Viscious Cycle - Retention Strategies Part II
Viscious Cycle - Retention Strategies Part II
(OP)
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?
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?





RE: Viscious Cycle - Retention Strategies Part II
¢¢
Chris
SolidWorks 06 5.1/PDMWorks 06
AutoCAD 06
ctopher's home (updated 01-18-07)
RE: Viscious Cycle - Retention Strategies Part II
I think this situation is somewhat good. It forces companies to evaluate their wages and retention methods. The only problem is that sometime you can't teach an old dog new tricks.
RE: Viscious Cycle - Retention Strategies Part II
The program was based on:
1. Annual bonuses that result from tangible, measurable performance on the part of the individual. In this case it was wellhead production, each tech had 8-12 wellhead compressors and his bonus was based on the monthly production from those wells compared to the production forecast.
2. Bonuses visible every month, payable once a year. At the end of every month I talked to each tech about his bonus for the previous month, and specific strategies to do better the following month. At the end of the year I would take them to a fancy lunch and hand out checks. Everyone knew what everyone else's performance was and it worked out that this was a carrot for the under performers to do better. One note, anyone who quit prior to the payout got nothing.
3. Aligned compressor-tech bonuses to goals that had a direct, bottom-line impact on my goals.
This combination of steps paid out up to $3,600/year per tech and it never (in 6 years) became an entitlement that they felt the company owed them.
Interesting to note that in the 6 years I did this, we lost 12 techs (almost all of them quit right after the luncheon). In the 3 years since I retired (and they dropped the program) they are back to replacing the entire staff 3-4 times per year (about 70 new hire learning-curves in 3 years). At the same time, the production rarely ever meets the forecast.
This incentive program was: (1) tied to things that the individual could directly impact; (2) Was visible and auditable by the employee; (3) was aligned with company goals; (4) was assured to be paid out regardless of other facts; and (5) was significant. This program worked for hourly field techs in a seller's market. I believe that any program with all five of these characteristics would improve the attitude of any employee.
David
RE: Viscious Cycle - Retention Strategies Part II
Chris
SolidWorks 06 5.1/PDMWorks 06
AutoCAD 06
ctopher's home (updated 01-18-07)
RE: Viscious Cycle - Retention Strategies Part II
Steve
RE: Viscious Cycle - Retention Strategies Part II
TTFN
RE: Viscious Cycle - Retention Strategies Part II
He stayed with this company for a little over forty years, performed his job admirable. The reason he never left to seek greener pastures? He didn't need too! The union protected his interests, collectively bargained for a fair wage, fair benefits. No reason to leave.
Most companies don't care about you. But thats OK, I don't want companies to care about me, it isn't their job. Now, when unions represent you, then there is someone who has your back, who has your interest in mind. Not everybody is superstar project manager material, some people are just hard workers that want a fair wage and a little security in life. Unions aren't the problem; They're the solution.
And don't give me that crap about unions being corrupt, for every corrupt union I'll show 10 corrupt companies.
My post wasn't supposed to be about unions, What I really have to say is that a smart company, especially in the engineering business, should recognize the value of people, and pays as much as it can afford to keep people happy. Not the minimum it takes to prevent them from leaving.
RE: Viscious Cycle - Retention Strategies Part II
In my industry, company's are offering completion bonuses of up to 10% to finish out a contract. Now you know what is starting, you guessed it, signing bonuses to offset the completion bonus you were getting.
One of the rules I follow is this - with other consultants I have no problems discussing terms & conditions of contracts, but in my line, we do not discuss day rates or compensation. I don't know of any of my fellow consultants that discuss day rates, it's taboo to ask anyone and if anyone asks me I tell them it's none of their business. I'll discuss per diems, travel class, transportation allowance, etc, but not day rates. Nobody's business.
My advice to anyone who grumbles about their package, it came from an old superintendent a long time ago - if you don't like it, you hired out wrong. You make your own deal, make the best one you can and when you sign on you honor it. When the contract is up, negotiate a better one.
I agree 100% with ctopher, the unions were very much needed early on in the industrial revolution and made great and needed improvements. But they have evolved into exactly what is choking our country - entitlements. If you want to know what's wrong with our education system - teachers unions.
Greg Lamberson
Consultant - Upstream Energy
Website: www.oil-gas-consulting.com
RE: Viscious Cycle - Retention Strategies Part II
At least thats the only reason I can think of to explain why they choose the option that is guaranteed to annoy someone when the alternative won't cost any extra.
RE: Viscious Cycle - Retention Strategies Part II
You credit them with far too much forsight to dream up a plan like that!
Should you ever pass through the North East you will hear a whirring sound. It is the sound of the Stephensons, Charles Parsons and William Armstrong are turning in their graves (like a turbine in the case of Parsons!), mortified at the state of the UK's manufacturing industry.
I disagree with those who blame the unions, at least from a UK perspective. The problem has spread downward from the top, where the focus has shifted from the long term good of the company to the short term bonuses of the Board and the shareholder dividend. As with everything there is a balance to be struck, but at this moment the scales tipped too heavily toward the accountants holding sway. I suspect there would be an entirely different set of equally serious problems if engineers were in virtually sole control of a company.
----------------------------------
Sometimes I only open my mouth to swap feet...
RE: Viscious Cycle - Retention Strategies Part II
A star for showing a incentive plan that makes sense. It has been a long time since I have seen one. The last one I had was pretty simple, If there was a profit, some of it was shared with you. Since then, succeeding executives have implemented enough "improvements" so that it is essentially non-existent.
Regards,
RE: Viscious Cycle - Retention Strategies Part II
That is what I keep seeing too--every time management "sweetens" an incentive program they add some more strings. After a while it is so complex that no one has any idea what their personal share might be, they lose sight of how their activities impact their bonus, and it stops being a day-to-day incentive. The program that worked was totally transparent and a guy could see a direct and immediate result of his actions.
I had a guy come to me in November once with the story that he had been offered a promotion and since he wasn't leaving the company could he collect his 11 month bonus--my answer was a truly hard ass I'm not paying the bonus for [his compressor serice company], I'm paying it for my production. Everyone knew about this and it had a positive impact on more people than were mad. The rules were clear and unchanging. It works.
David
RE: Viscious Cycle - Retention Strategies Part II
RE: Viscious Cycle - Retention Strategies Part II
RE: Viscious Cycle - Retention Strategies Part II
I spent some time contracting at a huge fiber optic plant that was unionized, You don't want to be stuck behind a union employee when you have to get to a meeting. They always seemed to be running on 1/2 speed. Heaven forbid you ever pick up a screw driver or a light bulb! You're putting your job on the line if you do ANYTHING not in your work description.
Companies that have plans such as zdas04 had are looking out for their employees and their own interests at the same time. This makes sense. If it is not in the companies interest, it ultimately is not in the employees interest either.
RE: Viscious Cycle - Retention Strategies Part II
kchayfie, the company I used to work for now pays a $2,000 bonus if you bring someone in that makes less than $50k and stays 3 months. It's $4,000 for an employee that makes over $50k. A friend of mine that works there made $14,000 last year just in recruiting bonuses!
GregLamberson, I agree with you completely when it comes to sharing rates. My father taught me that it is a taboo subject, but it seems I'm the only one around here that thinks so. The rampant talk in the hallways at work is unsettling to me.
I guess I'll just ride this wave and make sure to prepare for the inevitable down-swing...
RE: Viscious Cycle - Retention Strategies Part II
Here, they advertise even in metro stations for people with TS security clerance and can't get them.
People have figured out the small places asking 50 hours per week just to keep your job, or those that hire you to finish this rush job and let you go, teh micro-managers, etc.. at most good companies now, people don't even consider looking for another job.
I judge the state of the economy by the number of head hunter calls I get per month. I am somewhat underpaid, but I've had it with mom and pop shops (firms under 400 people), I will not go to them for anything.
See, those that did not treat workers right, they played into their competition's hands, they can't get those workers out of there. Sow the wind and you'll harvest the storm.
RE: Viscious Cycle - Retention Strategies Part II
The professionalism had disappeared previously, with no budget for mentoring young engineers or provisions for keeping the "gray hairs" as quality review experts. This all came about from price competition on fees and lowest cost hourly rates contracts. Blame can be equally shared by the corporate management of the engineering firms and the customers who were not told that good engineering does not cost money, it saves money.
Loyalty is a two way street. After numerous layoffs at the end of successful project completions, I am now a mercenary engineer working for the highest dollar amount available. It is nice to get 40% more than the average due to being able to take the next higher offer.
RE: Viscious Cycle - Retention Strategies Part II
However this practice was not law, so companies have discarded this along with benefits, pensions, and other forms of positive workplace culture. Companies have become mercenary and employees have had to respond in kind.
This new 'competitive employment marketplace' is not efficient. It contradicts Drucker's insights of the technological worker, Manslov on the creativity and maximized employee efficiency, Nash on maximum benefit to all parties in a mutual contract, and even Demming and quality. But today's business is focused on short-term returns at the expense of long-term business viability. The business philosophy today is not based on theories and insights of Nobel prize winners, but on the philosophies of take-the-money-and-run ego fixtures such as Donald Trump.
RE: Viscious Cycle - Retention Strategies Part II
RE: Viscious Cycle - Retention Strategies Part II
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
RE: Viscious Cycle - Retention Strategies Part II
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
RE: Viscious Cycle - Retention Strategies Part II
RE: Viscious Cycle - Retention Strategies Part II
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.
RE: Viscious Cycle - Retention Strategies Part II
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.
RE: Viscious Cycle - Retention Strategies Part II
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?
RE: Viscious Cycle - Retention Strategies Part II
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.
RE: Viscious Cycle - Retention Strategies Part II
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,
RE: Viscious Cycle - Retention Strategies Part II
4.5% @ ing-direct.com
RE: Viscious Cycle - Retention Strategies Part II
All I can offer is hold on tight - the ride isn't finished yet.
RE: Viscious Cycle - Retention Strategies Part II
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.
RE: Viscious Cycle - Retention Strategies Part II
That line is a classic.
RE: Viscious Cycle - Retention Strategies Part II
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'
RE: Viscious Cycle - Retention Strategies Part II
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
RE: Viscious Cycle - Retention Strategies Part II
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.