It’s starting to feel like 1999 all over again for Alan Boehme, the year the dotcom/digital economy hit its high-water mark and the IT job market peaked. On the one hand, that’s a good thing. “IT is in vogue again,” says Boehme, CIO of
. “It is not just for cost-cutting. It’s seen as key to growth.”
On the other hand, it’s a nightmare. Growing on average by 12 percent year over year, the $2 billion company’s appetite for business-enabling IT systems is insatiable. And so is Boehme’s need for IT staff. His hiring activity picked up about 30 percent last year, when he had 60 open positions. The market for tech talent is increasingly competitive, says Boehme, particularly where he sits in Silicon Valley.
Boehme’s experience is borne out by the numbers. Nearly two-thirds of CIOs who had staffing forecasts projected an increase in headcount, according to Gartner’s 2006 “IT Market Compensation Study.” Of those, almost 19 percent anticipated an uptick of 10 percent or more, compared with 5.2 percent in 2004 and 17.9 percent in 2005. Overall employment in the tech sector has increased since the second quarter of 2005 and is now at its highest level in four years, nearly matching prerecession IT employment highs, according to Forrester Research. A tightening labor market may be good for technology workers, but it’s a challenge for CIOs.
“The recent upturn has presented IT professionals with more options and differing expectations,” says Samuel Bright, Forrester’s IT staffing and careers analyst. “It forces enterprise IT not only to compete with other enterprise IT shops but also consulting firms, outsourcers and technology vendors for the same pool of IT talent.” Like it or not, enterprise IT is not as glamorous as working for Google. “As a result,” Bright says, “CIOs have to take a more strategic approach when it comes to recruiting.”
IT executives can no longer afford to delegate staffing to the back burner. It takes the right people with the right skills to help IT fulfill its mission. But where to begin? Right here, with answers to some of the most pressing recruitment concerns CIOs face today.
1: Most IT recruiting is done by HR and middle management. What’s my role?
Penske’s Stephen Pickett likens his role in IT recruiting to that of the coach in college athletics. “The CIO should be the chief sales and marketing executive for IT recruiting,” says Pickett, vice president and CIO of the transportation company. “They are the ones that sell the future.”
First, the CIO needs to provide the recruiting framework for the IT organization. “They should focus on more than headcount,” says Bright. “The CIO has to articulate a vision.” At the strategic level, IT leaders should focus on identifying key positions and building competency models for them. They also must make sure high-level recruiting strategy translates into frontline action by hiring managers. Unfortunately, CIOs tend to spend more time managing up than managing down. But smart IT leaders invest time in things like skip-level meetings with the direct reports of their direct reports and reviewing recruiting metrics (volume of incoming résumés, number of candidates being interviewed, turnover rates) to make sure their vision becomes reality.
It’s the CIO’s job to make other strategic staffing decisions as well. For Boehme, that means figuring out the best use of hiring bucks. “More than ever you find yourself managing dollars, not headcount,” Boehme explains. “I have to consider all my options. Should I hire four people in India? One person in the U.S. or Europe? Two contractors instead?”
Perhaps the most important role the CIO has is lobbying the business for recruiting support. Alastair Behenna, CIO for U.K.-based staffing firm Harvey Nash, says his job is “going to battle for headcount, salary reviews and benefits.” That’s something IT leaders could stand to do more of, says David Foote, president and chief research officer for Foote Partners, a workforce management research firm based in New Canaan, Conn.
“When CIOs look ahead and think about what’s going to make them successful in their jobs, deep down most of them know it’s successful staffing. But they don’t have the guts to fight for what they need,” says Foote. “Most CIOs aren’t looking at the staffing problem in a portfolio kind of way. They wouldn’t let their systems deteriorate the way they’ve let their staffing situations decline. They’re putting themselves at risk.”
2: Business skills are critical today. Should I poach job candidates from the business?
According to a recent Robert Half Technology survey, 41 percent of CIOs place a greater emphasis on business fundamentals when evaluating candidates than they did five years ago. So it only makes sense that the CIO recruit IT staffers from the business.
If only it were that simple.
Consider the issue of rotation programs. Forrester recently examined IT-business rotation from three angles: rotating employees through different jobs within IT, moving businesspeople into IT and moving IT employees into the business. A survey of 281 IT leaders revealed that they were quite good at job rotation within IT. However, only 12 percent of respondents were sending IT employees to the business, and just 7 percent were bringing business workers into IT.
Rotation programs “require CIOs to make a credible case from two angles,” says Forrester’s Bright. They have to prove that if IT workers go to the business, there will be a measurable improvement in IT performance; they also must show that a businessperson who spends time in IT will bring value back to the business. The latter is the harder argument to make—impossible even, in organizations where IT isn’t valued, Bright says.
Nonetheless, it’s good practice to create career development paths that cross back and forth between IT and the business. “Some companies have internship programs that include a rotation into the business,” says Diane Berry, managing vice president of Gartner’s human capital management content development group. Permanent job transfers from the business to IT can be a byproduct of successful rotation programs. “A businessperson spends some time in IT, sees value in the role and wants to stay,” says Bright.
Blatantly poaching employees from other departments is risky business. If you steal high performers, you’re not exactly setting yourself up for a good partnership. If you do plan to recruit from the business, try hiring those who have expressed an interest in switching to an IT career.
“The argument there is that the other department within your company would lose the employee anyway, so it is preferable to lose him or her to an internal department,” says Katherine Spencer Lee, executive director for Robert Half Technology. Just make sure you consult with managers from the affected departments before making a move.
Of course, not everyone working on the business side of the house will make a valuable addition to IT. “It depends on what part of the business they come from and what role they played,” says Larry Bonfante, CIO of the U.S. Tennis Association. “It helps if they have some process discipline or at least an appreciation of how technology works.”
The symbiotic give-and-take of workers between IT and the business—“talent alignment,” Bright calls it—is the ideal state. To achieve it, though, takes time. Behenna of Harvey Nash is working toward that by “demonstrating where joint ventures result in joint benefits: joint projects, initiatives, objectives, strategy. Don’t ask. Give. Once you’ve gained acceptance as enablers, the job is half done.”
3: I’m facing a mountain of open reqs. Should I enlist the help of a third-party recruiter or beef up internal recruiting resources?
Enlist all the help you can.
Internal HR resources can be a great help, particularly when you’re desperately seeking talented employees to plug sudden vacancies. But an HR generalist may not be enough, as his knowledge of IT-specific needs is likely limited. Many CIOs have seen value in hiring an HR resource specifically for the IT department or a corporate resource that is dedicated—at least part-time—to technology recruiting, hiring and retention. In smaller companies where that may not be feasible, extra communication and due diligence when working with HR are key.
“If this is a short-term need to catch up, it might make sense to bring in a third-party recruiter,” says Gartner’s Berry. “Many folks may want to keep the more strategic side of HR within the organization and outsource the more tactical work.” Making the best use of external recruiters takes some extra effort as well. “It’s very important that you get a good recruiter that understands your enterprise, IT organization, culture and the jobs for which you are recruiting,” says Berry. “They will be your face to candidates.”
That means you and your hiring managers must work to keep third-party recruiters in the loop on staffing strategy and needs. Penske CIO Pickett, a former president of the Society for Information Managers (SIM), says a lot of CIOs in that organization use external help for filling high-level roles. “But for most positions the use of internal staff that understands internal desires works best,” he says.
The holy grail is just-in-time hiring. Working closely with HR experts (not just when you need them, but long before you do) will help you develop and maintain a solid network of potential hires and help avoid a mad scramble just to fill a spot.
4: When I have an opening, should I promote from within or look outside the company?
There’s no right answer. “By hiring from within, you demonstrate to employees that they can move up within your company and can shorten transition time,” says Spencer Lee of Robert Half Technology. “By hiring external candidates, you bring a different perspective to the organization.”
Your tactics may depend, in part, on organizational culture. “There are some great companies that only hire at the entry level. It creates a very strong culture because they only promote from within. That creates strong loyalty,” says Berry. “On the flip side, I think you lose [out on] new ideas.”
The real problem today is that most CIOs don’t have the option. “They haven’t done a lot of staff development,” says Forrester’s Bright. “So they’re at the mercy of the market.” That costs IT more than just dollars and cents. Consider a company that has five enterprise architects but needs five more and has no one ready to move into the role. “They may not have any trouble finding someone outside and paying a 20 percent premium for them. But that means the people you have inside, who may be more talented, are now being paid less,” says Foote. “You end up with all kinds of internal issues. It kills CIOs.”
It’s a tough balancing act. “Even if there is no ‘obvious candidate’ inside the company, I try and see if we can shape someone,” says Behenna. “If I have nobody, then I put the requirements out. There are times when a fresh injection of talent can make a huge leap in productivity or direction.”
When a position is awarded, be transparent about how the decision was made (without violating any privacy concerns). That’s because a big concern for today’s IT professional is his career path. As IT staffing needs have shifted, career paths have become fuzzier. Smart CIOs will attempt to make career progression less of a mystery and work with employees on individual career development plans. IT workers are more likely to walk out because they see no opportunities for advancement than for any other reason, according to Hudson Highland Group’s “2005 Retention Initiatives Report.”
5: How can I figure out what compensation is fair?
With all the ambiguity around job titles and responsibilities, figuring out attractive—or just plain fair—compensation can be tough. But if you can’t pull it off, talented employees can (and will) follow the money elsewhere.
IT salaries are expected to rise across the board this year, between 2.8 percent and 4 percent (depending on which report you believe). The starting salary of a project manager is expected to rise 4.1 percent in 2007 to a range of $72,750 to $106,250, according to Robert Half Technology’s “2007 Salary Guide.” Application architects will see starting salaries rise 4 percent (ranging from $80,000 to $112,750), while IT auditors will earn 3.1 percent more in 2007 (a range of $69,250 to $97,000). Those with skills in service-oriented architecture (SOA), business process reengineering and project management, where demand for workers outstrips supply, may see double-digit salary growth.
The standard method for figuring out how to compensate someone for a particular role is to begin by looking at salary surveys. One problem, says Gartner’s Berry, is that IT organizations aren’t benchmarking salaries regularly enough or are using unreliable sources of data. Another issue is that surveys are often tied to job titles. And titles may not reflect an IT hire’s full responsibilities anymore. In today’s IT department, those responsibilities can change quickly and often.
“A lot of the roles I want to fill are evolutionary—and increasingly, revolutionary,” says Behenna, who estimates his IT hiring will increase by 30 percent from last year. “So there is no absolute reference point.” In a worst case, workers may find themselves seriously undercompensated for the work they’re doing, even though their salary is in line with their title. That leads to tension, resentment and, ultimately, to valuable employees being “ripe for the picking by executive recruiters,” says Foote.
Foote Partners has found that most employers address this conundrum by tying base pay to the dominant skills or role and incorporating additional compensation for the ancillary work and skills that are also part of the job. In setting pay, Behenna browses job boards for job descriptions and pay rates, discusses salaries with peers and invites his direct reports to research compensation. “I have to be a little creative,” he says. “It’s a manual process, but it works.”
Just as important as doing the compensation research is making sure employees know you’re doing it. “It’s PR for the IT organization that the company is keeping abreast of what the market is paying,” says Gartner’s Berry.
6: Wouldn’t it be a better investment to focus on retention rather than recruiting?
It certainly costs plenty to recruit and train a new employee. You may ultimately end up paying as much as 100 percent of a departing employee’s salary or more, just to get a replacement up and running, according to Berry. Then again, 100 percent retention is a bad idea too. Too little turnover “will limit the amount you can learn from the outside,” says Tim Bosse, executive vice president for professional staffing company Hudson IT & Telecommunications. It can also lead to a clogging at the top and a lack of entry-level positions at the bottom.
IT leaders should instead strike a balance between recruiting and retention efforts. Add “roles” and “rotation” to the list and you have the four R’s of staffing, says Forrester’s Bright. And they’re all interrelated. Yet Bright says he can count on one hand the number of IT leaders who keep continuous focus on all of them. “It’s amazing the lengths people will go to avoid having to create a fully fleshed-out talent management strategy,” says Bright. “They focus on one area only after it’s starting to cause problems.”
There will be seasonal or cyclical reasons to focus on one piece of the staffing puzzle more than another. But generally speaking, the key to success is to be proactive about managing the entire staffing spectrum. “You can’t tackle any of these issues in a vacuum,” says Bright.
7: Can I skip these recruiting headaches by outsourcing more of my shop’s work?
Nice try. But if you think you can insulate yourself from personnel problems, decisions and strategy by outsourcing, you’re sadly mistaken. You still have to roll up your sleeves and get involved. Otherwise, such arrangements are doomed to failure.
Mary Lacity, professor of information systems at the University of Missouri-St. Louis, has studied outsourcing best practices. She notes that with successful domestic outsourcing relationships, clients review the résumés of their supplier’s employees before they are assigned to their delivery team. And when it comes to a successful offshore outsourcing arrangement, clients often personally interview each potential offshore-supplier team member.
If you move to a more outsourced model, you’ll also inherit another set of recruiting headaches: hiring someone to manage it. “You’ll have to find the rare, but valuable candidates who have experience managing vendors and outsourcers, negotiation skills, contract and SLA management experience—skills a lot of people in IT may not have. Or want,” says Laurie Orlov, vice president and principal analyst for Forrester Research. And, as anyone who’s done significant outsourcing knows, it’s never long before any HR problems your supplier has trickle down to you. “A lot of the complaints you hear from people who have outsourced is actually disappointment in the level of quality of the outsourcers’ staff,” says Orlov.
An outsourcing decision might be made in part due to staffing concerns. “Some companies may outsource their legacy systems because they want to reduce the risk of being exposed should their baby boomers leave,” says Gartner’s Berry . But an outsourcing decision should never be made with the idea of removing all risk or responsibility for something—recruiting or otherwise. The work may move; responsibility stays.
Senior Editor Stephanie Overby can be reached at email@example.com.