Managing Resources in Turbulent Times
Date: Friday , October 10, 2008
These are turbulent times the likes of which haven’t been seen in decades! However, these are the times when the CIOs have to act boldly and take steps not only to weather the storm, but prepare the business for calmer waters when the economy improves. Having gone through past economic downturns, I have learned some lessons that are valuable:
*First and foremost, this is not the time to ‘pull in horns’. This is the time to take action, face the winds of change, and look ahead to the horizon.
* Resource management strategy is critical during difficult times. Actions taken without forethought and planning will impede the IT organization in future.
* Just as a palm tree bends easily during storm, flexibility in managing resources through economic turbulence will allow the organization to remain strong once the storm has passed.
More than half of a CIO’s budget deals with human resources, and almost all of IT success or failure depends upon the selection, deployment, and utilization of these resources. During stable economic periods, the CIOs generally have a predictable strategy for deployment and utilization of resources. But during turbulent times everything becomes unpredictable. Think about a financial institution that must realign its business by divesting, acquiring, or merging ? and doing so very quickly. Airlines need to realign schedules and utilization of their aircraft to address rising fuel costs. White goods manufacturers that have to adjust manufacturing and distribution to account for a slowdown in housing and construction during a recession. These situations require the CIO to alter the system’s plans and directions, literally overnight. This means shelving projects, changing scope, speeding up or slowing down delivery of systems, adopting new business processes, and doing all these with as little disruption as possible. These challenges are exacerbated by shrinking budgets and headcounts.
How can a CIO proactively address these challenges and balance the short-term business needs against the long-term health of the organization? My experience says that a CIO needs to have a resource strategy in place that would allow him or her to address these problems long before they occur. There are two foundations for a balanced resource strategy:
An integrated skills management program
* A skills management program allows the CIO to understand the entire organization’s skill pool and map it against business needs. It also forms the foundation for the next step ? creating alternatives for skills engagement and deployment. Too often, we have seen that companies think about skills as a staffing issue, and that too only when there is a skills shortage for a project. As outsourcing and staff turnover becomes more commonplace, we will hear much more about skills imbalance and the hunt for desired skills.
*What does a skills management program look like? There are two dimensions to the program: defining the skills needed over a pre-defined window and a program to assess and update the skills profile of IT staff. The skills definition is based on the business and technology environment and it not only concerns the current requirements but also the future direction, including technology and soft skills such as Project Management. These skills are categorized by levels of competency ranging from Master (expert) to Learning (entry). Then each staff member is evaluated against the skills in particular aspects and a profile is constructed. This will identify skill gaps, as well as over-population, and will form the basis for the skills management program.
* A well-managed skills program attracts motivated employees. Employees know where they stand in their own development and, importantly, what steps they can take to further their career by acquiring skills and using them on various projects. My own experience has shown that once implemented, employees constantly look at their skills profile and its attractiveness for future positions. It also allows managers to have deeper, more meaningful coaching and counseling sessions with employees based on facts rather than opinions.
Defined alternatives for skills engagement and deployment
A defined resource management program, tied to skills management, is a strong tool for a manager, but a critical one during turbulent times. An unpredictable environment requires the CIO to make resource related decisions ? retrenchment, reassignment, or even expansion ? quickly. There are three distinct options available to a CIO for managing skill needs, in good times or bad.
* Temporary or supplementary staffing: This is more commonly known as ‘contracting for labor’, where a CIO can call upon an outside staffing firm to search, hire, and provide resources with the right skills. This works extremely well when the skill requirements vary over a period of time or when a company has restrictions on adding permanent staff members. However, employing a staffing solution may create a dependence on outside laborers that can take the company knowledge with them when the assignment ends. Additionally, the U.S. labor laws and practices preclude keeping a contracted staff working for long periods of time.
*Outsourcing: Clearly, outsourcing is an option. A CIO can decide to invite an outside firm to take over the project or delivery responsibility totally and provide the services for a contracted fee. This is an excellent tool when the CIO decides that a certain skills acquisition is not needed on long term basis – such as knowledge of legacy systems, operational environment, and so on – or when there are many qualified providers with the needed skills who can provide credible service. This is also an option where the skills acquisition may be difficult for an IT organization (due to competition in the marketplace or unattractive location for jobs) and the work can be done wherever the provider is located. Obviously, this is not a good option if the skills set needs to be built in-house for the future. Consulting: Although, this is a form of outsourcing, it is differentiated by the fact that the engagement will be for a shorter period of time, and the scope and deliverables may be harder to define than in an outsourcing agreement. Here the CIO is seeking expertise on a short term basis. This may be the most expensive way to acquire skills but it can assure a CIO experienced, highly trained staff for an assignment whose end-value may be quite high for the company.
A CIO’s success depends not only on providing service to the business units for a short term, but by building an organization that can weather difficult times and drive change in the company. This is critical during periods of economic crises when all focus shifts to managing the prevailing situation. A well designed and sincerely implemented skills program is a necessary tool in the successful CIO’s arsenal creating a win-win scenario for the business, IT in general, and also for the employees.