E-commerce boom forces corporate rethink of staff retention strategies

Retaining valued staff has always been an issue within the IT industry, but the problem is set to deteriorate further over the next two years, according to Gartner Group.

Indeed, according to Gartner Group analyst Bob Hayward, staff turnover rates are expected to increase at least two fold from their current rates of between 10 per cent and 20 per cent by 2002.

"The mushrooming of e-business, the exuberance of investors and the seemingly bottomless venture capital companies funding start-ups is a significant lure to IT professionals," Hayward said.

Junior consultants within first - and second tier - management consultancy practices were most vulnerable because they would be the key players exposed to the financials, development and management of start-up ventures, he said.

"The traditional partnership model looks to be seriously flawed in today's market as it is cumbersome and doesn't necessarily reward those with an entrepreneurial spirit," Hayward said. "The older style of management, especially within the large consultancies, tends to stifle those who want to break away and make a name for themselves.

"This will necessitate the principal partners being compelled to provide acceleration [for junior consultants] to partner status if they want to retain their more talented individuals.

"The days of the junior consultants doing the bulk of the work and paying their dues for 10 years or so before becoming a partner have gone," Hayward said.

Although most of the companies have factored in some staff turnover levels, Hayward said many may be caught out because they are struggling to provide attractive incentives.

"Defined career path and company image are insufficient enticements as the key requirements are focused on stock options and globalisation," he said. "Better equity and more flexibility within the company structure will be dominant factors in retaining talented staff."

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