In the IT world, to hire or not to hire has been the burning question these past few months. Here are a few of the conflicting signals driving this confusion among IT managers:
- A few major vendors are reporting activity that they interpret as early signs of the economy turning around.
- According to one IDC survey, the worst is over with spending on IT and communications is expected to resume in 2003, driving a worldwide growth rate of 5.8% for the industry.
- However, another IDC survey is a bit gloomier and pushes economic recovery and a corresponding increase in IT spending out to 2004.
- In a recent poll the Institute of Electrical and Electronic Engineers asked 6,000 of their Fellows which industries were most likely to recover relative to hiring. The most pronounced finding was . . . considerable disagreement over which industry would bounce back first
- According to a survey of 1,400 CIOs conducted by Robert Half Technology, hiring in 2003 will remain close to the levels of the past 18 months.
- Others believe that IT jobs will be moving out of enterprises and into the outsourcing supplier companies.
For IT managers caught in the middle of tight budgets and a huge backlog of IT projects that might suddenly get the “green-light,” these mixed messages present quite the challenge. How can you as human resource professionals advise these IT managers on the development of a strategy they can use to move forward in these unpredictable times? The answer reminds me of some advice my mother gave me many years ago, when she said, “when you can’t predict one of two outcomes, plan for both.” Obviously in this case that is the best advice you can give your IT managers. Here then after speaking with a number of IT bears and bulls, is what I consider two specific best practice strategies, which you can share with your IT managers.
The Bear Strategy
Jon Piot is the COO and co-founder of a technology consulting company called Impact Innovations Group (www.impactinnovations.com), based out of Dallas Texas. Jon believes that current economic situation and its impact on IT staffing is likely to persist. Piot shared with me a simple four-step approach for designing a staffing plan that assumes zero growth and has contingencies in place which can be executed quickly in the event of further decline. Piot’ advice is as follows:
- Hold the line on hiring. Staff based on the demands of the current economic climate. In other words discount all of the predictions and assume that the current economic situation will remain in place for the long run.
- Create a list of employees with their title, skills, salary, and performance ranking (say for example an A, B, C and D scale). If asked to cut back staff, he advises that you start at the bottom of the list and work your way up.
- Do an inventory of the skills required to sustain the minimum maintenance for each critical process. He advises that the managers ask themselves “what number of people with what skills would I need to sustain minimum levels of maintenance for each critical process?” He goes on to advise managers to create a list of actions they would need to take to quickly get to those minimum levels.
- Identify temporary resource suppliers who can on short notice, help you with a spike in demand (E.g., a special project).
In essence Piot’s strategy will help IT managers to create a flexible organizational plan that is sized for today, can expand to meet small peaks or contract rapidly in response to a decline with what he calls “less pain and reactivity.”
There are, however, other experts that believe that the time is right to employ a more bullish strategy. In the August 1st issue of CIO magazine, Senior Editor Alice Dragoon, referred to the existence of these “bullish” CIO’s as surfacing in a survey that suggested that plenty of IT executives were getting ready “to snap up the best available IT talent out there.” Dragoon’s article goes on to cite how an April 2002 survey of 251 IT executives found that “19 percent are already hiring IT staff to handle increased IT activity, and 27 percent plan to hire in the third and fourth quarters of this year. Another 34 percent plan to add new staff in 2003.” (www.cio.com/archive/080102/hire.html). If this seems a bit too “rich” for your blood, perhaps you may find the following “hedge strategy,” a better number two strategy approach.
The Hedge Strategy
Bill Shulman is an SVP of EmployeeROI, a talent management firm based out of NYC (www.employeeroi.com). Shulman believes that IT managers should hedge their conservative “bear” strategy by developing and following what he calls a conservative “bull plan.” “IT managers are directly tied to their company’s ability to respond to the economic turn-around expected by many the second half of 2003 or early 2004. Signing new contracts will only contribute to revenue and earnings after IT has staffed up to build and support new systems and to support the expansion of non-IT department’s that will be rapidly adding new employees,” according to Shulman. (If new employees do not have reliable access to the company intranet, email, knowledge management systems, eHR, CRM, Supply Chain systems due to a lack of IT readiness – those new employees become drainers not contributors to the bottom-line).
“The biggest danger in not preparing for aggressive growth post-economic turn-around, is that IT managers who are late to respond will find themselves at a disadvantage in securing resources,” states Shulman. If you are hiring, your competitors are hiring. That talented professional you make an offer to, will have three offers from other companies just as promising as yours. To make sure IT managers are ready for rapid growth without taking on headcount that they cannot currently utilize, Shulman recommends the following two actions:
- Work with a talent management company to confidentially identify and pre-qualify a portfolio (pipeline) of passive job candidates. “By identifying top-grade passive (currently working) candidates and aligning them to each of the roles on your team, you complete two-thirds of the hiring process in advance, creating a competitive advantage over those companies who wait. Shulman points out that this is the only option for many companies with hiring freezes and budget freezes still in place. It is hard not to see the benefits of this approach when compared to the alternatives: a) absorbing the cost of screening, interviewing and then building and sustaining a relationship with candidates until you need them; or b) paying huge contingency recruiting fees to agencies when the hiring frenzy begins. Some talent management firms will provide the best practices, services, and advanced technology needed to manage this strategic approach for a percentage of future hiring, allowing IT managers to fully prepare while still operating within current budget constraints.
- Explore creating a relationship with one of the new breed of vendor management service providers, who are “vendor-neutral.” In other words, these companies are not temporary staffing firms, so they don't compete with your existing staffing suppliers or any of the companies they represent. Furthermore, they provide your company with business benefits, including: cost savings, timesaving, best practices, and advanced technology systems. Serventec Incorporated is a good example of a vendor-neutral vendor management company (www.serventec.com).
For the foreseeable future, it seems the direction of the economy and IT hiring will be an open question. By encouraging your IT managers to develop two strategies built upon these conservative frameworks, you will position them and your company to succeed regardless of the direction the economy ultimately takes in 2003!