by Stephanie Overby

Staff Alert

May 01, 200315 mins
IT Leadership

With outsourcing on the rise, CIOs are at the center of a morale crisis. They see many of their workers battling stress on the job. The best leaders learn to help employees now-and keep them in the future.

Dianah Neff’s staff was sick a lot last winter. But the CIO of the city of Philadelphia was worried that it wasn’t just the record cold and snow that had her employees under the weather. With the city facing its worst fiscal crisis since 1991, Neff had been forced to cut 10 percent of her staff through an early retirement program. She started cross-training the remaining 535 to deal with increasing demands being placed on IT. Meanwhile, as each new project request came in, Neff was openly looking at whether outsourcing some work might be more cost-effective — another anxiety source for her already stressed staff.

“People have become anxious. We’re watching to see if we’re getting increases in sick leave or if other issues are occurring. People deal with the stress of layoffs and increased workloads in different ways,” Neff says. “The staff is realistic. They know it’s a tough job market. I don’t know that you can ever really reassure people in these situations.”

Neff expresses a pervasive feeling: 75 percent of 290 IT executives in a recent CIO survey said their top staffing concerns in 2003 are their employees’ demanding workloads and staff burnout. At the same time, more CIOs are looking outside their company walls to fill their labor needs — 37 percent plan to increase the use of outside sourcing options, such as contractors and outsourcers, to meet work goals in the next year, according to the survey.

Add to this fiscal funk such nonwork stressors as homeland security alert levels and the war with Iraq, and it’s like the perfect storm for the IT staff. CIOs who think there’s no real threat of turnover in tough IT times and put off dealing with the situation may be in for a rude awakening even sooner than the highly anticipated economic turnaround. “Your best workers will leave and go somewhere else, and you’ll be left with heavier workloads and fewer top performers,” warns Diane Morello, a Gartner analyst. “We’re already seeing the start of a workforce backlash. There’s a subtle pulling back on the part of employees who are saying, If you’re not going to help me put the brakes on [the workload], I’m going to do it myself.”

Instead of waiting to see productivity slip, CIOs must to do everything they can now to prevent employee burnout, stress and doubt. Read on to share the experiences of CIOs who have learned the importance of adjusting office conditions — from establishing project management controls and making staff workloads more reasonable to recognizing top workers.

A Familiar Feeling

High stress and heavy workloads are nothing new to IT; night and weekend work has been the norm for years. “It’s an occupational hazard,” says Rick Skinner, CIO of the Oregon division of $3.3 billion Providence Health System. “IT staffs are responsible not only for keeping current systems and infrastructure running, but they’re also responsible for a whole host of new projects. Some are planned, budgeted and scheduled, and some come out of left field with no budget, no schedule and only a fuzzy idea of the deliverables. That kind of environment is by nature high stress.”

But if 70-hour workweeks somehow became the norm in the best of times, the hours being clocked by IT workers today — with budgets stretched and expectations on the rise — are potentially unbearable. “Like every other IS organization out there, we’re suffering from an incredible amount of demand. CEOs and CFOs want additional services, but they want it done for less,” says Bruce Reirden, vice president and CIO of the Care New England group of hospitals. “So ultimately as CIOs, we’re requesting people to work more just to get the jobs out the door. I couldn’t even tell you what the average workweek is like here. Some weeks it’s higher, some weeks lower. But it’s always in excess of what people are scheduled for.”

Linda Pittenger, CEO of People3, Gartner’s HR consulting group, says that overburdening staffs is risky. “It can mean costs related to absenteeism and productivity decreases because people are depressed, or it can increase productivity but also increase the risk of burnout because people are working harder to keep their jobs,” she explains.

Another downside to the current IT staffing environment is a decrease in innovation and a focus on the individual rather than the team. “In times like these people become risk averse. They don’t want to share new ideas because there’s no money in it,” Pittenger says. “And what if the idea is bad? Do I want to be the guy who raises his hand and says we should do this, and then it fails?”

Some CIOs insert research opportunities, even modest ones, into their staff schedules as a way of developing staff skills — and relieving some of the workaday pressure. At Electronic Arts, a $1.7 billion computer game maker, CIO Marc West insists his employees participate in niche R&D teams looking at where the business might be headed. “We run a pretty intense environment,” he says. “But we ask employees to dedicate these very, very narrow time slices to R&D. They give up an hour a week, but it gives them something positive to engage in. As a result, they find more time for other things and are better able to prioritize the work at hand.” West admits the R&D time can get sacrificed. About 15 percent of the time (when things are really crazy), the teams meet for an hour every two weeks. And he will extend the time lines for ongoing R&D projects.

Prioritization Is a Virtue

One thing has become clear as employees and other resources have become stretched paper thin: the importance of prioritization and project management skills. And that has to start at the top with the CIO. Otherwise the caliber of work coming out of the IT shop is destined to decline. “IT is the most project-oriented area of the business, but corporate IT still doesn’t seem to be able to get project management down to a strong discipline,” says Tom Pohlman, a Forrester Research analyst. “But if you completely overburden your staff and don’t have good PM skills, the quality of work is going to suffer.”

Darren Bien, CIO and COO of Keller Williams Realty International, found that out in 2001 when 20 major initiatives were in the IT pipeline and not one was implemented. Even in industries that are doing well (Keller Williams’ revenue grew 40 percent to $530 million in 2002 thanks to low-interest rates), the danger is still there. “We’ve had to drive a much more process-oriented focus on project management,” says Bien, who had 25 employees trying to complete those 20 projects. “Steering committee processes and prioritization put in place last year allow us to focus on what’s important.”

Providence’s Skinner says he has to ensure that the projects his 300 employees are working on aren’t ones more suited for a staff of 1,000. “I have to make sure that the things they’re being asked to do are reasonable not only in terms of business value but also in terms of the resources we have,” says Skinner, who’s been dealing with declining margins in health care for nearly a decade. “I’ve found myself changing from a cheerleader trying to sell technology to the business to the gatekeeper tying to ensure that we make only those investments that increase business value and can actually be accomplished.”

An effectual PM office helps to keep man-hours in check. “We know roughly what resources it will take to maintain our systems and also know how much is left over for project work. What we don’t know is which resource will be required on what project when and whether that might conflict with some other project,” Skinner says. “The project management office attempts to coordinate all the work.”

But the process requires continuous tweaking. “It’s impossible to forecast how many DBA hours we’re going to need on a given project, much less all our projects six months from now,” he says, adding that the project management office makes weekly adjustments.

In addition, Skinner gives his employees more accountability. More responsibility to relieve stress? Sounds counterintuitive, but giving workers some control can go a long way. This year, for example, four employee action groups reviewed the annual employee satisfaction survey results and determined what direction to take — a process previously handled by Skinner’s management team. The groups came up with creative recommendations with real business value that will be more widely accepted than if they were handed down from the top, Skinner says. One result: after employees pointed out that a 40-hour continuing education requirement did not ensure workers got the right kind of training, Providence managers will set training priorities and find ways to gain that expertise.

“Give people clear goals, resources to achieve them and the ability to make the day-to-day decisions. Even though they’ll work harder, it’s more enjoyable for them. That helps alleviate some stress,” Skinner says.

Even with the best processes in place, IT employees still have to work harder these days. But CIOs can help alleviate the stress by simple communication — providing a light at the end of the tunnel for their staffs even if they don’t necessarily see one themselves. “Most people can tolerate a certain degree of high intensity work if they see relief in the future — six, nine, even 10 months down the road,” Gartner’s Morello says, and leaders need to describe this road.

Cecil O. Smith, senior vice president and CIO of $59.5 billion Duke Energy, spends significant time these days reassuring his troops. “If there’s ever a time to be seen and be visible, it is now,” Smith says. “With all the concern about job security, the economy, a war, and what we’ve been through in rightsizing the company, the staff has got to be wondering, Will we be working here next week? or Will we be working on creative stuff? I say, This is one where we all have to help each other. We will be OK. We’ll come out of this. You have to help carry that message yourself.”

Acknowledge the Outsourcing Threat

Many CIOs are also looking to outside sources of help in meeting IT demands — either for cost, skills, strategy or a combination of the three. According to our survey, 68 percent of CIOs increased their use of contractors and contingent staff during the past year, 23 percent increased their use of onshore outsourcing, and 18 percent increased their use of offshore outsourcing. For the next year, 47 percent expect to increase their use of contingent staff and contractors.

“CIOs faced with an already bare-bones staff are told to cut another 10 percent, and the most promising thing for them is to look at the offshore outsourcing market where they can theoretically save 30 percent to 50 percent in hard costs,” says Morello. “If I’m a CIO in the United States and I’m being asked to continue to reduce costs after already extensive and radical cost-cutting, I have to justify why I’m not considering offshore.”

But while using outside sourcing options can be a good way for CIOs to meet business needs with smaller budgets and fewer full-time staff, their introduction can increase in-house staff malaise. This is particularly the case with outsourcing. “People are very reticent and nervous,” Morello explains. “If you are someone who has shown that you’re a great technical person but that’s all you have — you don’t have any business process or management skills — your role is at risk because that work is moving overseas, and chances are you aren’t moving to India with it.”

Electronic Arts’ West understood this issue when he began outsourcing 15 percent of the company’s development work to two middle-tier Indian software companies, iEnergizer in Noida and Cybage Software in Pune. “We originally started sending work over there because of the nonavailability of talented staffing in the U.S., but that’s not the situation today. Now we use it as a cost-effective solution,” West says. To help address concerns that Electronic Arts’ in-house developers will become obsolete, West has tried to position the Indian play as an opportunity. While he’s discontinued hiring junior developers, he’s encouraging his existing stateside developers to learn systems analysis and gain more strategic skills, such as getting to know the business’s order management processes to figure out what commercial software might be a good fit. “We’re trying to make it an opportunity to develop skills around managing offshore projects and managing a distributed development environment,” West explains. “There is always an underlying concern, and you can never take the full fear out of it. But we make sure it’s seen as a way to get the job done better and faster, and not just cheaper.”

The same people issues crop up with onshore outsourcing. George Brenckle, CIO of the University of Pennsylvania Health System (UPHS), outsourced the majority of his department to First Consulting Group, a health-care IT services company. First Consulting took over 170 of Brenckle’s IT employees in 2001 just after the hospital system posted a loss of $200 million, leaving just 30 employees in-house. “You can never 100 percent relieve the anxiety of outsourcing, but we were very open so the employees knew who we were talking to and what we were finding,” Brenckle says.

Brenckle was so concerned about employee reaction that in the end, 25 percent of the contract with the outsourcer addressed staff issues, such as guaranteeing that the outsourcer would retain all UPHS employees for at least a year and ensuring that turnover would be less than 2 percent. The pact kept some benefits, such as tuition reimbursement, that UPHS employees have. Still, the outsourcer saw two turnover peaks — one at the switchover and another 18 months later when some workers transferred off the UPHS account. But Brenckle knows it could have been worse. Remaining employees, whose stress levels skyrocketed initially, eventually got used to the idea of managing staff that actually worked for another employer. “Outsourcing is the kind of thing where you have to include your staff on the journey. You have to be very open,” Brenckle says. “Because the reality of it is that you have an IT department to run before you outsource, and you’re going to have an IT department to run after you outsource.”

“CIOs will spend tons of money analyzing who the right outsourcer is and on which piece to outsource, but when it comes to focusing time and money on people issues, they say they can’t afford it. But that’s the one piece that really matters,” says People3’s Pittenger. “Bring companies in to hire your people or have the outsourcer hire them. Take the business strategy and make it work for your employees. It doesn’t have to be a win-lose situation. Besides, you have survivors inside who aren’t going to stay if they see how you treat the people who don’t stay.”

Keller Williams Realty’s Bien admits he made a mistake when he outsourced strategic development to an IT consulting group a year ago. “There’s a lot of internal skepticism when you enter into a long-term relationship like that, and the outsourcer is doing all the neat and cool stuff, and your internal staff is keeping the wires together,” says Bien, who recently reinsourced that work. “As we go forward, we only outsource commodity services in the short term. And what we will keep in-house forevermore is the development of strategic platforms that differentiate us. It’s an employee satisfaction issue. And no one will understand your strategic needs better than the people whose livelihood depends on the success of the company.”

Get Used to This

But what CIOs want to know more than anything is when will this period of deflated budgets, inflated stress levels and increased pressure to use outside sourcing options end? Unfortunately, there’s no solid answer to that just yet. “There’s a yearning [among IT employees] for things to go back to the way they were two or three years a go,” says Pittenger. “But that period of time was so artificially inflated we’ll never get back to that.”

And while budgets have begun to inch up a bit, according to Forrester’s Pohlman, IT hiring is still trailing the slight budget increases. “This problem is going to continue to get worse,” he says. “Although we’re seeing some CIOs start to increase their spending, they’re not increasing their hiring [as much].”

Though not rosy, the situation does paint a clear picture of what CIOs need to do — everything they can to take care of their workers.

In Philadelphia, city CIO Dianah Neff seeks help and understanding. She’s looking into automation tools that might help her small staff deal with bigger workloads. She’s telling her city IT governing board that there’s only so much her staff can do. And she’s communicating like crazy with her employees.

“Communication is the best stress reducer. The staff feels at least a little less stressed if they understand what is going on,” Neff says. “If they aren’t worried about what management is doing, they can focus on their jobs or finding creative ways to do more with less.”