human resource management.
By John Simmons
Doing more with less has been the mandate of most CIOs for some time now. Budgets and teams have shrunk but project responsibilities have grown.
The good news is that recovery is appearing on the horizon. Companies are starting to hire again. Budgets are cautiously being unthawed and important projects are being launched. The bad news is, without a proper resource plan in place, that recovery could be the worst thing to happen to your IT department.
Right now there’s a calm before the storm. We all have a limited time to get our proverbial house in order to ensure our competitive ability for the future.
Are you ready for the recovery?
With the economic downturn of the past few years, many companies put technology-related purchases and initiatives on hold. Spending priorities shifted and IT projects were shunted to the back burner. This wasn’t because IT projects were no longer needed, but simply because companies could no longer afford them. The demand remained, even though the budget wasn’t there. This pent up demand has now started to surface.
Although we’re not likely to see the hiring frenzies of the late ’90s again, demand for employees will certainly start to pick up later this year and continue to grow. Once again, the talent market will be hot, and skilled candidates will be hard to find. In fact, Gartner predicts demand for relevant IT skills will outstrip supply by at least 20 percent for the next few years.
In recent months, I’ve heard a number of CIOs mention that they need to make some changes in their leadership team. With the talent I’ve seen available, these events should be happening now.
There are currently lots of good candidates on the market – but they won’t be there forever. More than 90 percent of knowledge workers who were laid off during the bust won’t be available for rehire when the economy turns around again. We all have a small window of opportunity to lay a solid foundation of strategy before the talent market picks up.
Planning is key because more spending and new hires will not help you if your current resource foundation is weak, or you lack a long-range and comprehensive resource management strategy.
If you’ve suffered from downsizings, budget freezes and talent drains in recent years, you can’t simply hang tight, hoping for a market recovery to make things better again. Studies show that flaws in your staffing strategies as a result of layoffs and financial difficulties will only be amplified – not reversed – in an economic recovery.
Coping with the aftermath of boom and bust
During massive hiring sprees, you tend to acquire (amongst some star performers) more average or below-average performers at higher than normal costs. This occurs as fierce competition artificially drives up salaries while making skilled employees so scarce that you’re forced to compromise on qualifications just to fill your openings. At the same time, your very best talent may be poached by competitors or may take advantage of their own marketability to jump to another position or go on their own.
Then comes downsizing. And because mediocre performance is not always the determining factor in layoffs, the team you are left with may not be the cream of the crop. Now that jobs are scarce, few people leave. You have higher-priced staff doing the same old job. With no turnover, no new hiring, and training budgets slashed, your team is not improving.
What happens as a result of this unlucky mix of average performers at higher-than-normal cost? You’re probably struggling just to meet service level goals, not to mention adding real value to the organization. Suddenly, IT becomes a prime target for outsourcing.
The secret to better performance
A shift in your underlying approach to resourcing can revitalize your IT department. In fact, optimizing your resource strategy is essential if you want to improve your ability to meet corporate objectives.
Resource management is a business function, not an HR function. Fine-tuning staffing levels, assignments, skills and readiness is crucial for supporting the future needs of the organization. In IT, resource management is a direct extension of the CIO.
CIOs must step up to the plate with a more comprehensive, long-term and strategic resource program that crosses the entire enterprise. It’s important to note that IT can no longer function as a discrete department within the corporation as a whole. Technology, and its resulting resource management strategy, must become an integral part of the core business strategy.
Gartner estimates that businesses that take such an integrated approach will be able to achieve their business goals twice as quickly and at half the cost than competitors that view IT and business as individual components. Yet rarely do I see a strategic resourcing plan that is closely linked to the corporate strategic plan.
Effective resource management can also help you:
• Avoid the expensive and demoralizing roller coaster ride of hiring sprees and downsizing
• Eliminate redundancies throughout the organization and capitalize on economies of scale
• Gain maximum productivity and return on investment from each and every IT employee
• Benefit from a loyal and motivated workforce eager to take on new opportunities
Four steps to success
At its most basic, resource management is about determining what skills you will need and what skills you have, then identifying and filling any gaps between the two. It sounds simple yet the results are anything but mundane. With such a strategy in place, some companies have saved up to 30 percent on hiring and training costs.
Let’s take a closer look at each component of a resource management plan.
1. Determine current and future needs
Most companies react to resource requirements as they occur, rather than anticipating and planning for them. The first step in any resource management plan must therefore be a detailed look at the organization’s overall goals and plans to determine what resources will be needed in the immediate, short and long term.
To be successful, this strategic assessment must encompass every aspect of the organization, from sales, marketing and customer service through to product development and delivery. Executive level support and participation is essential.
2. Assess current skills inventory
In much the same way that a supplier cannot ship products it does not know it has, an organization cannot take advantage of skills within its workforce if it remains unaware that they exist. Therefore, once resource needs have been charted, the next step is a comprehensive and realistic employee inventory that includes a profile of each worker’s skills and experience. This should include projects they are currently working on, when they finish, whether they are willing to travel, and other details that will affect their future deployment.
There must be one – and only one – skills database within the company. Regardless of how deeply departmental or regional divisions are entrenched, resource management cannot be effective unless it takes an all-encompassing view of the organization.
3. Identify skills gaps
Armed with an assessment of future needs and a current skills inventory, it’s now a relatively easy matter to match these two pieces together and uncover any skills gaps.
4. Generate plans to fill gaps
The first three components of resource management involve studying, planning and assessment. They set the stage for the final component, where action plans are created and implemented.
Companies that do not manage their human capital effectively often default to recruitment as their first and only method for dealing with skills gaps. Companies that have assessed their needs and inventoried their skills have many more options at their disposal. They can pick and choose the methods that will be most efficient or cost-effective for any given situation. Options include retaining existing staff, retraining employees or lateral transfers to new project areas or office locations.
Ultimately, whether the economy picks up or remains in the doldrums, moving ahead with IT initiatives is not an option for companies that wish to survive. According to Gartner, companies that take only baby steps towards new business opportunities or IT innovation in the next year – or worse, put them on hold altogether – will either lose significant market share or fail completely when the economy does recover. The time to act is now.
John Simmons is the founder of Kijik Consulting, a firm specializing in human capital management services. Mr. Simmons has over 20 years experience helping clients improve the performance and value of their IT workforce. He can be reached at [email protected]