Is the worst yet to come?

Some say the IT job market is the worst it’s been in a decade. Others say it’s worse than ever. In either case, IT pros should brace for more bad tidings in 2002.

Jerry Leslie got his pink slip in August. And after being downsized from a start-up technology integrator five months ago, this unemployed systems administrator says new job opportunities aren’t just slim, they’re razor thin.

“This is the worst job market I’ve ever seen,” says Leslie, who’s based in Bellaire, Tex., and has 18 years of systems administration experience under his belt. “It’s very unusual, especially for the IT industry. But it’s not just IT. I’ve never seen this many layoffs before,” he says.

Budget cutbacks. Staff layoffs. Project slowdowns. None of this is unheard of in IT. But few, if any, have seen anything like now.

“Everybody who has been around for a long time will tell you that it’s not been like this before,” says Eric Dean, CIO at United Air Lines Inc., a unit of Elk Grove Township, Ill.-based UAL Corp. “The airline industry goes though contractions and expansions every seven years, but this is on a scale that’s never been seen before.”

The turbulent economic climate, coupled with the disruptive wake of September’s terrorist attacks, is prompting IT leaders to rethink hiring practices to reflect a dramatically different labour market and economy.

The labour market is bloated with talented, laid-off workers, and the economy is still limping through a recession. That unsavoury combination is prompting many firms to renege on year-end bonuses and cut back on corporate perks such as training and testing new technology, while IT resources and spending get reprioritized around projects that promise an immediate return on investment.

“Our bonus has been reduced this year,” acknowledges Ed Bell, CIO at Commonwealth Financial Network. At the Waltham, Mass.-based investment brokerage firm, the bonus pool stems from a calculation of the company’s revenue, income and customer growth. Since those numbers are down, the amount that managers have to offer their staffs has decreased.

Now for the goods news: The time was right for a change, CIOs tell Computerworld (U.S.), and productivity isn’t taking a major hit. Even companies whose IT budgets have been marred with red slashes are still finding ways to reward and invest in their best workers.

At Commonwealth Financial, for example, Bell says he’ll find room in his budget to reward the top performers. “For the stars, I will do everything I can to compensate them,” he says. But poor performers won’t be getting star treatment.

“When there was a hiring frenzy, you weren’t able to spend the time looking at the individual’s contribution,” says Bell, who uses the evaluation system promoted by Jack Welch, the legendary former CEO of General Electric Co. Under Welch’s system, Bell assumes that 20 per cent of workers are his top performers, 70 per cent do a good job, and the bottom 10 per cent require an evaluation of their contribution.

Like many CIOs, Mark Westling, CIO at National Pen Corp., a maker of promotional products in San Diego, says he believes the downturn presents an excellent opportunity to revisit priorities and refocus the staffers who implement those objectives.

“In prosperous times, there’s little incentive to making tough choices,” he says. “During difficult times, there’s more incentive to make choices about the highest return projects, and that provides a real air of relief in the IT ranks because they know they’re making a valued contribution.”

For example, National Pen has refocused resources toward completing an order entry application built with software by Oracle Corp. That application aims to reduce the time required to process an order from 12 minutes to between three and six minutes. “We process a million orders per year, so it could offer a significant reduction in labour costs if we cut the time by one half or one quarter,” says Westling.

United laid off 20 per cent of its employees nearly 20,000 workers in the fall. That deep cut included 30 per cent, or approximately 600 employees, of the Chicago-based airline’s IT staffers.

By decreasing the amount of application change orders that the IT department processes by 90 per cent, United was able to reprioritize its downsized development staff to high-priority projects, such as the revised reservations system it launched in November.

Traditional carrots and perks, such as bonuses and company-sponsored extracurricular events, may be gone, but CIOs report that they aren’t hearing complaints and that they aren’t waving a big stick.

“One cold, sobering reality that’s not a motivator for employees, but something to keep in mind is the ‘I’m thankful that I have a job’ factor,” says Westling. “Quite candidly, a lot of folks are very thankful that they have a job in these difficult times.”

At United, IT workers won’t get their typical year-end bonuses, but Dean says he doesn’t expect cost cuts to have a negative effect on morale. “Everybody in the company understands that this is a very unusual time, which calls for very unusual measures,” he says.

Bell says he expects a demand for infrastructure and networking skills this year, but he advises job seekers to pay attention to project management capabilities and the capacity to understand how technology impacts the business.

“There are a lot of workers who are technically superior, but their contribution to the business isn’t as high as those who understand it,” he explains.

“Having certification in a technology” used to get workers a job, says Parvez Erani, vice-president of information management at St. Mary Medical Center in Long Beach, Calif. “But these days, there are people with years of experience without work. You have to do more than pass a certification test. You have to have real work experience.”

Erani also says that management is no longer willing to pay headhunters to find qualified candidates, as r