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This is the next article in this series of 5 IT Risks That Could Cripple Your Business: How to Mitigate Them. Please refer to last week’s article for risk #5. In today’s digital era, IT plays a pivotal role in the success and operational efficiency of virtually every business. Hard to imagine many successful businesses that are considered innovative these days without a robust IT presence. In fact, companies like Uber have branded themselves as a technology company. From safeguarding sensitive data to maintaining system up-time, IT is the backbone of a modern enterprise. This has caused a competitive landscape for top IT talent in which there is no end in sight.
The IT landscape has really changed over the past 20 years. Due to things like AI technologies, Open Source, Cloud computing, among other things, skillsets required by IT professionals have definitely changed. In the past, we would regularly see people with 15 years or more experience in key roles using technologies like Oracle, Java, SQL Server, etc. They were Senior level persons and would fill functions like Senior Database Administrator (DBA), Senior Java Developer or Senior Network Administrator. However, innovation is moving so fast as well as changing landscape of the field means that some technology has not been around long enough to find persons with 15 or even 10 years of experience. Also advances in technology platforms making it easier to maintain than years past has led to less experienced persons administering and using the platforms. Of course, companies have outsourced functions like database administration or server administration that was not even a consideration in the past. However, this does not in anyway lessen the need for skilled IT persons. In fact, there is more of a need for the right personnel to operate in the current atmosphere.
Why lack of Right IT Personnel is a Risk:
The number of IT professionals has definitely expanded over the last 10 years. Expanded training options like bootcamps, on job learning, expanded curriculum at universities have added many more resources. Early in my career, most people in IT roles had IT related degrees. Now it is common to see people from other disciplines that have gotten into IT because of changing job roles or those looking for better pay and more opportunities. I am not saying that you have to have an IT degree to be a great IT professional. Some of the most skilled people that I have worked with over the years studied other disciplines in college. But the pool of resources has increased substantially. In addition, outsourcing options have increased the pool of talent of IT resources. So you may think, then it is easier to find and replace resources because the pool is larger than in years past. You would be wrong. The range between great and not so great talent and experienced and very inexperienced resources in the IT field is enormous. Just like in years past, finding and retaining great IT professionals is still a challenge. A report by SHRM IN 2022 says that IT workers will be difficult to find and keep and 64 percent of IT executives cite talent shortages as most significant barrier to adoption of emerging technology. Because the technology is constantly evolving and trends emerging all the time, needs of organizations can change over time. Particularly because organizations know that the businesses that are the biggest winners are the ones that use technology and innovation. IT is right smack in the center of this.
The current IT job market is very strong. Businesses realize that technology is one of the biggest differentiators and companies are increasing looking to implement and improve technology to scale. The rapid demand and pace of innovation has kept experienced IT personnel in high demand. According to Bureau of Labor Statistics, employment of computer and mathematical jobs are expected to grow 22% from 2020 to 2030. Jobs like: Cybersecurity specialists, software developers, cloud architects, data scientists, project managers, network administrators, AI specialists, continue to pay great. In addition, fueled by AI related technologies, there are growing demand for new jobs like Prompt Engineers. However, this increases risks of organizations. Due to complexity of many IT systems deployed by businesses, losing experienced engineers can really impact success and put a big hole in organizations.
Turnover is also a very big concern to organizations. The Cost of Turnover can be enormous. A study by the Society for Human Resource Management (SHRM) in 2022 found that the average cost of replacing an employee is 6 to 9 months’ salary. In the IT industry, the cost of turnover is higher where according to a 2023 study by the IT consulting firm CompTIA, the average cost of replacing an IT employee is 150% of their salary. When they lose an employee, companies have to recruit, hire, onboard, and train the new employee. It could take several months are even years before they get close to the lost productivity. What about the institutional knowledge lost.
It is hard for a typical organization to compete for talent with large companies or innovative companies. I remember working with summer interns at organizations (with lots of resources) in the past and found that many of the interns preferred to go work for innovative and exciting companies like Google or Facebook or Amazon. Competing against companies that are in more technologically advanced sectors for top talent can be challenging. This directly impacts technology initiatives because it takes talent to execute projects and implement new technology. I have seen projects fail over the years due to not having the right resources. One of the worst things that can happen is to lose a key IT resource in the middle of a project, which normally domes the project or significantly expands the timeline.
Another risk is Cultural Fit. It is not just having the right technical skills but also the cultural fit of IT personnel into the organization. Successful organizations realize that IT is a team business. Having an exceptionally skilled IT person that cannot work with others or does not fit the culture can really damage the organization. That is why you hear organizations constantly talk about culture these days. Having to replace an IT resource does not only mean finding the skill but one that fits the culture.
How can we mitigate IT Shortfall?
Luckily, there are a number of ways to mitigate the IT shortfall and attract the best talent. Of course, this starts with great compensation packages including salary, benefits, and other incentives to attract and retain IT talent. The internal HR Team should survey the market regularly or use consultants to perform compensation studies to make sure that packages remain competitive. However, organizations have to understand that drivers today are not necessarily the same they were years ago. Salary is not always the biggest differentiator. Today, things work life balance, hybrid work options, social consciousness, and environmental concerns, are very important to potential employees.
Finding top talent can be a challenge but there are a number of things that organizations can do. We typically used a number of methods which included using Staffing Agencies and Headhunters in finding the right talent. Another thing organizations can do is build a relationships with universities and other educational institutions. This can give them an inside track to possible candidates and talented new grads or soon to be grads. We started an intern program and found that often, when students interned, they were happy to take full time jobs if opportunities aligned with their graduation dates.
Continuous Learning and Development was always an important factor in keeping employees happy. This is important across all job functions but especially IT due to rapid changes in the industry. IT Professionals do not want to become obsolete or stuck using technology that limit future job opportunities. Many also love to ticker with and learn new technology by nature. Providing IT staff with opportunities for professional growth goes a long way in keeping them happy. This includes training, certifications, and exposure to the latest technologies, which can be a significant factor in retention.
Flexible Working Arrangements can really set organizations apart. COVID impacted work life in a way that most would not have believed before it happened and the pace at which changes were made and adopted is extraordinary. Companies did what they had to survive. I have seen companies go to a hybrid approach of working. For example, allowing employees to come into the office 3 days a week and work the other days from home. Or for example, allow employees to work 1 week in the office and other week from home. I have seen some clients adopt the work from home model. These options provide great value to employees. A survey by Global Workplace Analytics found hybrid options improves employee satisfaction and 2/3 of employees want work from home options and approximately 1/3 would choose it over a pay raise.
The use of Consultants is another tactic that is typically used by organization to bolster their staff. As a long-time consultant, that has kept me employed for years. Today, this also includes outsourcing to overseas firms as well as local US based firms. The term staff augmentation is used often which typically involve consultants working day to day directly with organization’s employees. I have seen people who have worked with companies as consultants for over 20 years. This provides companies with the flexibility to add skilled persons to get work done without the commitment of benefits that full-time employees would require. It is a win-win for everyone as most consultant prefer to be consultants.
People seem to overuse culture today, however, having a great culture really adds to enjoyment of work and improves retention. Fostering a supportive and innovative work environment encourages employees to stay and grow with the company. This is especially true for staff members that have made the rounds to a few organizations and seen ones that did not have a great culture. They really appreciate a great culture when they find it. However, one thing to note, a great culture includes good bosses because no one sends workers away faster than horrible bosses.
One final factor that goes a long way in retaining top talent is implementing modern, innovative technology. Why you may ask ? The digital transformation landscape has led to organizations reimaging their business processes to become more efficient. This typically results in better utilization of technology which includes newer, more modern technology like automation, machine learning and cloud computing. This often requires a smaller IT workforce, but does not lessen the need for people with the right skills. However, organizations may have the ability to do more with less.
In closing, organizations have to be proactive and use a number of strategies to find and retain their IT staff. They will find that it is worth it because research has shown that to find, train and replace a key employee can be painful. Anyone that has done it realizes the difficulty. By taking the actions mentioned above, it improves the chances of keeping the best employees.
Please look for next article on Risk #3 next week.