In a competitive market, firms pull out all the stops to retain employees

“Regardless of what we preach, it’s business first, then client issues, then employee concerns.” “Long hours, lack of recognition, single-mindedness.” “[The firm] is extremely cheap.  It is not uncommon for people to fly to China or India economy class, and [the firm] offers no perks that one would normally associate with a consulting firm. In essence you are an expendable resource that is being squeezed to pad the partners’ bank account.”

These quotes from our 2007 Best Firms to Work For survey sum up one of the primary obstacles to retention: employee dissatisfaction. And from the looks at these quotes, and plenty others that were in our annual Best Firms report, there’s a lot of work to be done if firms want to keep what they’ve got in an ever-tightening talent market. Companies can put all the effort into human capital objectives they want—in fact, according to a McKinsey & Company survey released in December, 46 percent of business executives report that their companies will be investing more over the next six months into training and recruiting efforts. But at the end of the day, if employees are don’t feel valued, they aren’t going to stay.

For PricewaterhouseCoopers, that means acknowledging that employees have individual needs, so a retention strategy designed for all is destined for failure. “There isn’t just one path; there’s a variety of paths,” says Genevieve Girault, the firm’s human resources communications director.

PwC recently faced some retention issues of its own. In 2001, Girault says, “We kind of reached a critical point when we reached a record high turnover at 24 percent.” At that point, she and her colleagues had to figure out who was leaving and why. “We really sat down to do a lot of thinking,” she says. That thinking and their research determined that women were the ones running for the door. “We realized we were losing some of our moms,” says Girault, adding that some men were leaving for the same reason—family time.

So PwC made a number of policy changes that Girault says makes the firm more family friendly. Extended maternity leaves, backup childcare centers, paid training for women who choose to stay home for a time but want to go back to work, and mentoring programs for moms were all part of the new plan. “We’re now giving them more options,” Girault says of the mothers.

But flexibility isn’t just a privilege for the mothers in the firm. Fathers can take advantage of a flexible paternity leave as well. But more to the point, the firm doesn’t prioritize life plans, Girault says, explaining that parents and non-parents alike are treated as though their outside lives matter, and the flexibility that is afforded to parents is afforded to everyone. Single people and non-parents can take sabbaticals to pursue their passions, Girault says, explaining that one firm employee is in a rock band and PwC works with him to make sure he can play shows.

Girault says the firm has addressed the issue culturally as well. Booklets such as “The Value of Time Off” and “The Prepared Parent” drive home some of the issues the human resources department is focusing on. But the family leave and subsequent work/life balance issues aren’t just a challenge at PwC—they’re a challenge at nearly every consultancy. And firms are realizing they have to address it now, especially as benefits grow in importance in many employees’ eyes.

McLean, Va.-based consultancy MorganFranklin up until recently didn’t cover maternity or paternity leave in its short-term disability plan, says the firm’s human resources director, Denise Watters. “We really needed to add that component to [it]” in order to stay competitive, she says, adding that now the firm, like PwC, also offers backup childcare on site. Now she says, “Our benefits are robust; [the leadership] really cares about the family.”

Watters herself, she says, is focused on making sure employees—and their spouses—know what benefits are available to them, and that effort may be one of the reasons the firm saw an eight percent increase in retention in 2007.

Cultural Shift

Carolyn Lese, human resources director at IBM, agrees with Girault that the key to keeping employees happy is flexibility—and it’s something her firm offers in large doses. “IBM has a culture of flexibility in the way that we work,” she says, but in addressing that, she’s not just referring to IBM’s consulting arm, IBM Global Business Services, but the firm as a whole. And being part of a large firm with different business lines can open an untold amount of doors for consultants itching to make a move. “You’re not just joining a consulting firm, you’re joining IBM,” says Lese, who explains that consultants can move into a different business at the firm without hurting their career. “There are a plethora of opportunities at IBM.”

As for specific benefits that would entice a consultant to remain with the firm, Lese points out that work-at-home arrangements when consultants aren’t at a client site aren’t a benefit—they’re a given. “It’s OK, you wouldn’t think twice,” she says.

Because of the type of culture the firm has, Lese says there isn’t so much a retention-focused strategy at the firm, so much as a setup that fosters employees’ professional and personal growth. Training and mentoring opportunities are examples of that, Lese says. One standout program is the benefit that IBM employees can take up to three years of a leave. While some new parents may use that time at home with their child, others may go on safari in Africa, she says. That flexibility has had positive results at the firm. “[Work-life balance is] always rated as one of the top three reasons why people stay with IBM.”

Relationships Matter

MorganFranklin has a different philosophy as to why employees stay. For the firm, it’s about the at-work relationships. The company encourages employees to recruit their friends, and compensates them accordingly. “People like to work with their friends and people they feel comfortable with and professionals who are at their level,” Watters says. “We have found that they’re going to refer someone they think is going to work well within our culture and with them on the team, and that ensures a good retention rate.”

In addition, relationships are important to the firm’s leadership, says Watters, who asserts that the firm’s CEO, CFO and COO “know every single employee, and they care about every single employee and their families, so they’re always looking for the right thing to do.” That mindset directly influences her position directly. “When it comes to HR, it’s very easy.”

The firm also is looking at different ways to boost morale—although with an 85 percent retention rate last year, keeping employees isn’t a major challenge. Monthly and quarterly awards programs help keep the momentum going, and new for 2008 are personal development plans, Watters says.

Awards are a morale-booster at KPMG as well, says Lynne Doughtie, the national managing partner of the advisory practice. The firm’s Encore Awards are a chance to recognize employee efforts. More than 60 percent received an award within the past year, she says, adding the emphasis is on “just making people feel good about their accomplishments.”

Community Building

In addition, KPMG is looking to build communities through the use of some online resources.  Doughtie cites a number of ways the firm is using its intranet to keep employees engaged. A career architecture site is a huge hit—and is drawing a lot of hits. Five thousand users, she says, have used the site to design their own career path, which allows them to take ownership of their future. And to that end, hypothetical compensation levels are transparent and available to all employees, so everyone has an idea of what figure is attached to what level. “People really like that transparency,” she says.

In addition, one of the firm’s biggest annual community-building efforts takes place online—namely, the firm’s annual vacation photography contest, which Doughtie says attracts more than 4,000 photos from employees. “I think that [gets] more hits than any other article [on our intranet],” she says.

KPMG consultants are not only building their online community, but they’re reaching out to real-life communities in need, Doughtie says. “The thing that we’re really trying to build here at KPMG is a value-based culture,” she says, adding some employees spent two weeks together helping Hurricane Katrina victims.

KPMG consultants also are helping their co-workers. The firm has a vacation-donation program, and recently employees helped out a co-worker who needed to take a leave because his son was ill. How does this translate into retention? Of the man who needed the vacation time, Doughtie says, “his loyalty [is] to our firm because of what all those individuals did for him,” she says, adding it’s often the intangible efforts that compel employees to remain at a company.

Out of Office

Retention is something that’s even harder to address when it comes to the next generation of employees. Research by college recruitment Web site Experience found that graduates stay at their first job for 1.6 years. That’s why, according to Girault, work-life balance isn’t just about new parents. Millenials, she says, are looking for companies that understand that need for balance. “Now it’s very competitive around what are you doing to maintain a quality of life,” Girault says. To that end, managers are notified when employees have accrued the maximum amount of time off. “It’s a business issue,” Girault says. “We’re just not trying to be nice. If people don’t take their vacation time, they’re going to burn out. If we want to attract the best and retain the top performers, it really needs to be a culture that makes people want to work here.”

Making Millenials happy also is on the minds of KPMG leadership. At the firm’s recent town hall meeting, not only was popular comedian Stephen Colbert a speaker, but an intern also was going to addressed the firm-wide meeting to discuss what attracted her to the firm—namely a speech a KPMG employee once gave about ethics.  During the town hall, the firm also showed videos of new hires and interns at the company.

The feel-good efforts by firms like PwC and KPMG do more than make employees appreciate where they work. Since it’s far less expensive—and often more desirable—to keep a current employee than to hire a new one, instituting these proportionally inexpensive programs makes good business sense. In fact, companies should be looking at retention strategies that center on values, recognition, benefits and employee development instead of compensation because, according to HR Magazine, 90 percent of employees give a reason other than pay as to reason for their departure. “People feeling valued and treated well has less to do with compensation than with some of the intangibles,” Doughtie says.

Road Warriors Reap the Benefits at Crowe Chizek

Crowe Chizek, a public accounting and consultancy firm, is realistic about travel in the industry.  The firm also recognizes that employees who travel too much can burn out and leave a firm. “We know that in our industry we’re just never going to eliminate that so what can we do to make this easier for people?” Jane Hoff, human resources leader at Crowe, says the firm asked itself. Tying into the firm’s value structure of “care, share, invest and grow,” Crowe started its Road Warriors program in 2006. The concept is simple, Hoff says. “What we have done although knowing that we can’t eliminate travel for people is implement some programs to make the pain of travel maybe a bit less painful,” Hoff says. “And so [Road Warriors is] just various programs or perks, so to speak.” Those perks range from the small, like getting reimbursed for dry cleaning expenses on the road, to the large, like paying for weekend travel to or from a chosen destination while spending weekdays at the client site. So, for example, Hoff says, “if you’re traveling extensively, we will fly your family for the weekend to your location if you choose that, or we will fly you to another location to spend the weekend.” Courtney Bolka, a senior staff accountant based in Fort Lauderdale who participates in the program says she is thankful for those perks. On the road about eights months a year total, Bolka says the weekend travel and free BlackBerry program are her two favorite perks. And when asked if it’s compelled her to stay loyal to the firm where she’s spent the past two years, she says yes, adding that the travel program in particular, makes her feel valued as an employee. “It shows the appreciation for the people traveling,” she says. —J.D.