

"It's about making it a great place to work, which you have to do nowadays," Fox added. "It's not just a job - we have Hollywood-themed days where our staff can make movies. And we buy the techies pizza. That's all they want: money, development, training progammes, getting to play with the latest technology and being fed."

John Dams, director of sales at Computerlinks, said often vendors and reseller partners struggling with attrition had set sales staff unrealistic targets at a time when the economic recovery is fragile
at best.

Fifty of Computerlinks' 200 UK staff have been at the distributor for more than 10 years, he said.

"We pay a very competitive salary but also give staff a sabbatical every four years. And we set realistic and justifiable targets," he added. "Location is also key as it's easy for staff to jump around in the M4 corridor, where a lot of vendors and resellers are based. I dare say that's not a problem in Newmarket."

Climb every mountain

Lawrence Jones, managing director of hosting firm UK Fast, said high staff turnover is inevitable in an IT industry that is dynamic, skills and qualifications are easy to match up and salaries are being pushed up by a shortage of supply.

But he claimed staff retention has never been an issue for UK Fast, which he described as a very "unusual organisation".

To begin their induction, new starters must scale Snowdon before engaging in raft building and quad biking in and around UK Fast's hotel and training centre in Castell Cidwm (pictured right).

"They will go there at other stages to do training and team building and if people are having a tough time, they can take their family there," Jones said.

"We were recently valued at ￡140m. We started as just two kids in Manchester with no outside funding. For it to be worth that much, it's down to treating the staff very well and retaining them, as replacing real talent is impossible."

Jones said UK Fast is set to dish out ￡78,000 in tax-free bonuses to long-standing staff at this year's Christmas party. Those who have been at the firm for 10 years get ￡10,000 apiece.

"Why aren't more companies doing this?" he asked. "People think nothing of paying out on recruitment - what about the people who work for the company? If you don't hold on to your talent, you certainly won't hold on to your top customers."

Jones suggested channel firms struggling to retain staff are those that "have failed to grasp the new online market out there".

"If you look at some of the businesses that have lost a lot of people recently, it's related to the fact that the market has changed. People always want to work for a business with the best product," he said.

Although dynamic start-ups may encounter fewer staff retention issues than a $10bn giant with several layers of management, larger firms crippled by staff disillusionment have few excuses, argued Max Riggsbee, chief marketing officer at flash memory vendor Whiptail.

A mass exodus of staff will more likely be caused by concerns over the vendor's strategic direction than quibbles over pay and commission, he claimed. Often such misgivings will stem from the management not listening to staff and customers, Riggsbee added.

"The reason people want to leave is not normally money but because they do not think the company is going anywhere. It's not a train they want to be on," he said.

"Management needs to be accessible and not in a bubble, so staff can speak to them about whatever they want."

Jones at UK Fast said the emphasis the new wave of tech giants put on their working environments has added to the pressure on larger vendors' HR departments. But it's not too late for them to change, he added.

"$2bn organisations have no excuse," he said. "They have the money, they just got greedy along the way. They have to educate their shareholders and emulate what Facebook, Twitter and Google are doing. These people are building incredible working environments."

Top tips for hanging on to talent

■ Spruce up the office

Not everyone has the budget to kit out their office with murals, futuristic furniture and video games but the likes of Google and Facebook have irrevocably raised expectations of how today's working environment should look.

Staff will give their employers short shrift if they are not made to feel warm and fuzzy, advised UK Fast's Jones.

"It's not all about accountants whipping people to save on costs anymore - the industry has changed," he counselled. "It's about doing things that make people smile. You could start by getting a couple of pool tables and get people competing against each other."

■ Match competitors' pay

Money makes the world go around and those who scrimp on pay risk losing their best staff to competitors. Caps on commission and a refusal to offer accelerators can be particularly infuriating, as can setting targets that cannot be justified by the current spending climate.

But Whiptail's Riggsbee said most channel salespeople see a competitive pay packet as a prerequisite rather than a deal maker when it comes to their choice of employer. Most are more motivated by whether or not they believe in the vendor's technology, he claimed.

"Commission takes care of itself," he said. "The product line has to be meaningful to the person selling the product, or they will go somewhere else to collect that commission."

■ Focus on staff development

The channel is a skills-driven industry and - no matter how obvious it sounds - staff will move on if their career progression is not supported.

John McGlinchey, senior vice president at IT trade association CompTIA, said its annual research into IT skills repeatedly shows that staff in companies that offer them the chance to get certified feel happier and more dedicated to their employer.

Jones at UK Fast added: "The biggest single thing I have learned that people want out of their job is to develop, and that is in every area from salary, to knowledge, to their relationships. If you're a developing business, make sure you show staff a road map of where you see them on your journey - the best talent won't hang around if they feel undervalued."

■ Management must muck in

However large the firm, management must be accessible to avoid disillusionment among rank-and-file staff.

Riggsbee said Whiptail holds company-wide lunches every Friday to boost camaraderie and ensure top management are not incubated from the wider workforce

Larger vendors may have to be more creative. "What's stopping [Cisco CEO] John Chambers from going out one day with an account manager to find out their lot in life?," said SICL's Fox.