|Obviously, their needs are very distinct, but many IT managers use a one-size fits all approach when rewarding their key employees. When a project completes, everyone on the team gets the same thing, be it a comp day or $100 gift certificate to Amazon. Giving the same thing to everyone is what's fair, right? But is it really fair to your best people? |
Hold On to Your Top Performers
Most CTO's realize that The Pareto Principle applied to IT staff means that 20% of your people are delivering 80% of your entire team's bottom-line value. In addition, nearly every software management book cites studies comparing the productivity of the best software developers to the least competent (yet still useful) programmers. The difference between the extremes has been reported as high as 100:1. The closest these numbers ever seem to come to one another is about 4:1. But how much more does this extreme difference in value end up costing?
Assuming that your annual cost for the least competent developer is $50k, what are you paying your best developers? $80k? $120k? $150k? Since a lot of the costs for an employee are fixed, they don't increase in relation to base salary. For the purposes of this examination, let's use some worst-case figures, $150k. Assuming that your $50k developer delivers $50k of value (otherwise they'd be reallocated, right?). If your best developer is a mere four times more productive than the worst, they deliver value $50k in excess of their cost. The following chart depicts how this rate of return skyrockets, depending upon which assessment you trust.
Note: The 100:1 comparison is intentionally missing, because the curve was so staggering that viewing the distance between cost and value of the 1:4 best programmer on the chart was not possible with the naked eye.
If IT Management invests in more training for the bottom-rung programmers, costs immediately increase, but without any guarantee that productivity will likewise increase. Consider, also, how much of your salary is factored into the "cost" of this moderately competent employee? Probably none. Management costs are usually invisible, factored away as overhead. It certainly feels like you're being productive - trying your hardest to bring along the strugglers, hoping that they eventually rise above their shortcomings. Consider how much of your time is spent with either of these employees:
Obviously your best performers are worth their salt. As such, it's incredibly important for the CTO to impart effective retention strategies, as this handful of hotshots embodies 80% of your team's value. Their experience with your unique systems combined with their talents and ability to get the job done in a pinch makes them nigh unto invaluable.
- The self-managing dynamo who, with speed of a bullet train, handles customer complaints, delivers defect-free results, and even cleans up after himself in the breakroom
- The trainee who has some interpersonal issues, occasional product defects, difficulty understanding requirements, and shows up late on Mondays because of his hangover
But, what's the best way to invest in your best people? What should you do to show those top performers that they're appreciated, and increase the chance that they'll be there for you when you need them again?
What's the best way to reward your superstars?
Pay them cold hard cash. If your $100k developer puts in 70-hour weeks during the final push of a key project, most pure cash rewards would come in at a rate less than minimum wage. Simply reconsider this alternative. This can be quite insulting, seen, instead, as a paltry offering to buy them off and ease your guilty conscience. Regardless, after the taxman gets his share, the net impact of this money can be far less than it costs to pay it out.
Send them to extra training. Some engineers might be excited about an opportunity to take training in a new city on the company dime. They may even ask to spend the weekend before or after, at their expense, just to cash in on this chance to get away for a bit. Be careful though, this could appear to your high achiever that you found their performance lacking. They might assume that they need further training to be worthy of the real reward that lies waiting. If your achiever is sensitive, they might get concerned that all of that effort they exerted was a red flag to you that they were struggling along. Offering a training reward in this situation could be interpreted that this struggle was obvious to you, and you are now taking corrective action.
Offer a promotion. Though the allure of an impressive title or tangible benefits accompanying a promotion may motivate some, most technical people have come to realize the dangers of the Peter Principle. They fear that their world will change drastically should they become a team lead, project manager, or department head. Your turbocharged techy probably likes what they're doing right now. That's why they're so darned good at it. Before considering a promotional reward, make sure that the new position actually leverages the skills and talents exhibited by these high achievers, or you may end up losing them. If you decide to take this chance, make sure your top performer knows that he can switch back, if something doesn't work out with the new role.
Provide additional holiday or vacation time. Everyone likes time off, right? Unfortunately, if you offer this reward to a very techy person who is so completely immersed in their occupation that they have little social interaction outside of the workplace, they may not know what to do with themselves during this free time.
Give them stock options. Although this may seem like a decent idea, with the intent of imparting ownership and profit sharing to the worker, most I. T. staff are gun-shy of the stock market since the tech stocks tanked with the dot com bust. If your company is public, employees know that the future value of stock may end up being less than the option strike price. If your company is not yet public, your staff might feel that you're handing them a wad of lottery tickets, in lieu of a real reward they can actually feel.
Do unto others as they would have done unto them.
There are many ways to reward your best. It's easy to be tempted to offer all of your high performers the same reward. It's especially easy to offer them what you would want.
All of this leads to a very simple concept: communication. Simply put, ask the your shining stars what they really want. What is it that will allow them to truly feel appreciated? The path that leads someone to be a great technical resource is very different than the path of a great IT Manager. You may be surprised by the answers you hear. In fact, your employees may be surprised, as well, to learn that you are actually giving them a say in determining the reward for their efforts.
The answers can vary significantly for each person, depending upon their long-term goals, how their needs are currently being met within Maslow's Hierarchy of Needs, and the current stressors in their life. Don't make the mistake of assuming that the answer you receive today will hold true throughout your top performer's career.
- Do they want cash?
- Do they want more challenging job assignments?
- Do they want some time off to appreciate their children?
- Would they prefer more mentoring?
- Do they simply want to be acknowledged at a company function?
- What rewards have they received in the past that really made them feel good?
Ultimately, instead of attempting to reward your people the way you would like to be rewarded, break The Golden Rule, and spend the time to actually learn their needs and wants. By involving them in decisions that affect their lives so directly, you might coincidentally cash in on the Hawthorne Effect, and motivate your employee by showing you care. You will likely find that you've created a work environment that has makes your high achievers happier than they've ever been. As a result, they will find a way to push themselves to new levels of productivity, realizing that their efforts will result in rewards that are truly meaningful to them. You may even earn their respect and allegiance for a lifetime.
About the Author:
Daiv Russell is a Software Engineering Strategist with Envision Software, Inc., a Florida-based technology consulting company committed to helping companies solve problems, increase revenues, and reduce costs by guiding software development teams through project management chaos, transmogrifying staff into inexorable, raging, IT SWAT teams -- delivering value with frightening prowess, precision, and agility.
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