Companies buy loyalty with their fringe benefits

Outside offers of stock options ranked highest among companies for reasons why staff left. This is a relatively new phenomenon, and is most likely linked to the success of recent flotations at CBT Systems and Iona Technologies. The stories that circulate about paper millionaires at Intel and Microsoft Ireland - which is said to have more than 18 millionaires here - have also fuelled this interest.

A new survey on incentives to retain staff in the software industry has found that fringe benefits are a key factor in securing a loyal workforce. Salaries in the technology industry have become so competitive that the decision to move from one company to another now rests on add-on benefits.

Just under half of the 32 indigenous and overseas companies surveyed offer their employees share options, while profit sharing schemes are only available to less than half of employees. Company childcare facilities and in-house training are not provided anywhere, and external training is only subsidised in 75 per cent of the companies surveyed.

One of the main reasons advanced by companies as to why staff left, was a desire to gain experience with new technology or improve skills.

"The cost of losing an employee is far, far more than the cost of recruitment," says Mr Barry Murphy, chief executive officer of the Cullinane Group, which conducted the survey. "Nobody in Ireland is spending money on staff retention schemes, when the importance of tying people emotionally to a company is becoming widely accepted in the US."

The US is now leading the field in developing skills retention models. A division is drawn between hard and soft benefits, with soft benefits increasingly becoming the area of focus. Hard benefits tend to be focused on in interviews and include salary, bonus, profit share, share options, pension, health and car schemes. The soft bonuses are training programmes, child care facilities, extra holidays, technology in the home.

Timberland, a US-based company, gives each employee one week's paid leave each year to do voluntary work in the community. Outside offers of stock options ranked highest among companies for reasons why staff left. This is a relatively new phenomenon, and is most likely linked to the success of recent flotations at CBT Systems and Iona Technologies. The stories that circulate about paper millionaires at Intel and Microsoft Ireland - which is said to have more than 18 millionaires here - have also fuelled this interest.

"Indigenous companies should be putting aside 15 per cent of their capitalisation for staff and management," says Ms Mary Cryan, director of the Irish Software Association. "There is no point in offering people £3,000 more and not involving them in the company, this is where smaller companies have much better scope to control the work environment than larger multinationals. They should maximise on this."