The quest for IT talent
- 07 June, 2010 09:25
That noise you hear is the scrape of chairs being pushed back, laptops snapping shut and your ICT staff walking out the door. The war for talent is on again — if it ever stopped — and as with all wars, there will be victors, survivors and casualties.
Identifying, retaining and developing talent never gets easier. There are only degrees of difficulty. What should you do to attract and groom good people? How can you make your IT organisation one that offers interesting roles and compelling career prospects? How can you avoid becoming collateral damage in the war?
How much it really costs to replace staff
First, the bad news.
Recruitment specialists, Chandler MacLeod, say the cost of losing an employee in their first year is about three times their annual salary, plus the hire cost of about 30 per cent — a total loss of up to $165,000 for somebody on $50,000. Multiply this by the number of staff lost over a year and many companies get indigestion.
Chandler MacLeod says in addition to the direct and indirect costs of hiring — advertising, screening, interviews, equipping, administration, orientation and training — you must also factor in the financial burden of separation (legal costs and severance payments), lost productivity, interrupted client relationships, impact on team morale, and disruptions to core business activity. Ouch!
The market is on the move
Now, even worse news.
Peoplebank is Australia’s largest IT&T recruitment company. It claims a talent pool of more than 300,000 candidates and 3000 contractors on-site, and places 6000 candidates every year.
Peoplebank’s National IT Market Update: April 2010 reveals significant salary increases — the first sign of increased competition among employers for IT skills — are beginning to emerge. It supports anecdotal evidence of shrinking talent pools around the country.
Jeff Knowles, acting chief executive officer of Peoplebank, says in Victoria alone, the number of jobs available has grown by 100 per cent in the past three months. “Tellingly, we’re also finding candidates have several options,” says Knowles. “A year ago, each candidate would have one role or assignment offered at a time. Today, they are choosing between two or more, or are dropping out from the selection process because they’ve taken a job elsewhere.”
Knowles says the skills shortage will lead to more volatility. As the shortage worsens, contract rates will continue to rise, tempting many into contract work, especially those who feel they were poorly treated during the global financial crisis.
“Peoplebank is already fielding calls from many such workers, and we are acutely aware it won’t take much of a pay increase to tempt them from their permanent roles. What companies do now to reward and acknowledge their IT staff will be critical in each worker’s decision to commit to a business or move on.”
The Peoplebank IT&T Salary Index is based on IT&T job offers and employment activity over the past three months. Taking just the Sydney market, the number of roles available has grown by 30 per cent for permanent opportunities and 20 per cent for contract roles. You need only follow the money to see where it’s all heading. For example, an intermediate level applications architect can now expect a base salary of $130,000 or a daily contract rate of $800. For a senior enterprise architect, it’s $160,000 or $900 per day. A senior project manager commands $140,000 or $750, service delivery managers expect $160,000 or $700, and senior IT managers about $180,000 or $1000.
CIOs expect a base salary of $350,000 or $2500 per day, according to the index.
Next: Weapons to use in a talent war
Weapons to use in a talent war
The CIOs of IBM Australia, Aristocrat Leisure and Sinclair Knight Merz have seen it all before. For varying degrees of time they have employed talent retention strategies to ensure they don’t become talent war casualties.
Like many executives charged with ensuring their business has the commercial smarts and technical grunt to prosper post-global financial crisis, they have found an effective weapon in career mapping. Easy to say: Difficult to do well.
Career mapping helps IT executives identify talented technical staff and chart their career paths — where they start, where they want to go and the skills needed in between to make it happen. It enables IT organisations and employees to choose paths that build intersections between individual career aspirations and the needs of the business.
IBM’s global career development program, Career Smart, is a resource centre for career and learning guidance. It is admired by CIOs around the world. Career Smart is the latest evolution of a tactic employed by IBM for many years. It is extremely popular with its vast audience. And, with more than 400,000 employees and 100,000 contractors in 170 countries, IBM is one of the world’s largest employers.
Career mapping helps IT executives identify talented technical staff and chart their career paths
“Having the right people at the right time is critical for IBM,” Godbee says. “Part of that is getting the right people, but it’s also retaining the right people. Sometimes it’s retaining the people with the right aptitude. They may not have the specific skills you need now, but if they have the aptitude to be trained in those skills you want to keep them.
“Career Smart covers our entire business and includes everything about job roles, career management and skills development. People can see how to develop a career path in any particular area.”
For example, a graduate who wants to be an IT architect will move along the architect career path. They start as an associate architect, move to an advisory senior architect at various levels, right through to what IBM calls a distinguished engineer — a high level expert. So if someone knows architecture is where they want to be, they can see precisely what they need to do. No ifs, buts or maybes. Along the way, each job level demands certain capabilities and competencies. They come partly from who a person is, but also from the specific skills they need to excel in that area. Once a person has the basic capabilities and competencies, they develop the specialist skills and build the experience they need to progress.
“It’s about demonstrating the expertise you need in order to move through the various levels,” says Godbee.
Next: How CIOs have implemented career planning within their organisations.
Where’s the plan?
When Tony Yortis joined Sinclair Knight Merz (SKM) as CIO, there was no career planning specific to technology specialists that enabled the firm to determine how anyone became an architect, an engineer or a CIO. There was nothing to outline the commercial, technical and leadership capabilities required for these roles. “We spent eight months defining those critical aptitudes in each of our functional areas and creating generic roles based on 10 core capabilities,” says Yortis, a member of the CIO Executive Council.
“Now, people have a map. They can see what levels they need to reach, from entry to senior, for each of our roles. If someone is a systems analyst and they want to move into infrastructure, they can develop a career plan and know exactly what they need to focus on to achieve it.
“We invest a lot of money, time and effort, but it builds engagement with people. It helps you to attract and retain the right people and hopefully, they will stay for a long time.”
At SKM, a manager sits down with an employee and the employee rates themselves. Level 1: Do I understand the commercial imperatives of a project? Level 2: Am I applying them? Level 3: Am I demonstrating broad business understanding and influence outside my circle? Level 4: Can I move beyond my expertise and make technology a business value proposition to influence my peers and other functional areas?
We invest a lot of money, time and effort, but it builds engagement
Yortis — who believes the war for talent is constant — says SKM had a poor attrition rate several years ago. Now, even though there is movement in the IT industry again, SKM is facing little staff attrition.
“It’s early days for our program,” says Yortis. “We’ve only launched this in the past three months, but there is strong take-up. It’s given our people something tangible to work towards.
“If someone says they want to move into project management and the map shows them they need a certain level of commercial understanding, then they need that certain level of commercial understanding to move into project management. It’s that simple.
“It allows us to manage expectations. More than anything else, some people think they are already at a certain level. Rather than have a subjective discussion about what you and the employee thinks, you have an objective discussion with real examples of where they’re at and what is required to progress.”
No surprise then to hear from Yortis that when it comes to self-assessment, Gen-Y overstate their skills and people in their 40s tend to understate their value.
“I really don’t care what generation they are,” Yortis says. “Every day at work will not be a good one, so you need people who are resilient; people who are constructive. People who want to get involved, work as a team, and solve issues. You don’t want people who are in it only for themselves. You want people who understand that they’re doing something great for the company, that the company is doing something great for them, and that when they leave they will be a better person. None of this is generational. It’s attitudinal.”
Changing the mix
Angelo Grasso, CIO of Aristocrat Leisure, has been developing a career mapping methodology. It is a passion area for Grasso. He is more than aware that CIOs need to address the skills shortage by retaining critical staff and offering long term career development. But into the Aristocrat mix he has introduced a strategy deemed unfashionable by many — outsourcing.
“Even though people say outsourcing is old hat, it’s important they look at it again,” Grasso says. “It frees your mind. It enables you to provide better quality roles and more interesting work for your staff and this helps to retain good people. They can become more immersed in your business. And that’s what you want. Yes, some people like a basic role. But in our organisation there are few such opportunities.”
Aristocrat went to market in August last year with its new global strategic plan. That process is underway. It means Aristocrat needs good people to be able to execute that plan. It has outsourced many IT functions, both on and offshore.
“We chose to change our mix significantly,” Grasso says. “We had some staff turnover because we chose offshoring for our applications development and some other projects. But we wanted certain key roles to remain in-house.
“We had some project managers, but not true project managers. We didn’t have true business analysts. We didn’t have true enterprise architects. We defined the job descriptions based on competency and we took people who were willing and able to fill these roles.
“Today, it’s important to have a combination of different sourcing strategies. If your organisation is going to take IT seriously you need to be commercial. In difficult economic times, you have to look at what is core to your organisation and what is non-core.
“As long as you have experience and you can manage risk through transition phases, offshoring allows you to reduce cycle times, increase service levels and reduce overall TCO. It’s vital you can demonstrate to the organisation that you are commercial.”
Aristocrat now has a retention plan that includes career maps based on job descriptions, which comprise management and technical competencies. They show what is required for a particular role and where that role can progress — whether it’s technical, management or other. It also defines the skills and behaviours required so that it is easy for people to understand.
“Once we’ve mapped the career, we look at the person’s aspirations,” Grasso says. “We consider things like sponsoring internal training, a university degree, MBAs, secondments — and generally looking at how to improve a person and how we can assist them to achieve their goals. There has to be a match between the person’s goals and the company’s goals. When there is, we can develop a tailored career plan.”
Next: The good news
What they want from you
Finally, some good news: These strategies work.
In March 2010, Michael Page Technology Australia conducted a survey of IT professionals across three age demographics: Generation-Y (born after 1981); Generation-X (born 1965–1980); and Baby Boomers (born 1946–1964). All IT skill sets were included in the sample to ensure a broad perspective. The survey was designed to give IT employers direction on the most effective ways — apart from salary increases — to retain existing intellectual property and attract new staff. About 74 per cent of IT candidates surveyed would leave their jobs in the next six months if offered the right combination of benefits; both financial and non-financial.
Gen-Y listed career progression and job security as the two most important non-financial factors in remaining in their jobs. They are equally as interested in gaining exposure to new technologies as they are in increasing their salaries.
Gen-X nominated workplace flexibility as the most important factor, followed closely by job security.
Baby Boomers said workplace flexibility and recognition for achievements were most important to them in their current work environment.
In the next six months, 46 per cent of all respondents are planning to ask their managers for an increase in salary or other non-financial benefits. Of this group, 38 per cent will ask for a salary increase, 26 per cent will ask for more responsibility or career progression and 20 per cent will seek for additional training and professional development.
You have been warned.