Nerds Galore

ROB QUAIL, BASc

Director, Enterprise Risk Management, Hydro One Networks Inc.

Nerds Galore (NG) is a Canadian service company with 1,000 employees working out of offices in 12 Canadian cities; the head office is in Edmonton, Alberta. NG provides full-service information technology (IT) support to small and medium-sized Canadian businesses, including help desk, on-site troubleshooting, security, network setup and support, backup services, wireless networks, hardware and software procurement, and website design and hosting solutions.

Nerds Galore was formed in 2000 in the garage of its founder, Jeeves Stobes. NG has enjoyed strong growth in its segment and has an excellent reputation with its customers. In the beginning, NG focused on a particular customer subsegment, small start-up businesses, especially on low-tech businesses such as boutique services. Lately its strategy has shifted more to midsize customers (which have deeper pockets and less chance of going broke) with more sophisticated technology needs. Recently there have been problems for NG.

There has been steady decline in customer satisfaction, as shown in Exhibit 27.1.

Following a thorough investigation and follow-up with many of NG's key customers, the Executive Team has concluded that the main cause of this has been high internal staff turnover, leading to gaps in customer services and service continuity. Indeed, staff retention has been an issue, as shown in Exhibit 27.2.

To continue to provide strong customer service, it is critical that team members are competent in the latest technology, and yet turnover has approached 20 percent in three recent years. This is a particular problem for NG because of its high focus on customer service; new staff receive extensive and costly training in NG's customer service and cross-selling approaches. The company's pay package is competitive but not at the very top; instead, NG uses its reputation for excellent customer relationship and staff development to attract motivated staff. Note that it's well known that one of NG's competitors was recently raided by a large systems integration firm and lost most of its network management technical staff in a single quarter. NG has been having a particularly difficult time retaining staff in the larger urban centers and other technology hubs in Canada where there are more competitors and the competitors generally pay more.

Despite the fact that customer satisfaction has been declining, the Executive Team did note that revenue numbers have not suffered; in fact, they have

96 94 92 90 So very satished 8.8 86 84 82 80 2008 2009 2010 2011 2012 201325 20 15 % of employees 10 5 2008 2009 2010 2011 2012 2013100 SCON 0688688388 2004 20 20 06 2007 2008 2009 10 2011 2012 Revenues -Net Income 2013