Five months after the markets tanked in April 2000, temporary staffing company Manpower began to notice less demand for its services. Even as revenue slipped, however, the company’s 350-person IT department still had tons of work to do, especially since it was now charged with new projects that would help the company run more efficiently.
CIO of North American operations Peter Stockhausen and his IT management team responded to the challenge by devising an innovative approach to sharing staff within IT: a marketplace for allocating workers among various projects. To motivate managers to participate, Stockhausen gives them credits on their budgets every time they free up one of their direct reports to work on another manager’s IT project.
With austerity the order of the day, IT departments at CIO 100 companies have to be flexible when it comes to staffing. “We’ve had to absorb significant amounts of new project work without increasing our budget,” says Stockhausen. Keeping IT employees motivated while providing them with training without breaking the bank are key traits of resourceful companies, and employing flexible staffing strategies like Manpower’s IT marketplace is one way CIO 100 honorees are getting the most out of their lean staffs. Fellow honorees Alliant Energy, Roadway and Royal Caribbean Cruises have created flexible organizational structures inside their IT departments to facilitate sharing and redeploying IT workers. (On July 8, 2003, after the CIO 100 honorees were selected, Yellow Corp., parent company of Yellow Transportation Inc., announced it would acquire Roadway for $966 million.) They also haven’t cut back on training even when resources are tight. Results from a survey of CIO 100 honorees show that 48 percent don’t plan to increase or decrease their staffs within the next year. And with traditional rewards such as bonuses, raises and fat expense accounts gone, CIOs have to find ways to keep their existing and often overworked staffs pumped up for completing mission-critical projects on time and on budget. Another way CIO 100 companies maintain flexible staffing options: They keep a stable of consultants, vendors and contract programmers on hand for when new work comes in that their lean IT departments can’t or don’t want to handle.
But being resourceful isn’t just about cutting costs, training on the cheap and redeploying staff. It’s about doing all of those things and still keeping IT services up to snuff.
Share and Share Alike
When Manpower’s revenue dropped off, IT kicked into high gear. The department developed an application that automatically posts reports on the company’s intranet so that they don’t have to be printed out on paper and physically distributed to 1,200 satellite offices around the country. It also worked with Ti3, a Plano, Texas-based custom applications provider, to develop an interactive voice response system so that the temporary staffers employed by Manpower can submit their hours over the phone rather than through time sheets.
For Manpower’s IT department to accomplish such efficiency-minded projects, Stockhausen had to stretch the capacity of his staff and make sure the right people were working on the right projects. To that end, he and his IT management team decided to give managers for different support functions financial incentives to promote staff sharing. If, for example, a functional manager’s direct report gets put on another manager’s development project, that manager receives a credit for the time that his report is not working in the support function. A support employee who earns $30 an hour and spends 40 hours helping to build a new application is worth a $1,200 credit plus benefits on his manager’s budget.
“The [functional] managers are actively trying to get their employees working on projects for periods of time so that they can meet their own budgets,” says Stockhausen. “It creates a little marketplace.”
At Alliant Energy, Managing Director of IT Gregg E. Lawry has seen his IT budget slashed by more than 10 percent. Yet due to the way he’s organized his IT department, Lawry’s been able to do more with less. A matrixed organizational structure that combines vertical skill sets such as Unix administration and workstation support with centers of excellence such as customer support services allows Lawry to easily share and redeploy staff. For example, Unix and database administrators report to both the centers of excellence for application hosting and storage management. When a project comes up—like an effort to benchmark the company’s current storage capacity against its future storage needs—Lawry can assign employees from the vertical areas that work in storage (for example, Unix server, database and SAN administrators) to the benchmarking project without draining resources from ongoing projects in the application hosting center of excellence.
Sharing staff is also an ingrained practice at Roadway although the mechanisms for doing so are not formal. Roadway IT managers meet on a regular basis to discuss work going on in their groups, their staffing needs and opportunities for redeploying workers. Kevin Carracher, who has several responsibilities as Roadway’s director of infrastructure management including security and disaster recovery, recalls one of these meetings when the manager of his advanced technology group offered to loan a project manager to the desktop technology group. The end result: With an experienced project manager, the desktop technology group’s project proceeded much more smoothly than if it had had to do without.
Roadway Vice President of New Venture Commerce and CIO Robert W. Obee says that effectively deploying employees often comes down to knowing what projects fellow IT managers are working on, finding out when those projects are scheduled to end and asking each other if they have resources they can share.
Don’t Skimp on Training
CIO 100 honorees know that the most critical time to invest in staff training is in the midst of a hiring freeze or following a layoff. During such times, IT departments are invariably faced with skill gaps that can only be filled by training employees so that they can pick up the slack. Plus, the folks who remain in the wake of a layoff are in dire need of a morale boost, and training them is a huge motivating technique because it shows that the company is committed to developing their careers.
Alliant Energy and Roadway emphasize the importance of creating formal development plans for employees to keep them motivated. Both companies use these development plans, created by supervisors and their direct reports, to determine whom to train. At Roadway, for example, managers try to match skills needed for upcoming projects with employees who have expressed interest in the relevant areas.
When Alliant Energy began plans to replace its legacy HR, supply chain and financial systems with a PeopleSoft ERP system, IT managers identified who would be most interested in working with the new technology and programming language of the system based on their direct reports’ individual development plans. IT managers used quarterly check-in meetings to tell their employees about the new ERP system and ask them if they were interested in learning new skills and taking on a new role. If they were—and most were, says Lawry—the manager and direct report set up a development plan consisting of class- and Web-based training. Those not interested stayed on the legacy systems.
Once companies identify whom to train, they should consider the resourceful option of training in-house. When Obee needed to retrain Roadway’s mainframe programmers on HTML, he flew an expert into town for a weeklong stay instead of sending his developers to classes and seminars across the country. Obee says conducting the training onsite saved the company approximately $50,000 in travel costs. In addition, the in-house training allowed Roadway to customize the material to suit its developers’ precise needs by taking into account the very HTML and XML projects they were working on.
Roadway employs another cheap training technique, the “train the trainer” approach. IT staffers who attend a training course are responsible for teaching what they’ve learned to other employees upon their return. Often this effort to train on a shoestring fails because the people who’ve been through formal training aren’t held accountable for transferring their knowledge. But at Roadway, the IT employees make the approach part of their application development process. Finally, don’t underestimate the cost-effectiveness of trial-by-fire training methods. Tom Murphy, CIO of Royal Caribbean Cruises, says training “on the fly” was the most effective way for his IT employees to learn new skills in the aftermath of a layoff that eliminated 50 percent of his 450-person IT staff. Even though the cruise line experienced a precipitous decline in business following 9/11, the drop-off in business didn’t translate into any less work for the remaining IT employees. They had to quickly acquire new skills so that they could build electronic documentation and paper list embarkation systems in compliance with new security regulations from the government. “We didn’t have the time or the money to do a lot of formal training,” says Murphy.
Use Your Vendors
To prevent staff burnout as well as boost motivation, CIO 100 honorees liberate their IT workers from mundane activities and put them on exciting new projects. They bring in vendors, consultants or contractors to take over routine tasks like support and maintenance. They also tap their vendors for low-cost training on new technologies. Not only do these approaches result in cheaper and faster deployments, but they also lift full-time employees’ morale by giving them opportunities to learn new skills and work on challenging technologies.
Alliant Energy’s Lawry brought in PeopleSoft consultants and a few small technology companies from Madison, Wis., during the ERP implementation. The consultants helped train his employees on the new system and took over support of the legacy systems while Alliant IT staffers were busy with the deployment. Doing that was cheaper than hiring an army of consultants to do everything and left Alliant’s IT staff well-positioned to support and maintain the new system. Hiring consultants was also cheaper than if Alliant’s IT employees tried to implement the new system on their own. Had they attempted the implementation by themselves, says Lawry, they would have taken longer than the year and a half it took to deploy the system and probably would have seen a lot of costly mistakes.
By selectively using contractors as a resourceful staffing strategy and by retraining and redeploying IT workers, Lawry’s been able to reduce his contract labor mix by 20 percent since 1998 and has decreased headcount in his IT organization from 303 employees and contractors in 1998 to 278 in 2002. All the while, Alliant Energy’s IT infrastructure has expanded to meet the company’s business needs. (Storage alone has grown from seven terabytes of data in 1998 to 40 terabytes in 2002.)
Roadway’s Obee also augments permanent staff with contractors. By keeping the IT organization’s staff levels flexible, Obee says, CIOs don’t have to let go of in-house staff when business goes south; they can instead fire contractors and keep in-house people on hand to continue rolling out strategic IT projects.
But CIOs need to be judicious about using contractors to bolster IT staff, says Royal Caribbean’s Murphy. In his organization, using too many contractors too often rather than hiring full-time employees has become a morale issue. Murphy decides when to use contractors and when to hire new employees based on whether full-timers have the skills needed or can easily acquire training. Murphy also considers whether the skills in question will be needed over the long haul or just temporarily. If it’s a temporary need, he’ll hire a contractor rather than hire someone for six months and then dismiss that person when her work is complete.
These days, Murphy’s focused on making wise rehiring decisions. Royal Caribbean saw an uptick in business this past winter, and with it came bundles of new project work. “We’ll never have the kind of headcount we had pre-9/11,” he says. “The company doesn’t want to do it. We still have all the same obligations and commitments and major projects we had [before 9/11]. We just think we can do it with less [people].
“We’re a much, much better organization today than we were pre-9/11,” he adds. “We’re much more efficient, and we’re much more productive.” Indeed, the mark of a resourceful staffing strategy adds up to more flexibility and efficiency for the organization in good times as well as bad.