According to the 2004 IT Staffing and Compensation Guide, an annual report released by Meta Group, 24% of the more than 650 companies surveyed indicated that IT professionals in the application development field were the most difficult to retain. Respondents also indicated high turnover among employees who specialize in security (13%) and those who hold networking job functions (13%).

IT staff salaries will increase by as much as 10% to 15% over the next three years, according to Meta researchers. As the economy improves over the next year, key IT employees will seek greener pastures with competitive employers, analysts say. To prevent a mass exodus of highly valued employees, CIOs will need to pay closer attention to their human capital management programs, including development, welfare and morale, recruiting and retention, and compensatory strategies such as performance-based incentives.

"The 'grass is greener' mentality must be dealt with head-on," says Maria Schafer, a Meta analyst. Meta suggests that IT organizations devise innovative retention strategies, such as providing more flexible work rules (e.g., job sharing and teleworking).

"As the economy heats up, so does the desire and incentive to seek higher-paying work and greater development opportunities," says Schafer. "CIOs must tackle this issue immediately, using a variety of tools to compete with competitor firms, or face a real workforce crisis in the months to come."