5 key levers IT management can use to fight the talent crisis

Missed a session at the Data Summit? View here on demand.

The overall shortage of IT talent that the industry has experienced over the past decade is growing over time. Despite calls for good employees and an ongoing escalation of pay scales and benefits packages, potential recruits aren’t really pushing themselves to get these positions.

Employees are clearly in control with many more opportunities at both startups and established companies. Managers find themselves having to use multiple levers to keep pace with attracting and retaining talent, while also successfully realizing some substantial growth opportunities in the marketplace.

On Feb. 28, Gartner released an in-depth report on the subject, coming to a pretty stark top-line conclusion: Past efforts to attract and retain talent aren’t enough to keep pace, let alone win, in the current talent crisis. This means that managers must completely overhaul their hiring practices and devise more creative ways to get good people into their business and stay there.

The report suggested these specific remedies:

Increase hiring effectiveness by sharpening their organization’s employee value proposition (EVP), while increasing hiring volume by leveraging non-traditional labor pools and profiles, in addition to using alternative sourcing models such as crowdsourcing, subcontracting, and acquisitions. Reduce current staff turnover by launching internal initiatives to address the most pernicious causes of staff turnover: poor workforce management and management quality. Increase your chances of success by interweaving both short-term and long-term tactics. Avoid gaps in the delivery of current commitments and enable greater production capacity to meet growing market demand by using multiple tactics across all five levers described in this study. “Business as usual” efforts are not enough to maintain or increase market share in this market.

Opportunities are greater for everyone

There is both unprecedented growth and resource constraint in the 2022 services market, Gartner reports. For example, a historically high level of revenue growth from consulting and outsourcing firms continued in 3Q21, growing 14.7% year over year. Average headcount grew 5.2% quarter on quarter in 3Q21. Average gross margins increased by 1% to 31.3%. However, average operating margins remained stable as a result of higher recruitment costs and higher fill costs.

Attrition in 3Q21 rose to 21.9% (from 18.0% in 2Q21) reflecting the strong demand environment with better bargaining power for skills in demand. Gartner research shows that time to fill a position has increased by 18% since pre-pandemic, and a survey of HR leaders found that 48% of organizations report significant turnover concerns.

2022 offers greater growth opportunities than most in the past 20 years, Gartner said. However, talent scarcity across all IT sectors threatens to hamper growth channels, as well as the ability to overcome current backlogs. These conventional approaches to HR are good, but not good enough:

Compensation-related tactics. The three most popular strategies selected by HR leaders are increasing employees’ base salary (50%), communicating how to increase the organization’s salary (37%), and increasing short-term bonus target amounts ( STI) of current employees (17%). † Non-compensation related tactics. The most popular non-compensation tactics are offering job flexibility options (74%), improving employee development opportunities (47%) and upskilling managers in retention and career interviews (44%).

The report offers five key alternative strategies that technology company general managers must now employ in a white-hot market, where the balance of negotiation has shifted from the talent buyer to the seller.

Five new levers that managers can pull

Lever 1: Leverage non-traditional labor pools and profiles

Technical consulting and outsourcing firms have traditionally hired computer science or science, technology, engineering, and mathematics (STEM) graduates from universities of technology, supplementing those who leave with later personnel with similar experience. Many companies have historically limited their recruitment to the cities where the companies have delivery centers, often partnering with local universities to attract recent graduates.

These strategies now need to be reconsidered. The COVID-19 pandemic has proven that many consulting and software engineering services can be provided by people working remotely, often from home. It no longer makes sense to limit recruitment to the cities where you have delivery centers. Companies should also look into hiring neurodiverse (ADHD, autism spectrum, etc.) workers who might otherwise have passed over; many people with these conditions are excellent employees in specific positions.

Leverage 2: Use alternative purchasing models

General managers recruit on the basis of forecasting, with the goal of always having enough employees “on the bench” available to staff newly won projects. Freelancers, contractors and staffing agencies have always been a Plan B for resourceful short-term peaks. Indeed, some service providers have built a business model based entirely on freelance or temporary employment, eliminating the challenge of already managing usage.

However, flexible staffing is not an easy solution to the current talent crisis. In some countries, the flexible staffing market had been disrupted even before COVID-19 by government legislation aimed at extending benefits and taxes to freelancers (such as IR35 in the UK). During the COVID-19 pandemic, the flexible staffing market has set the same high standards as the rest of the services market, causing more scarce resources and higher than normal daily billing.

Leverage 3: Prioritize and implement relevant technology

The technology lever has three main value vectors to consider:

Using automation to free up time for more valuable activities; enable processing of much larger volumes (for example, searching hundreds or thousands of resumes in the hiring process); and providing greater effectiveness in processes (for example, reducing unconscious biases in hiring processes and decisions) or significantly reducing friction in employees’ work and process environments.

Used properly, automation can be used to improve work by eliminating highly repetitive tasks, freeing up talent that can then be focused on higher value work. Employees really appreciate this. The work with a higher added value will in turn be important to attract and retain talent.

Leverage 4: Strengthen your employee value proposition

The employee value proposition is the set of attributes that potential and current employees perceive as the value they gain from joining the organization. General managers must consciously shape this perception. Gartner research shows that while pay is very important, job opportunity, career advancement and respect are equally powerful factors that employees value.

Fundamental principles of EVP can be broken down into personal and organizational aspects. Personal aspects are no longer just about salary and bonuses, but a myriad of choices ranging from in-house gigs, freelance work for other business units, completion fees, and even start-up funding contests. The concept that a salary increase is the only way to increase your income is long gone. Likewise, employees do not expect traditional career paths, but want opportunities for non-traditional career paths and value employability outside the organization.

Organizational aspects include radical flexibility of when, where and what people work on. Work-life balance has now been replaced by work-life harmonization, with a growing awareness that work should fit into life and not dominate it. Employees want their organization to take action on issues they care about and go beyond just making a statement.

Lever 5: Redesign how the job gets done

To successfully address the talent crisis, general managers must rethink and redesign the way work is performed and measured. The highest priority should be on improving processes and simplifying work. Gartner research shows that these have the most impact on workforce health, while also making the process environment more effective.

General managers have the opportunity to take a fresh look at the basic assumptions about the work involved in producing and delivering their products and services. This analysis should start at the business process level. It should include job categories behind each product or service, and should typically extend to the level of individual duties and job roles. Critically, it includes a strong focus on metrics – for example, the fixation on usage as a primary measure of IT services performance can detract from a more value-oriented focus.

Process improvement is an important strategy for increasing production capacity and counteracting a major driver of attrition. Frustration with processes has led two-thirds of employees to develop their shortcuts to avoid glitches, friction and red tape. Users of these workarounds spend an average of 1.9 hours per day completing routine tasks. For an organization with 10,000 employees, that equates to more than 3 million wasted hours per year.

VentureBeat’s mission is to be a digital city square for tech decision makers to learn about transformative business technology and transactions. Learn more

This post 5 key levers IT management can use to fight the talent crisis

was original published at “https://venturebeat.com/2022/03/11/5-key-levers-it-management-can-pull-to-fight-the-talent-crunch/”