New worries

This situation is different from that of the recent past in several ways. It's more complex than the frenzied IT labour market during the dot-com boom, when hysterical demand lifted wages for many IT workers across the board. And though employers in the late 1990s were also looking for specialized IT skills, today's companies are looking for IT workers with combinations of specialized skills, says Jim Lanzalotto, vice president of strategy and marketing at Yoh Services, a U.S.-based provider of talent and outsourcing services.

"It used to be 'Go find me a CRM specialist,'" says Lanzalotto. "Now it's 'Go find me a CRM specialist who has expertise in the pharmaceutical industry.'" Such candidates don't come cheap.

But the pressure to keep the existing workforce happy is also intense because it's getting harder for CIOs to find -- or replace -- certain skills. In the IT organization at Tokyo Electron America in Austin, for example, turnover is still relatively low, at 5 percent to 7 percent. "But the 5 percent to 7 percent that leave is very painful, because these are very important skills that are hard to replace," says CIO Russ Finney.

So Finney uses various non-monetary techniques to keep his staff engaged. "We're putting a lot of energy into making sure our people feel good about their jobs," he says. One method is stretch assignments, or projects that challenge them. This might include taking someone who has worked on a component of an ERP implementation and placing him in charge of an entire ERP project for one of the company's seven U.S. operating companies, says Finney.

Finney has also made an effort to give as many of his IT staffers as possible an opportunity to travel to Japan to visit Tokyo Electron's headquarters. There has to be a business rationale for the trip, of course, but it's still considered a perk, and Finney tries to distribute the trips equitably. "We try not to limit this to a select set of people," he says.

In some cases, retaining critical performers requires creativity. Last year, Mohegan Sun CIO Dan Garrow was in danger of losing one of his top programmers, an employee with extensive gaming systems skills who was well-versed in the casino company's quality assurance and testing requirements.

The programmer moved to Spain because his fiancee took a job there, so Garrow hired him as a contractor. "He knows everybody here and knows his way around the organization," says Garrow. "He can write and submit code from overseas."

Despite this kind of flexibility, retaining IT talent has been difficult for Garrow. The previous CEO, who left the company last summer after an 11-year run, believed that all company employees should receive standard 4 percent annual pay raises. That made it more difficult to reward individual IT performers.

To get a better handle on compensation, Mohegan Sun recently hired consulting firm Mercer Oliver Wyman to conduct an assessment of employee pay. Once that is completed, Garrow expects that the salaries of various workers -- including IT staffers -- will be adjusted to reflect the market. Also, the new CEO "is more amenable to performance raises" than the previous chief was, says Garrow.