Recruitment, retention and redundancies are the three big "R"s facing IT directors at the moment. Retention is top of the list, the challenge being how to motivate staff when the traditional incentives - promotion, salary increases and new project work - are no longer an option.
The good news is that you have a captive audience. Unlike a couple of years ago when IT professionals were frequently switching jobs and it was hard to keep hold of someone for longer than 18 months, the employment market is now so uncertain that people are prepared to stay in a job much longer.
"There has been a consistent deterioration in the market through 2002," says Simon Trippick, managing director of recruitment agency Tac Europe. "This means there is real stagnation in the marketplace and there is much less churn than there was two years ago."
Research carried out recently by the Chartered Institute of Personnel and Development (CIPD) shows that labour turnover has decreased dramatically since 2000. The Labour Turnover Survey 2002, which covers the year 2001, shows that the overall turnover rate now stands at 18.2%, compared to 26.6% in 2000. Almost half of the organisations surveyed for the report made redundancies in 2001 and just under a third operated a recruitment freeze.
The latest Computer Weekly/SSP survey of appointments, data and trends shows that the IT recruitment sector is still in decline. Both press and Web advertising fell by two-thirds relative to levels a year ago. Worst hit are software houses, telecoms, media and retail companies, all of which cut recruitment by more than two-thirds.
Moreover, the report on jobs by the Recruitment and Employment Confederation in November shows that while overall demand for staff has risen for the first time in three months, the manufacturing sector continues to record lower levels of employment. According to the survey, demand for IT staff fell sharply for the fourth month running, in both the permanent and temporary markets.
No wonder IT staff are looking over their shoulders - it is the fear factor, not a sudden increase in loyalty to their employers that is keeping them in their posts. "People are staying where they are," says Trippick. "We don't have anywhere near the kind of numbers of people who are in permanent jobs but looking for a new job as we used to - fewer than 10% on our database."
Redundancies have an unhealthy effect on the morale of organisations. When reducing headcount, employers should take care to ensure outgoing staff are given sufficient remuneration packages and career counselling, not just as a matter of good practice, but also because you need to show the people left on the team that you care.
Philip Virgo, strategic adviser at the Institute for the Management of Information Systems, thinks it is imperative that employers treat departing staff well, especially the talented ones, because you never know when you might need them again. "When people leave, keep the lines of communication open so that you can pull them back if you need to," says Virgo. "If you have to let go of people who you rate highly, make it easy for them to return."
Most companies are only releasing budgets for critical, low-cost, low-risk work, which means that shiny new development projects are just not happening. This presents managers with a problem: what to do with your brightest, highly ambitious staff who are turned on by whizzy technology?
Rather than lose them or make them redundant, Virgo suggests other ways of keeping them. "There will be very little in the way of major projects for a few years," he says. "So the people who want the big projects and cutting-edge technology will not be used for a couple of years and you probably want to place them somewhere else for that time. That could be career breaks, part-time work or taking an academic secondment."
This way you reduce your costs without losing key people. Frances Wilson, HR adviser at the CIPD, agrees that encouraging people to take time off for studies or personal development is an ideal way of retaining staff and keeping them motivated. "It is the perfect opportunity to give sabbaticals or secondments," she says. "It gives the company breathing space and sends out good messages that you are flexible and thinking about your employees."
Wilson also advises that employers consider exchanges between different organisations. If, for example, you have a sister company that is in a better state overseas, or subsidiary companies in other sectors, it might be possible to arrange placements, so that when you do need more staff in the future, they can return with a wider set of skills.
It is important to have a long-term view so that when the market does pick up, which will not be for a while yet, you are not left scrabbling around for skills. Involve your most promising employees in planning for the future. "One of the interesting tricks is to set up a team to do your long-range career planning," explains Virgo. "They can look at the skills you will need running forward and you should put the key people who you don't want to lose on that team. It is very important to cherish the people who are important to you and let them know that you are serious about not losing them."
The beauty of a stagnant market is that finally, after a few manic years of excessive staff turnover, managers have a relatively stable workforce. This means you can foster individual talent and actually implement career development plans for employees, without fearing they will be off before you reap the benefits.
Training can be a problem though, because training budgets are always affected by a downturn so there has to be a very strong business case for any courses to be signed off. That said, now that the emphasis has moved away from new technologies, there is time to train staff up on the more general, business-related side of things - management, presentation, communication and business development courses should all be considered. "It is an opportunity to catch up on all those skills that they did not have time to get before," says Virgo. "Companies need more of the 'softer' managerial and communication skills from IT departments. Plus things like structured methodology, software audit, security skills, rapid development tools - you can get people properly skilled in the skills that save you money."
It is important that managers do develop their employees' skill sets. IT professionals are so motivated by career development and training that if they feel that is being neglected, they will quickly become demoralised. "In most IT jobs you end up doing the same thing over and over again, which is why people switch jobs so much," says Jeremy Walden, e-business developer at development company, RG Internet Solutions. "Most of my career development is done by moving jobs. But it is a lot harder to find jobs at the moment and a lot of people think that if they have a secure job, it is better to stick with it rather than take a risk. Plus, new projects have been cut which limits the amount of interesting work there is. This all means that a lot of people are bored."
Walden thinks it is imperative that managers make it clear to staff that there is still a strong career path for them at their company, even if promotions are not possible. "The way to motivate people is to show them that they are still going somewhere, that tasks can be achieved and how they can contribute to the overall success."
Owen Williams, head of IT at global property consultancy Knight Frank, says his staff do not have a morale problem, namely because he ensures that they have plenty of challenging work. "You have to make sure you keep the interesting work for your staff," he says. "We are losing some of our outsourced services, so we are training our internal staff to do the jobs instead. For example, we used to have a network management contract, but I've chosen to lose the contract and train up the staff, rather than lose the staff."
If budgetary constraints mean that something has to go, Williams thinks IT directors can be a bit creative about what to cut and what to keep. "You have to look at the resources available and talk to people about what they want."
If you want a strong performing department, then you need to motivate them, both as individuals and as a team. A stable workforce means that managers should be able to build very cohesive teams. Short-term projects are a good way of doing that. Set people achievable targets and help them see the business benefit in what they are doing. Now is the time for managers to instill in IT professionals a real understanding of how to serve the business, rather than being a technologist for technology's sake.
Identify those people who have a lot to offer the business. Many companies have put a veto on promotions, but if you do want to fast-track anyone, there are alternative ways of priming them for top positions. Wilson recommends mentoring. "It is a very important tool, particularly for the IT sector," she says. "For example, having the director of marketing mentoring an IT person if you think that person has the potential to hold a senior position in the company. This way you give them a spread of different experiences."
The real problem comes when more recruits are needed. With the reduced headcounts, most IT departments are working flat out, but getting a recruitment initiative signed off in the current climate is hard. And if you do manage to hire a few extra people, you want to make sure they are the right ones. Be selective, set candidates technical and personality tests. Some employers issue really tight job specifications to deter the no-hopers and keep the number of applicants down. You really don't want to recruit someone who isn't up to scratch because the downside of having a stagnant workforce is that once you've got someone, they're not going to leave in a hurry.
How to keep staff motivated
- Communication. Find out how individuals want their career to develop and set them goals
- Short-term projects. They cost less, are business friendly and achievable targets boost morale
- Encourage key people to take career breaks, sabbaticals or go part time to stop them leaving if work is low
- Plan for the future and make it clear your staff have an strong career path in the company.
Benefits of low staff turnover
- Managers can plan ahead, developing people according to specific business needs and building strong teams
- People hate speaking to different people every time they ring the IT department. A more stable workforce allows the department to forge strong relationships with users, suppliers, customers and whoever else they deal with.