The Soft Touch

On a gray November day in 1997, Ted DellaVecchia, senior vice president and CIO of Capital Blue Cross in Harrisburg, Pennsylvania, rallied his troops to talk about teamwork. DellaVecchia had been hired less than two months earlier, commissioned to turn around a struggling IT organisation that was losing almost one-quarter of its employees annually. For years, the company's IT department had existed as two separate IS units, and employees weren't happy. The best way to understand why, DellaVecchia thought, was simply to ask them.

So he invited his 410 employees to cite examples of how the company had failed to make them feel like part of a team. Rick Duker, a Blue Cross IT employee since 1985, stood up and pulled out his business card. Duker wondered aloud why his card called him an IS staffer but did not identify him as a member of Blue Cross IT. DellaVecchia asked Duker to bring his card to the podium for a closer look. Reluctantly, Duker agreed. He gave the card to DellaVecchia, who read it aloud again and then tore it to bits. That card, DellaVecchia said, was a thing of the past.

"This notion of two separate [IS] entities-that was exactly the kind of thing I wanted to change," DellaVecchia says, reflecting on the incident. "I told [Duker] he could get the card he wanted. I told them all they'd get new cards.

These people are IT professionals, and I told them they deserved to be treated like just that-professionals. They had been wanting to hear that for a while."Believe it or not, DellaVecchia found, such inspirational demonstrations can make or break an IT organisation. With the high-tech economy booming and the number of available IT jobs at an all-time high, the challenge facing CIOs such as DellaVecchia is not just how to get good employees but how to hold on to them. Staff retention, once thought to be determined by salary and quantifiable rewards, has become a complicated mix of nonmonetary benefits and other intangibles. (For a look at how companies are using hard cash to retain employees, see "Hot Skills and Cold Cash")According to a March 1998 survey by The Gallup Organisation Inc. and Carlson Marketing Group Inc., almost 70 per cent of the 2,000 IT employees polled said nonmonetary benefits provide the best motivation for sticking around. The study also revealed that employees favour recognition from managers and supervisors by a margin of almost 2 to 1 over recognition such as large cash bonuses or salary raises tied to productivity.

"Pay is a great motivator, but it's increasingly losing influence," says David Foote, managing partner at Cromwell Foote Partners LLC, a consulting firm in Stamford, Connecticut. "You have to pay fairly, but you also have to give people work that's meaningful, work that engages them. The things you learned in Psych 101 have never been more important."For DellaVecchia, the soft approach is a necessity. Since Capital Blue Cross is a nonprofit corporation, DellaVecchia can't throw money at his staff retention problem. Instead, he has turned things around with a calculated plan that stresses recognition, environmental stability, independence, opportunity for growth and teamwork. Today, 18 months after DellaVecchia was hired, the attrition rate in Capital's IT department has dwindled to 9 per cent-well below the IT industry average of about 14 per cent. For the first time in recent history, the number of qualified applicants exceeds the number of jobs available in Capital's IT department.

And for those people already on the inside, spirits are high, productivity is up and everyone-including Duker-has new business cards. "Sometimes," says Duker, "money isn't everything."Work Hard, Play HardAfter that fateful November meeting, DellaVecchia's first formal act as CIO was to create a sense of unity within Capital's IT organisation. In the name of progressivism, DellaVecchia began to refer to the department's two IS units-Capital Blue Cross Information Systems and the Shared Services Centre, an operations partnership between Capital Blue Cross and Blue Cross of Northeastern Pennsylvania-as the Capital Blue Cross "IT team."Next DellaVecchia reorganised Capital's IT management structure. Prior to his arrival, the division had seven levels of IT managers-so many that today DellaVecchia claims even he can't list them all. By eliminating more than 40 per cent of the managerial positions and combining the rest, DellaVecchia reduced the number of managerial levels to three.

"At first, changing this system was a little like fixing a flat tire on a moving vehicle, but the initial changes served to tell my people, 'Hey, it's a new beginning, folks,'" DellaVecchia says. "I wanted everyone to know I was committed to moving toward a oneness of purpose and being."Immediately after DellaVecchia announced the structural changes, he made tactical changes to the division. He established a leadership team composed of his top nine managers and arranged to meet with them every morning to discuss the status of certain assignments as well as larger issues. The intent, DellaVecchia says, was to create a greater sense of oneness among his top brass. For the rest of his people, DellaVecchia instituted quarterly, departmentwide meetings at which all his employees were welcome. Soon Capital's IT atmosphere changed dramatically.

One of the people to notice that change was Marie Roof, director of application systems and a member of Capital's IT leadership team. Roof says that although some of Capital's IT employees had a hard time adapting to DellaVecchia's style, in the end few seemed to mind.

"We were amazed at how much warmer the environment had become," says Roof, a 12-year Capital employee. "The fact that [the CIO] actually wanted to talk to everyone with such regularity was a totally new concept to us. We felt like we had become part of something special."Once he established this new structure, DellaVecchia concentrated on opening lines of communication throughout the division. He started a Capital Blue Cross intranet, which he uses as an interactive newsletter. Then he initiated an "ambassador program" through which he randomly invites employees to meet with him, often over lunch. All employees have the option to refuse his invitation, but most relish the opportunity to talk face to face with the boss. By talking with him privately, DellaVecchia adds, Capital's IT employees feel like they are ambassadors for their colleagues. "I have programmers knocking on my door to talk to me," DellaVecchia says proudly. "Sometimes they're so eager to chat that it's hard for me to get any work done."Distractions aside, DellaVecchia boasts, his open-door policy is a good one.

The friendly environment gives DellaVecchia daily opportunities to indoctrinate employees in his life philosophy-work hard, play hard. In a phrase, the sentiment epitomises what has become of the division as a whole.

"You can't help but get involved in [DellaVecchia's] philosophy because when you're around him his intensity and passion for making things work is infectious," says Joe DeLutis, a five-year Capital IT veteran who, like Duker, holds the position of technical staff member. "As I say to my wife every night, I'm having the time of my life right now."The IntangiblesHand in hand with DellaVecchia's "work hard, play hard" campaign came an increased effort to recognise employees on every level for good performance. He gave his managers full autonomy in negotiating contracts on certain projects-a freedom unprecedented in the history of Capital's IT division. He urged those same managers to thank hard-working staffers publicly at the quarterly department meetings and to single out dedicated workers in intranet postings.

If one particular group of employees does something exceptional, DellaVecchia writes a congratulatory memo and distributes it throughout the department.

This recognition strategy also includes more tangible rewards. DellaVecchia has taken advantage of the company's "extraordinary performance award" program, giving small cash bonuses to employees who consistently excel, and his managers honour positive attitudes by giving employees a Night at the Movies-a folder of gift certificates for two free tickets, popcorn and soft drinks at a local movie theatre. Both are further efforts to remind his people that heroism in the workplace is priceless.

Perhaps the largest components of DellaVecchia's strategy are his commitments to giving his employees interesting projects and providing them with constant opportunities to expand their knowledge of the IT field. DellaVecchia says he tries to give all his people assignments on the cutting edge and encourages them to suggest new technologies whenever they see fit. Regularly, DellaVecchia books speakers and invites his entire department to listen. Often these speakers are leaders in the IT industry. Sometimes DellaVecchia brings in CIOs from competing health maintenance organisations so that employees can get an idea of what's happening elsewhere in health care. DellaVecchia also follows corporate policy in offering his employees a number of onsite training courses as well as full tuition reimbursement for any IT-related classes at qualified universities. "Every person has different receptors," DellaVecchia says, "so I tried to cover every base in carrying out a broad thank-you policy."In Duker's case, DellaVecchia's investment in new business cards was just the beginning. Duker says that before DellaVecchia arrived, he was becoming frustrated with what he considers Capital's "conservative" approach toward using innovative technology. After the November meeting, DellaVecchia sat down with Duker, heard him out, then asked him to research a switch to newer relational databases and personal productivity software. DellaVecchia accepted most of Duker's recommendations, then publicly thanked him for his input.

"We're trying to build well-rounded professionals, for our sake and for theirs," DellaVecchia says about assigning Duker to assess the company's technological needs. "If you invest in [your employees], trust them and give them the opportunities to learn the business, they will invest more of themselves in you."The intangible, nonmonetary benefits DellaVecchia instituted in the Capital Blue Cross department go on.

-- Staffers can telecommute or use flexitime if they can demonstrate that they need such special considerations.

-- Department workstations are fitted with new furniture and state-of-the-art computer equipment -- a direct contrast to the old, run-down workspaces of a few years ago.

-- In some instances when employees work late, DellaVecchia has his managers buy them dinner.

-- There's an annual IT outing, and just this year there's talk of a Capital IT talent show.

"I don't think any of this stuff is new, but if you're sincere -- which [DellaVecchia] definitely is -- these things really work wonders," says Roof.

"Work should be more than just a job. It should be just as much a part of you as anything else. All these things put together make a huge difference in how I feel about coming in each day."Psychology for the AgesRoof's realisations are nothing new. Almost 60 years ago, psychologist Abraham Maslow developed his "hierarchy of needs," which explained what motivates people. According to Maslow, people can achieve their needs for self-actualisation and psychological happiness only after they fulfil their basic survival and security needs, that is, money, food and shelter. Foote, the consultant, says corporations like Capital Blue Cross that cannot offer employees six-figure salaries are able to stimulate employee creativity and motivation through methods that don't involve a lot of money.

DellaVecchia adds that once people reach a balance of money and noncash benefits, retention is no longer an issue-they're in it for the long haul.

That's the kind of environment DellaVecchia has attempted to create at Capital and is precisely the reason why DeLutis, one of his technical staff members, says he plans to stay with Capital well into the next millennium.

"I've got money in the bank, more responsibility than I've ever had, and I'm still able to coach my son's junior high school football team," DeLutis says.

"That's the kind of life everyone dreams about. Stability and peace of mind.

You can't put a price tag on that."

Retention Tips

So you want to hold on to your best people, but you don't know how. Here's a quick reference guide to the finer points of a retention strategy as devised by David Foote, managing partner of Cromwell Foote Partners LLC, a consulting firm in Stamford, Connecticut.

-- Know what's out there. Nonmonetary benefits don't mean a thing if your salaries aren't competitive. Collect market data at least twice per year.

-- Make it personal. Recognition is good; personal praise is better. And be certain that no hard work goes without comment.

-- Be creative. Sure, cash bonuses convey a sense of appreciation, but so does a free round of golf at an award-winning course.

-- Invest in them. Training programs should never be a budget line item. Where possible, spend a minimum of 5 per cent to 7 per cent of your IT budget on education. Your investment will pay off immediately.

(Matt Villano is a freelance writer based in New York City. He can be reached at mjv@whalehead.com.)

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