The software development landscape is changing rapidly, and the demand for software developers is growing. Recruiting high-quality talent and helping engineering teams to remain adaptive to new technologies are significant challenges for CTOs.

The technology industry has the highest turnover rate for any industry. A LinkedIn survey of industry professionals reported that tech companies have on average an employee churn rate of 13.2%, which can be as high as 21.7% for embedded software engineers. The technology industry is known to be highly competitive, and unsurprisingly software developers are choosing to search for better opportunities frequently. 

However, there are significant factors that contribute to the low talent retention rate across the industry. 

This article will discuss the leading factors behind the industry’s low employee retention rates. It will aim to understand how to improve talent retention within organisations; it includes industry expertise knowledge from CTOs and hiring managers on how to achieve a high retention rate for their company. 

Why Do Software Developers Seek New Opportunities?

Two certain organisational limitations are resulting in software developers actively seeking out new employment opportunities.

The first is a work environment that is limited in collaboration and innovation opportunities. Many large organisations have outdated computing software that requires more effort to maintain. The maintenance of legacy systems is known to slow the progress of innovation. 

ERE Recruitment Intelligence company pointed out that software developers need work environments that challenge their current skill sets. 

Aaron Decker, a full-stack software engineer from ERE, explains: 

[M]any companies don’t give developers challenging work. They treat software engineers as data-entry workers rather than creative professionals. As a result, projects fail, work becomes unfulfilling, and employee experiences turn into death marches. Here’s what it comes down to: Software engineers are addicted to learning. New technology, challenges, languages, paradigms. Programmers like it when you throw this stuff at them. What they don’t like is stagnation.

This limitation can further result in an inability to retain talent and therefore directly impact an organisation’s ability to increase the productivity of software development to maintain innovation to improve scalability, efficiency and meet customer demands.  

The second limitation is a limited capacity for software developers to build their career development. LinkedIn points out strong evidence suggesting that the trouble with talent retention within the technology industry is the very high demand for specific skills and rising compensation within the industry’s competitors. As the technology industry is continuously plagued with talent retention issues, there are clear reasons for the high turnover rate of software developers. These are primarily down to a lack of scope for career development and flat salaries. 

Industry leaders have been offering software developers the chance to create impactful organisational contributions. This incentive retains top employees by allowing developers to have greater career development autonomy. The organisations that are unable to provide similar incentives are missing opportunities to acquire high-quality talent and achieve higher rates of employee retention.

What Are The Career Goals of Software Developers?

Software developers are thought to leave their current roles due to better compensation packages. However, from a developer’s perspective, this is not the sole reason for seeking external opportunities. A Glassdoor survey of 1,400 Software Engineers asked developers about their reasons for changing jobs. To which 78 per cent of developers responded that compensation is the reason, but notably more than half of those engineers also said they would take less money to work in a great culture or for a great brand. 

A 2015 LinkedIn survey on why people change jobs found that professionals will change jobs out of concern for career advancement, with 45 per cent surveyed stating a lack of opportunities for improvement as the reason for leaving. A recent study of a niche technology ecosystem found that a third of workers were planning to leave their current roles within the next year; 44 per cent cited a lack of salary increase and career stagnation as the main reason for jumping ship. 

Senior managers must create stronger incentives to improve job satisfaction and also to enhance the organisation’s software developer talent retention strategy. 

How Can CTOs Improve Talent Retention And Foster Professional Growth?

BlueOptima asked three distinguished CTOs and Hiring managers within the software development industry about the importance of high employee retention rates. This is in order to understand how organisations have high talent retention rates within their engineering teams, and to provide advice aimed at addressing these challenges.

What are the trends or patterns you’ve spotted where organisations fail, which leads to low retention?

Tom Winter, Co-Founder of DevSkiller, says, “From my experience, the primary factor always tends to be related to work-life balance or finances. Organisations that experience low retention rates tend to overwork their employees and assume that paying a good wage is enough… Also, not investing enough in HR or having a solid employee development strategy can lead to low retention rates…” 

While the founder of The Rosenstein Group, Darrell Rosenstein, observes that two contributing factors that affect employee retention rates. 

Rosenstein explains: 

First, software developers at many companies work under perpetually tight deadlines, which are often set by people who don’t understand the ins and outs of the work. This leads to a stressful work environment that can quickly lead to burn-out, especially among employees who are expected to work overtime on a regular basis with few opportunities for time off.

Second, I see a lack of appreciation for employees as contributing to high turnover rates. One of the main reasons candidates tell me they’re on the job hunt is a lack of career advancement or professional development opportunities from their previous employer. Something as simple as providing performance-based incentives or recognition programs can help your staff to feel like they have a future with the company.

Why Is The Talent Retention Rate Important Across Software Development?

The founder of The Rosenstein Group, Darrell Rosenstein, states: 

The main benefit is consistency. When you have the same core staff for the long term, they gain a core of cumulative knowledge that they can build on and use with each successive project. This increases the overall productivity of the team and reduces the instances of mistakes and errors. This consistency has a positive impact on team morale, as well. Long-term team members are committed to maintaining and improving the workplace culture because they see it as their “work home”.

Additionally, Tom Winter, Co-Founder of DevSkiller, says: 

I think it’s crucial due to the fact that historically developers and engineers work in highly stressful environments. The profession itself is inherently stressful, which leads to burn-out and job fatigue that are responsible for low retention rates. Given the expansion of the freelance market for skilled engineers, particularly remote-based, companies nowadays are struggling to retain top talent. So in my opinion the onus is on the business to revamp their policies and focus on retaining their best employees during this time.

While Dominic Holt, CTO at Valerian Technology points to the importance of employee retention rates as: 

Retention rates at my company are at roughly 99%. Retention rate is super important for software development; it is much harder to read/learn someone else’s code and become a productive member of the team than it is to write your own code and continue contributing from what you’ve written. Regularly switching team members will annihilate productivity on the team. There is also a drag on the rest of the team any time someone is getting up to speed with a software baseline, which likewise can lead to productivity dips.

Retention rates are essential for hiring new software developers; however, it is also a crucial factor in successfully onboarding new developers. 

Former Senior LinkedIn software engineer and co-founder of Holberton School for software engineers, Sylvain addresses this factor by explaining: 

It takes time to get a developer to be comfortable with the specifics of a product: the codebase itself, how the architecture is working, the coding conventions of the company, documentation, the weakness of a system, and many other topics that are specific for every company, sometimes team… Productivity will only peak after some time for any engineer, and it will increase with time. Onboarding new engineers also takes time from your team. These are a few examples of why retention is extremely important. 

3 tips on how your organisation has increased employee retention rates

Tom Winter points out DevSkiller’s strategy for increasing retention rates by stating:

Our strategy for making a happy workplace is both financial and non-financial. We make sure our employees have regular bonuses and benefits such as paid gym memberships, additional free days for the ones who complete the project we’re working on, and so on.

With that being said, I think that non-financial “incentives” are more important for long term retention. That’s why we’re holding frequent meetings and have more frequent employee reviews where we use the opportunity to tell our employees their work is valued, and give them guidelines and goals for the next period. 

Darrell Rosenstein, the founder of The Rosenstein Group, highlights these three tips as the key to increasing development talent retention rates: 

Tip 1: Use exit interviews to determine why you’re losing staff. You can’t fix a problem you don’t know about. If you notice trends or patterns in responses during exit interviews and are losing multiple employees for similar reasons, this indicates an issue that you need to address.

Tip 2: Hire for longevity. Part of achieving high retention levels start with high-quality employees who are a good cultural fit for the company. If you find you’re losing a lot of new hires before they reach the 6-month mark, you should re-examine your recruitment process or find new talent pools.

Tip 3:

  1. Be proactive and responsive to employee feedback.
  2. Ensure employees are clear on the processes for employees to make suggestions, lodge complaints, or voice concern about workplace issues.
  3. Address these complaints and issues in a timely manner. If your staff feels like they have a voice in the workplace, they’ll be more likely to stick around.

How BlueOptima Achieves A Low Turnover Rate Within Software Development Teams.

To understand how BlueOptima maintained low turnover rates within its engineering teams, Chief Technology Officer Salman shares the incentives that lead to this low rate. 

How does the team dynamics help to contribute to a high retention rate of engineers? 

BlueOptima’s CTO Salman states: 

One area often overlooked is one of the most important factors, which is a learning and development culture. A good software engineer is one who has this unquenching thirst for learning and improving. We have an ecosystem where engineers can learn and apply their knowledge. It is essential to get that ecosystem in place because it is a thriving environment for engineers. They learn on the job while working on projects, collaborating with team members, and applying the learning in their day to day activities.

These factors help individuals grow faster in all aspects of their career and advance at a much faster rate.

What incentives do you provide to engineers that allows them to feel valued and drives innovation?

BlueOptima’s CTO Salman says: 

The technology landscape is changing every day, and organisations need to evolve to stay relevant and deliver better than what they did yesterday. 

Nobody likes the feeling of being a small cog in a big wheel. For employees to engage and give 100%, there needs to be a sense of ownership. They need to own their work and understand what they do, why it is essential and how it will bring about change. While this is the most difficult to communicate, it’s also the most effective. And every small thing that they can own in the development process helps them achieve this sense of ownership which is very fulfilling.

What care and team bonding incentives do you provide to engineers that allow them to feel valued? 

BlueOptima’s CTO Salman says: 

Build a strong engineering culture to improve organisational retention rates. At BlueOptima, there are tailored development plans for team members to allow engineers to be part of their professional growth, and we conduct regular feedback sessions to allow every engineer to voice their concerns. 

It is essential to understand that while everyone works to get paid, not everyone wants to do unsatisfying work only to get paid. 

Final Thoughts

As the demand for software development and development talent continues to grow, organisations that foster hiring longevity conditions are better positioned to improve employee retention rates and retain top talent. Initiatives aimed at building a strong collaborative culture can also present opportunities for better employee loyalty and job satisfaction. 

Creating opportunities to allow engineering teams the means to provide valued impactful contributions can increase innovation. An organisation’s bottom line can benefit from improved scalability, efficiency and meet customer demands.

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