Recruit, retrain, reskill. That's the ongoing mission of CIOs charged with whipping the current information systems staffing crisis.
Understaffed, underskilled, overwhelmed. That's the sinking feeling common among CIOs who feel the crisis is beating them.
Can IS be saved from the ravages of the staffing crisis? Yes - with innovation, cooperation and motivationWith trouble hiring suitably trained software engineers locally starting to put heavy brakes on their businesses, some Australian companies are being forced to recruit engineers from overseas to help fulfil contracts.
The problem is, attracting overseas-trained staff is not as easy as it sounds and the competition is stiff. In the US, as many as 200,000 high-tech jobs remain unfilled, while the majority of Canadian advanced technology companies face a skills shortage, and half have unfilled job openings. Further, skills shortages are driving up wages and stifling growth in Britain's middle market companies, with chief executives saying the lack of IT staff has become an even greater barrier to growth than finding finance.
There may be nothing new about the worldwide IT skills deficit - it's been with us as long as there's been demand for IT professionals, after all - but companies everywhere are increasingly having to wage recruiting war on a global arena. And with recruiting raids by rivals intensifying, more executives are being forced to devote time and energy to easing the impact of the deficit.
That means Aussie CIOs wanting to build the information systems required to support their business needs should expect to pay a premium to attract skilled staff over the next few years, and will need to develop bold and innovative strategies to keep them.
Kevin Charman heads up IT recruitment for Morgan and Banks. He says large companies here in Australia are much more aware than their Asian counterparts of the need to have aggressive HR departments focused on HR retention. But he warns that as those Fortune 500-equivalent companies increase the premiums they are prepared to pay to attract and retain staff, other organisations are finding themselves having to follow suit. For instance, he says, the cost of bringing software engineers from overseas is rising as corporate Year 2000 (Y2K) efforts intensify. Analyst programmers with no Australian experience are already earning up to $70 per hour for fairly fundamental and elementary skills, and Charman says that's nothing to the prices companies will be forced to pay in a year or two, as the Y2K skills shortage gets worse and demand intensifies.
"You're competing for a global resource that's in short supply," says Charman.
"There is probably more of these skills in India and the Asian sub-continent than anywhere else in the world, but the US, UK and the European marketplace have heavily tapped into [the supply]. The pool is getting smaller and it gets worse for Australians because we're a little slower getting off the ground in terms of addressing the [Year 2000] situation," he says.
And as Information Industries Taskforce chairman Professor Ashley Goldsworthy noted in his report to Government early last year, the Australian IT industry's perennial shortage of people with specific IT skills will worsen thanks to the upcoming Olympics. "The Sydney Olympics represent an enormous information processing and communications exercise," says Goldsworthy. "There has been widespread comment about Olympic Games-related demand for construction workers, but little about Olympic Games-related information and communication skills demands," his report says.
Charman says the IT marketplace is more candidate-short than any other discipline in which the company recruits. While the sudden massive thrust into using technology as a business driver and the subsequent greater emphasis on integration and development of new systems is partly responsible, Charman agrees the Year 2000 is probably the single largest issue. "The good news is that Australia as a country is one of the hottest destinations around the world, so given the choice a good Cobol programmer will very often prefer to be in sunny Australia for the next two to three years than they would in cold wet London," he says.
But being a hot destination won't be enough for long, unless Australian companies can also compete on salary and conditions. In the US software organisations are already starting to pay the signing bonuses once the preserve of professional sports stars. Australia may soon be forced to follow.
Warren Kensett-Smith, financial controller with D&B Software, says in every area where there's a shortage, large organisations with deep pockets are attracting the cream of the crop, making it that much harder for mid-range to small-size companies to get the staff they need.
And he says the fluidity of the IT market means there are a number of specialist recruiters who will target particular organisations to attract staff rather than recruiting in an open marketplace. "I've been in the industry now for about 10 years with a couple of companies. You see a lot of that happening, where someone leaves to go to XYZ Pty Ltd and over the next 12 months you'll see four or five people from the same company go to the XYZ organisation. It's a fairly incestuous industry," Kensett-Smith says.
Part of the answer, Charman believes, is to stop thinking purely in terms of remuneration and start thinking in terms of the "reward strategy" most likely to help you retain good staff, offering non-tangible considerations such as investment in training as well as salary. [See "Taking Stock for Future Shock", pp 32Ð39 - Ed.] "Learning organisations seem to be able to retain their staff better than organisations where the emphasis is just on doing the job.
Organisations that are prepared to invest in training people on a continual basis," he says"Money and training are the two things that talk most, probably followed by career potential," Charman says. "If people are aware there's good succession planning and potential for their careers to move forward into something bigger, better or different, then they will be more likely to stay."If it's harder to offer promotional opportunities in these days of flatter organisational structures, then that's just too bad. Companies that can offer promotion will come out ahead every time. It's a competitive edge thing.
According to Kensett-Smith, D&B Software is one company happy to invest in such training but it also feels the need to protect that investment as best it can.
"Organisations make a big investment in training and a number of organisations are looking to protect that investment contractually. That is, if we agree to develop your skills at this level over the next 12 months, you agree that you will stay for 12 months after that so we get the benefit of the skills.
"One of the major reasons we've taken that approach is to protect the investment we're making," says Kensett-Smith. "In the IT industry the average turnover is between 20 and 25 per cent. If people are moving that regularly, and yet at the same time are asking to have the currency of their skills maintained, it does become an issue for organisations of how to protect that investment."Investing in training staff can inspire loyalty but also makes your staff more marketable. Under those circumstances Kensett-Smith says contractual protection might seem harsh but can be sound business sense. "There is also a growing movement in certain areas to move to project-based employment," he says. "You may decide there are couple of staff you want to keep on hand as a stable resource but that you will bring others in as you need them. A lot of the large outsourcing organisations like CSC, EDS, IBM GSA work on that basis. They tender for a job, win the job, and then go and recruit the staff and the staff have been specifically hired to work on that project.
"That may well be a way for an organisation to go," he says.
Telstra Customer Process and Information executive director Dwight King is philosophical about the skills shortage, and reasonably well satisfied with Telstra's strategies to deal with it.
"I've been in the IT business now for about 28 years. Is this a problem? Yes.
Is it different to what we've seen before? No. I certainly wouldn't put a panic around it," says King. "There's always been a skills shortage in IT. With the Year 2000 the number of people needed at the lower skill levels is higher and they are attracting a premium, but that's a matter of the cost of doing business, not the skills shortage."Telstra sees the key to dealing with the skills deficit as creating an environment, both for graduates and long-term staff, where people want to work and stay. "Telstra is a large employer of IT personnel. We've done a number of things in terms of managing our resources, and the first one of course is to create that environment," King says.
A major linchpin of those efforts is Telstra's skills transfer program. When consultants like Andersen Consulting are brought in to build major systems, Telstra knows it will need ongoing skills to maintain and enhance those systems, especially considering how competitive is the environment it operates in. It started a program of transferring skills from consultants and outsourcing companies to employees about a year and a half ago and says it is working extremely well.
"The concept is that obviously at different times you need these highly skilled resources. If you don't think you're going to need them for a long time you hire them in as consultants or you outsource it or whatever. Then you work a program to transfer that information to your people.
"We then take over the key roles or positions in the various projects, and it gives our people a great boost in morale. First of all they get the skills. And many times it also results in a promotion for them because they now have new skills and abilities to lead into other areas. So they're given new opportunities, and more importantly, they become more accountable for their work," King says.
"For Telstra, that intellectual property is now a part of what we own, and of course it reduces our overall cost, because we're paying for internal people versus the higher rates that we pay for external people. It's called a 'win-win' scenario. And the firms like Andersen want their people to go into other parts of the world where they can leverage what they've learned here, so they're also anxious to free some of these people up to get into other markets."It's an approach King says generates high levels of loyalty among staff. And he says while competitive wages are also important, the work environment matters far more.
"What are the future opportunities for people to grow in their jobs? Do they see themselves being in just an IT group or do they view themselves as being in a broader group? You'll notice my title is not CIO, yet I have the role of the Chief Information Officer. My role is customer process and information, so we work the IT, but we also work the high-level processes that Telstra uses.
"So what I'm looking for is people that understand more and more about Telstra's business, not just information technology. The people in the organisation know this, and they know the direction that we set for this organisation. This helps them see that there are more opportunities with us than just IT. They say: 'Gee, I can get involved in the business, the business units want to hear what I have to say, I'm consulting to the business units.' It all helps stimulate people and make them feel good about their work."Telstra also has a program designed to help the organisation value its people, and which is currently looking at everyday ways to make people feel good about being part of the Telstra team. "That's a program that we've just started up and it's beginning to show some benefits already," King says.
David Simpson, an executive vice-president and head of IT for Bankers Trust, says the company tackles the problem on several fronts. "Graduate recruitment is a very key strategy for us. We've always employed technology graduates - we usually get about seven or 10 a year - but now we've signed up with the University of NSW and UTS to sponsor graduates. I think we've got three signed up. We haven't done that in the past but we're finding there is a need."Simpson says the company also enjoys a reasonably high degree of success in making sure those graduates stay on after recruitment. Graduates are paid well, but the pay cycle is also a key issue, he said. "I think sometimes people forget a graduate with two or three years experience in Visual Basic is worth a hell of a lot more than a graduate with no experience. So we need to make sure we ramp them up to market worth each year. That's a key factor in keeping them for the long term.
"We want to keep them for five, 10 years or more and they become integral to our business because we put a lot of time and effort into our recruitment process and into looking after them for the first year and a half to two years.
Their career then becomes their own and we want to make sure their pay scales aren't such that they get poached by somebody or they go out contracting, which is always a concern."Ongoing training is another key strategy. Every graduate is treated as an individual, and the training program is tailored to his or her interests and ambitions. Younger graduates are often put into a rotation program which gives them experience in working with a number of departments, while mature graduates who want to get straight down to work in a single area are given that option.
"As far as ongoing training is concerned, we always make sure we keep staff up-to-date with the latest skills and technologies, and keep them trained up with conferences and training courses. It's something we're ramping up at the moment as well, producing a skills matrix of all our people and putting the appropriate training in place for them."But, Simpson says a good work environment was just as critical to engendering staff loyalty. "We pick up graduates sometimes from other companies that have brought them in, given them an old 386 PC and stuck them in a corner. Or they join a consulting company, they're put on a one-month training course and bingo they're out at a client earning $2000 a day for the company but they haven't got a clue and they're learning on the job. We don't tend to do that, and we make sure they've got state-of-the-art hardware when they join us," Simpson says.
And to help the company keep up with what he calls the "never-ending, spiralling surge of salaries", Bankers Trust has moved to a six monthly review of remuneration.
The Sports Factor
Dr Bill Curtis, co-founder and chief scientist for US company TeraQuest Metrics, thinks companies could learn a lot about workforce practices from Pro Sports.
Writing in a recent issue of The Cutter Edge, he says getting good staff starts with recruiting, since coaches know they win most of their games when they recruit players. But he also thinks companies should emulate the way US Pro Sports management build relationships with universities and also take part in professional conferences to recruit talent.
Organisations need to scout for talent, he says, arguing the cost of scouting for talent will pay for itself. "The poorer the job that managers do in recruiting and selection, the more time they will spend managing performance. I once heard a software manager say: 'Winners win; everyone else needs management.' That may be a bit simple, but he understood how his time was spent," he writes.
And if that's the way things are going in the best companies in the US, we'd better assume Australian companies will soon be doing things the same way. It's the only way we can continue to compete in an area where the global skills shortage is likely to get a lot worse before it gets any better.
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