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Retaining IT Personnel: An Integrated Framework

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 CHAPTER 3

RETAINING IT PERSONNEL

An Integrated Framework

M. THITE Mohan Thite

In the knowledge economy where intellectual capital is the key sustainable

competitive advantage, attracting and retaining talent are strategic compet-
itive weapons. This paper reviews issues, challenges and strategies in retain-
ing IT personnel in the light of generic retention strategies and proposes an
integrated framework encompassing environmental, employee and organi-
zational influences in a cross-cultural environment. It recognizes that reten-
tion strategy is inextricably aligned with overall people management
philosophy and high performance work culture that encourages social net-
works and holds managers directly responsible for employee morale. In
searching for common themes and key principles in retaining IT employ-
ees, the paper argues that IT personnel are not fundamentally any different
than other occupational groups; however, any retention strategy needs to be
grounded in organizational realities and situational considerations.

“I am much less worried about one of our competitors stealing the designs of our latest
product than I am about one of our competitors stealing one of our best minds”
—Eric Benhamou, Chairman and CEO, 3Com

The twenty-first century economy and its surrounding political and social
environment are considerably different from the past. Since the advent of

IT Workers: Human Capital Issues in a Knowledge-Based Environment, 71–86

Copyright © 2006 by Information Age Publishing
All rights of reproduction in any form reserved. 71
72 M. THITE

the scientific management theories, we have not faced the kind and
amount of uncertainty that we are facing today due to a host of factors,
such as widespread globalization, technological revolution, political and
economic realignments and networks resulting in hyper competition.
As the economic foundation moved from agriculture to industry and
then to knowledge, the source of wealth has moved from land to machin-
ery and now to intellectual capital. Traditional competitive advantages,
such as capital, market share, and superior technology are no longer sus-
tainable. In an uncertain environment, knowledge is the only torch to
find our way out of the tunnel of darkness. Since the source of knowledge
is embedded in human brains, human resource becomes the only sustain-
able competitive advantage in the knowledge-based economy.
It is obvious that retention of high performing employees is better than
a long and expensive search for new employees with uncertain outcomes,
particularly when intangible costs, such as lost productivity and loss of
company knowledge often to competitors are taken into account.
Employee turnover is estimated to cost the U.S. economy $5 trillion
annually (Journal of Business Strategy, 2003). Further, failure to retain
good staff inevitably casts a shadow on future recruitment. In technology-
intensive industries, such as Information Communications and Technol-
ogy (ICT), market swings are more frequent and pronounced and conse-
quently the balance between demand and supply of labor is shaken more
often than in other industries. This calls for a more focused approach to
recruitment and retention of high performing employees.
With the onset of the knowledge economy, the war for talent is increas-
ingly visible in many sectors of the economy. With the general recognition
that highly talented and committed people are always scarce, the chal-
lenge is not only to attract them but also to retain them. The purpose of
the chapter is to find common themes and key principles in successfully
retaining IT employees and secondly to address the question, “whether
the issues, challenges and strategies in retaining IT employees are funda-
mentally any different than any other occupational group and if so, how?”
This chapter presents a systemic and holistic analysis of employee reten-
tion by first reviewing macro environmental factors that affect employee
retention in general and then comparing and contrasting generic reten-
tion strategies with those of IT industry specific strategies.

INTEGRATED FRAMEWORK

Based on the literature review of strategic human resource management

(HRM) or high performance work practices in general and retention
practices in the IT industry in particular, the author proposes an inte-
 Retaining IT Personnel 73

Table 3.1: An Integrated Framework of Employee Retention

Environmental Organizational Employee
Influences Influences Influences
• Economic • HR Philosophy/ Architecture • Life cycle/
cycle • HRM climate career stages
• Technology • Employment security • Personal and
cycle • Performance management occupational
• Employment • Remuneration and reward orientation
flexibility • management • Personal
• Outsourcing • Work arrangements circumstances
• National • Quality of work environment • Social
culture • Learning to learn initiatives networks
• Industry/ • Career development
occupational • Leadership
sub culture • Managerial competence in
• managing people
• Sense of belonging
• Quality of life initiatives

grated framework of employee retention (Table 3.1). The framework rec-

ognizes how environmental and employee-related factors interact with
organizational factors and initiatives to produce a combined and over-
arching effect on employee retention.
An exploration of the key elements of the framework follows:

ENVIRONMENTAL INFLUENCES

Every economy and industry undergoes boom and bust cycles affecting
the demand and supply of labor. After experiencing unprecedented pros-
perity throughout the 1990s and the consequent historically high levels of
employment, the United States went into recession in late 1990s and even
today the recovery is patchy. The boom and bust was even more pro-
nounced in the IT industry where the employment boom resulted in a
frantic search to attract and retain IT personnel, and the subsequent
crash of the dot-com sector and the empty rhetoric of Y2K led to a sharp
downturn in employment levels.
In the highly globalized, technology-intensive, fast changing and hyper
competitive and uncertainty laden environment of the twenty-first cen-
tury economy, the boom and bust economic cycles can only expected to be
more frequent and sharp. These cycles will have a dramatic effect on how
employers strategize their recruitment and retention policies. Unfortu-
nately, companies typically think of retention only when the labor market
74 M. THITE

is tight and ignore it during a downturn. Pfeffer (1998) describes the futil-
ity of such an approach:

By laying off employees too quickly and too readily at the first sign of finan-
cial difficulty, (firms are) buying high and selling low (and, in the process,
incur unnecessary cost having done a) good job selecting, training and
developing their workforce.…. They lay off people in cyclical downturn and
then, when the entire industry is booming and staff is scarce, they engage in
often fruitless bidding contests to rehire the skills that they not that long
ago sent packing. (Thus, in many cases), layoffs put important strategic
assets on the street for the competition to employ.

The intense uncertainty in the business environment has led organiza-

tions to seek ways and means of having a “flexible” workforce. This flexi-
bility has taken various forms, such as externalization of labor through
casual, part-time and contract workers (Lepak & Snell, 1999), outsourc-
ing, multitasking, delayering of management levels, rightsizing by reduc-
ing fat, including poor performers, restructuring, reengineering,
performance pay, and so forth. Capelli (2000) argues that no company
can insulate itself from today’s free wheeling labor market and recom-
mends a market-driven retention strategy that begins with the assumption
that long-term, across-the-board employment is neither possible nor
desirable.
However, many research studies have shown that the claims of long-
term benefits of workforce casualization and outsourcing are dubious and
doubtful and are in fact harmful to the long-term health of the organiza-
tion (Davis-Blake, George, & Broshak, 1994; Sahdev, Vinnicombe, &
Tyson, 1999). Further, endless retrenchment, restructuring, reengineering
and other belt tightening exercises amidst reports of corporate excesses in
executive compensation and managerial ineptitude due to short-term
outlook have resulted in change-fatigued, highly stressed, demoralized
and cynical employees.
Apart from the economic cycles, the technology cycles add further
complexity, particularly to the IT industry. Along with the phenomenal
improvement in the performance of computing equipment, communica-
tion capabilities and data storage capacity, the shelf life of any technology
is not expected to be more than a few years. This adds enormous uncer-
tainty to the career prospects of technical personnel and therefore, it
comes as no surprise that they value continuous learning opportunities
very highly.
National culture is another major environmental consideration in peo-
ple management, particularly in countries with high cultural context. As
most management theories and practices originate in the west, it is
important to recognize and act on cross-cultural differences. Hofstede
 Retaining IT Personnel 75

(2001) who conducted a now classic study of work values of employees of

IBM Corporation in more than 50 countries, defines culture as “collective
programming of the mind” and argues that people carry mental pro-
grams over their lifetime that contain a component of national culture,
which is expressed in different values. For example, the contract oriented
style of the West clashes with the contact or relationship oriented style of
the East and requires western managers to show patience, perseverance,
and long-term orientation in doing business with Asian partners and
managing employees. Western countries generally have a low cultural
context compared to Asian countries as they are mainly individualistic in
their mindset with the result that their societies have a high tolerance for
individuals and groups defining their own destiny, whereas in collectivistic
cultures, the society exerts considerable pressure on individuals and
groups to conform to societal norms and values.
Several studies point out national differences in employee motivation
in the IT industry. Agrawal and Thite (2003) found that “managing multi-
ple expectations” is one such culture-based characteristic of Indian soft-
ware professionals as they need to manage “expectations of peers and
family members.” These “multiple pulls and pressures create immense
confusion in the minds of Indian software professionals and tempt them
to go for short-term gains, often at the cost of technical excellence to be
gained by staying on in one position or organization for sufficiently
longer period.” A successful Japanese approach to retaining IT profes-
sionals is to “create a Japanese-style Theory Z atmosphere in the firm,
stressing lifetime employment, non-specialized career paths, collective
decision-making and other holistic matters” (Licker, 1983). Similarly, the
highest career orientations for Taiwanese MIS employees were “job secu-
rity, followed by service, challenge and life-style” (Igbaria & McCloskey,
1996).
However, any cross-cultural analysis should also take into account the
changing times in any culture and that sometimes, strong organizational
and/or occupational culture may dilute the importance of national cul-
ture. For example, it is possible that the IT industry suffers from “high
turnover culture” where the employees are likely to believe that turnover
is appropriate and perhaps even expected, necessitating the need for
management to constantly monitor employee attitudes and perceptions
on motivation and job satisfaction and introduce timely and effective
measures to redress employee grievances (Moore & Burke, 2002). In a
high turnover culture, employees more often “get mislead on career
opportunities and keep seeking the elusive greener pastures and are in
dire need of mentoring by senior managers who can relate their experi-
ences to help others to pitch their career expectations at realistic levels”
(Agrawal & Thite, 2003).
76 M. THITE

With the above environmental influences in mind, let us look at

generic and IT-specific retention strategies to illustrate the organizational
and employee influences shown in the integrated framework.

GENERIC RETENTION STRATEGIES

Retention strategy cannot be viewed and analyzed in isolation. It is closely

linked with the HRM philosophy and climate of the organization, includ-
ing key HR policies and practices, such as HR planning, job analysis,
recruitment and selection, training, performance management, career
planning, remuneration, and reward management. Strategic HRM con-
cepts and practices, also called high performance work practices, are
interrelated elements in an internally consistent human resource “bun-
dle” or system (Delery & Doty, 1996). An organization that follows a coer-
cive approach for one part of its HRM system cannot succeed in adopting
a collaborative approach for another part.
Management philosophy is the foundation of a people-centric culture
(Thite, 2004). No HR strategy, including retention, can succeed unless
the organization has an overarching HR philosophy that assures its
employees that they are working for a caring, nurturing, trust-worthy
organization. Any organization that is serious about attracting and retain-
ing talent has to create an HR philosophy that “restores people to the
heart of organization” and offer a new social contract that shows people
“what the company is willing to do to help them build their own futures”
(Kanter, 1997). Such an organization needs to be not only high perform-
ing but also seen to be of high character, credibility and integrity and
value driven (Smith & Kelley, 1997).
An HRM philosophy is reflected by key indicators, such as attitude
towards time horizon, ethics, employment security, fair play, and expecta-
tion management (Thite, 2004). As in investment decisions, time horizon
is a critical element in people management. An organization with a short-
term focus regards HR as a cost or a profit center and demands a quick
return on investment. In contrast, an organization with a long-term focus
regards HR as an investment to be reaped over time. The ethical stan-
dards of an organization also shape its image as a “compelling place to
work” as an increasing number of knowledge workers scrutinize the cor-
porate social responsibility of their employer in areas such as pay equity,
environmental concerns, customer service, and community engagement.
Further, people care as much about the fairness of the process as they do
about the outcome itself (Kim & Mauborgne, 1999).
Organizations, which adopt the “people as partners in progress” policy,
demonstrate a distinct HR philosophy characterized by employment
 Retaining IT Personnel 77

security, company flexibility, sharing of financial success with the work-

force, development of good communication and consultation, and repre-
sentative employee voice (Involvement and Participation Association,
1997). Pfeffer (1998) proposes a set of universal best practices in HR,
namely, employment security, selective hiring, self-managed teams and
decentralization, performance pay, extensive training, reduced status dif-
ferences, and sharing information.
Pfeffer and Veiga (1999) believe that “employment security is funda-
mental to the implementation of most other high performance manage-
ment practices.” Kanter (1997) urges organizations of the future to write a
new social contract with their employees incorporating new motivational
tools, such as providing employable skills; giving them control of their
career agenda (e.g., letting employees choose their next project); access to
training, mentoring, and challenging projects; enhancing professional
reputation by providing abundant public recognition of achievements;
and sharing of value creation through company share ownership, and so
forth.
As life-long careers disappear, people are focusing on employability.
They prefer employers who give them the opportunity to work on skills
that are in demand today and in the foreseeable future. Those employers
who are committed to providing ongoing training and reskilling and
those who practice internal job rotation and promotion are the ones who
are likely to be treated as the employer of choice (Meyer & Allen, 1997).
Firms that recruit and retain star performers almost always offer con-
tingent compensation that includes gain sharing, profit sharing, stock
ownership, pay for skill, and various other forms of individual, team and
organizational incentives. “When employees are owners, they act and
think like owners” (Pfeffer, 1998). Recognition rewards that celebrate suc-
cess and the competencies that contribute to the success abundantly, fre-
quently, equitably, and in time, go a long way in reinforcing employee
commitment and intention to stay.
Studies on employee turnover emphasize the “importance of employee
expectations and morale (i.e., feelings of well-being, job satisfaction) in
contributing to employee decisions to stay” (Steel, Griffeth, & Hom,
2002). The morale-turnover relationship is seen to be particularly strong
among high performers. That is why organizations, such as Microsoft,
hold their senior managers accountable for their subordinates’ morale
(Barlett, 2001).
Achieving a proper fit between the person and the task is seen as
another successful retention strategy. Literature on career anchoring
(Schein, 1996) and job sculpting (Butler & Waldrop, 1999) suggest that
people have deep rooted personality orientations. They have clear prefer-
ence for or against particular type of work, such as working with technol-
78 M. THITE

ogy or people. In the case of IT professionals, this may mean the

availability of choice between a technical and a managerial career path.
Social networks at work also act as a powerful glue to bond and retain
people. Social relations with colleagues are an important consideration
for people and often result in “job embeddedness” that is characterized
by links (i.e., connections with other people and groups), fit (i.e., compat-
ibility with job, organization, and community) and sacrifice (i.e., cost of
what people have to give up if they leave a job) (Mitchell, Holtom, & Lee,
2001). Even though such relations are primarily driven by individual initi-
atives, the employer can play an important role by way of decentralized
organizational structure, open communication channels, innovatively
designed office blocks, flexibility in working conditions, promoting
humor, and so forth. The quality of work environment is a major influ-
ence on the stability of social architecture at the workplace.
Thite (2004) draws attention to the importance of an employee’s
immediate manager, who can make or break the strategic intent of any
managerial policy on the ground and therefore, wields enormous influ-
ence on the motivation, job satisfaction and hence, the intention to stay of
employees. In a special issue on employee retention and engagement in
Human Resource Planning journal, the editor notes that “one tenet
strongly related to retention and engagement is the fundamental role of
the front-line leader or supervisor as the driver” (Frank, 2004). As noted
by Frank and Taylor (2004), “Pay, benefits and other employee rewards
entice employees to enter a company, but poor managers cause them to
leave.” It requires firms to reward managers for retaining or engaging tal-
ent or punish them when they do it poorly (Jamrog, 2004).
As with any HRM policy, retention policy is situation specific. Its suc-
cess is contingent upon a variety of macro and micro variables, such as
national and organizational culture, organizational size, industry type,
and occupational category. Therefore, rather than the best practice
approach, a “best fit” approach is more appropriate in designing and
implementing a retention policy. Multiple levels of analysis, including
individual, group, business unit, firm and industry level, help us provide a
closer picture of interacting HRM related variables and improve accuracy
of data in HRM analysis (Gerhart, Wright, McMahan, & Snell, 2000).
Further, Agarwal and Ferratt (2002) point out that as against the “sin-
gle dominant HRM system perspective embedded in the SHRM litera-
ture,” the “enacted HRM system perspective” that emphasizes differences
in specific occupational groups, such as IT, and different ways in which
managers implement and employees perceive the same policy, explains
greater variance in intentions to stay. This necessitates a close examina-
tion of IT-industry specific retention strategies.
 Retaining IT Personnel 79

IT-SPECIFIC RETENTION STRATEGIES

A taxonomic approach to the sociology of professions assumes that “pro-

fessions possess some unique characteristics which differentiate them
from other occupations” (Desai, 2005). Therefore, this section begins with
the examination of the personality and occupational characteristics spe-
cific to IT personnel.
IT professionals typically exhibit characteristics attributed to scien-
tific and professional employees in that they perform work that is intel-
lectual in nature and requires advanced education, they need to be self-
disciplined and achievement-oriented, they prefer considerable auton-
omy and that they tend to be cosmopolitans more than locals (Davis,
1981). According to Peterson (1987), as an occupational group, IT per-
sonnel exhibit certain distinguishing traits, namely, youth, mobility,
short tenure, intenseness, adaptability to change, craftsman approach to
work with a unique mix of product/service orientation, sensitivity to
work as they see their output as an extension of their personality, isola-
tion and aloofness in relating to and dealing with the overall organiza-
tional environment, and association with absolutes with a black and
white approach to problem solving. As knowledge workers, they are
more loyal to their profession than the organization they work for
(Agrawal & Thite, 2003).
One study concluded that “within an occupational group, IS people are
as motivationally normal as other workers” (Ferratt & Short, 1986).
Another study found the IS personnel to be more logical and analytical,
conventional and conservative and more self-assured than the general
population (Wynekoop & Walz, 1998). Clearly, research on this subject is
inconclusive. However, it is fair to say that like other knowledge workers,
IT personnel look forward to autonomy, challenging tasks, immediate
and frequent feedback and rewards, ownership of ideas and enterprise,
commitment to profession more than organization, teamwork/community
of practices, de-beaucratized work environment, and an open, consulta-
tive, fun loving organizational culture.
As in generic retention strategies, there is no one set of best practices
that can be found for the IT industry. A snapshot of IT industry based
retention strategies (Table 3.2) as noted in the literature shows that orga-
nizational initiatives in this regard encompass a wide range. Again, the
emphasis here is not on any one HR practice but the overarching HR phi-
losophy or strategy that acts as a catalyst to motivate and retain people
(Agarwal & Ferratt, 2001). Reflecting the strategic HRM literature, Agar-
wal and Ferratt (2001) draw attention to the “long-term investment strat-
egy” adopted by IT companies with low turnover. It focuses on long-term
relationships with employees by investing more in career development
80 M. THITE

Table 3.2: Examples of Retention Strategies for IT Personnel

Ferratt, Agarwal,
Richens Gill and Pidduck Moore and Agarwal and Ferratt
(1998) (2001) Brown (1999) (2002)
• Dynamic skill • Interesting and • Interesting work; • Persistent and
building; challenging work; • Market-anchored accurate feedback;
• Creative fair mar- • Working compensation; • Recognition and
ket compensation; environment; • Promotion from tangible rewards;
• Creative • Compensation. within; • Developing a spirit
incentives; • Communication by of community;
• “Soft” benefits; senior manage- • Achieving the
• Creation of a sense ment; balance between
of culture and • Financial stability an individual’s
belonging (of organization); professional and
• Empowerment/ personal identity
participation;
• Development
plans and
competency/skill-
based training;
and
• Flexible work/time
arrangements

and security in the form of employment security, financial stability, long-

term employment benefits, job rotation, holistic training and develop-
ment and long-term career planning and management. Apart from
length of relationship, these companies also focus on “concern for the
individual and productivity” characterized by flat organizational struc-
ture, flexible work arrangements, challenging work, frequent feedback
and community programs.
Pare, Tremblay, and Laonde (2001) attest to the need for a long-term
relationship with employees to gain their affective commitment or emo-
tional attachment to the organization as it is the strongest predictor of the
turnover intentions of IT professionals. According to them, the HR prac-
tices that have the most direct influence on affective commitment and cit-
izenship behaviors of employees are:

• distributive justice (i.e., perception of internal and external equity

in compensation, promotion, etc.),
• competence development by providing and facilitating continuous
learning,
• recognition of contributions, and
• empowerment.
 Retaining IT Personnel 81

A survey of senior-level IT managers on the perception of importance

of various retention practices concluded that “the work itself is regarded
as a highly effective motivator” (Ferratt, Agarwal, Moore, & Brown, 1999).
Following on Dalton, Thompson, and Price’s (1997) identification of four
distinct career stages among professionals, namely, the apprentice, col-
league, mentor, and sponsor, Hsu, Chen, Jiang, and Klein (2003) con-
ducted a survey of IS professionals and found that “career satisfaction is
positively and significantly correlated with career stage. Moreover, mana-
gerially anchored IS professionals are found to be more satisfied in the
mentor stage than those who are technically anchored.”
Finally, reinforcing the importance of a “knowing-doing gap” (Pfeffer
& Sutton, 1999), Agarwal and Ferratt (2002) emphasize that it is not the
policy per se but the way it is implemented by individual managers and
perceived to be fair and equitable by individual employees that is more
important to IT professionals. Sometimes, the informal culture may over-
ride the formal HR policy and therefore, both need to work together to
produce desired results. For example, Truss (2001) observes that in
Hewlett Packard, despite the formal policy on performance-based promo-
tion, a strong internal network with influential people played a crucial
role in promotions.
The increasing phenomenon of global offshore outsourcing in the IT
industry has further complicated the challenge to retain IT personnel as
it is likely to result in loss of future domestic talent and critical knowledge
as well as further weakening of “the already fragile relationships between
employees and employers” (Pfannenstein & Tsai, 2004). It is difficult to
counter the political backlash of outsourcing and its impact on employee
morale and therefore, the issue needs to be handled with sensitivity and
an eye on long term implications (Thite, 2005). Anecdotal evidence sug-
gests that outsourcing breeds further employment insecurity in the minds
of employees and therefore, those companies that keep employees fully
informed and consult them in a trust-worthy environment on matters that
affect employee morale and job security are more likely to keep their star
performers. Even companies that rely on outsourcing as a business have
to tread carefully in managing employee expectations. For example, in
the Indian Business Process Outsourcing (BPO) industry, employers have
to often counter the negative perception about the attractiveness of IT-
enabled Service (ITeS) jobs and the notion that they do not provide a
career path (Karnik, 2005).

CONCLUSION
The integrated framework proposed in this chapter indicates that there is
little justification in arguing for IT-specific retention practices. While the
82 M. THITE

degree of importance of each retention strategy may vary from industry to

industry, the strategies themselves do not differ in any significant way. For
example, the need for “continuous learning” seems to be more prominent
amongst IT professionals due to rapid technological obsolescence (Pare et
al., 2001) but providing learning opportunities is an important retention
strategy in any sector of the knowledge economy.
This raises the question as to whether there are specific retention prac-
tices for classes of careers. The answer seems to be no. For example, a sur-
vey of the accounting staff in the finance industry indicated that successful
staff retention depends on employee’s relationship with the immediate
manager, supportive environment, clear communication, encouragement
of professional growth through training and mentoring, and competitive
pay—factors which are clearly identified in the generic retention litera-
ture (Messmer, 2004). Similarly, a study of nurse managers who success-
fully created a culture of retention that facilitated employee engagement
and contribution identified the following success factors:

• put the staff first by listening to and responding to their needs;

• forge authentic connections by getting to know them and instilling
a sense of community;
• coach for competence by setting expectations, supporting develop-
ment, role modeling and managing performance;
• focus on results through empowerment and involvement, and
• leadership through partnership (Manion, 2004).

Again, none of the above factors is unique to the medical profession,

and all are applicable to any other industry.
It also needs to be noted that the general literature on strategic HRM
is replete with best practices from well-known organizations in the ICT
industry, such as Sun Micro System (Thite, 2004, p. 160), Hewlett Packard
(Truss, 2001), MicroSoft, Cisco Systems and SAS Institute (O’Reilley &
Pfeffer, 2000) and is consistent with IT-specific motivation and retention
strategies. With its growing share of the service sector and increasing need
for knowledge workers in the twenty-first century economy, the ICT
industry may continue to be the focus of the best-practice HRM literature.
However, the contingency effect on any HRM policy, including reten-
tion, cannot be ignored. Steel, Griffeth, and Hom (2002) recommend that
a fully integrated retention policy that takes into account external and
internal environmental factors is more likely to succeed. The retention
goals need to be formulated based on data on who is quitting, the indus-
try quit-rate statistics and projected workforce needs. Organizations
should also find out why people stay as “the reasons people stay are not
 Retaining IT Personnel 83

always the same as the reasons people leave” (Steel, Griffeth, & Hom,
2002). Such information mechanisms help determine whether excessive
bleeding of talent is occurring and if so, how much, where and why. Steel
et al. suggest two kinds of retention strategies: “blanket strategies” at the
macro level (such as, improving recruitment practices) and “focused strat-
egies” tailored to specific target audiences.
Further, in today’s uncertain and competitive world, it is neither possi-
ble nor desirable to aim at retaining all employees. The competitive envi-
ronment calls for employees who perform beyond contractual obligations.
It is these employees that organizations should identify and try to retain,
while periodically weeding out chronic poor performers (Bartlet &
Ghoshal, 2002). However, in the quest for star performers, people man-
agers should not ignore the “average” performers who constitute 60%-
80% of any organization and are the solid, everyday contributors (Hend-
erson, 1997). Finally, Pfeffer (2001) cautions that fighting the war for tal-
ent could become hazardous to the organization’s health if it leads to
overemphasis on the individual to the detriment of team spirit and
undermining the importance of systems and culture on performance.
Therefore, retention is not a set of isolated best practices but an ongoing,
systemic effort in improving the overall quality of HRM climate.
Ultimately, managing people is a balancing act. The challenge is how
each organization finds its own balance in managing conflicting chal-
lenges that are more grey than black and white. Even those organizations
that apply the same set of management principles differ remarkably in
their understanding, practice, and outcome of those principles. That is
why managing and retaining people is a competitive advantage that is dif-
ficult to imitate.

ACKNOWLEDGEMENTS

This chapter has borrowed heavily from the key themes outlined in the
author’s recent book, “Managing People in the New Economy,” published
by Sage, New Delhi. The author is grateful to Professor Tom Ferratt and
two anonymous reviewers who helped sharpen the focus and structure of
the chapter.

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