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Workforce Planning – Is your Organization ready for the IT talent war?

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In IT we have a real problem with Workforce Planning – we seem to go from feast to famine and back again at regular intervals when it comes to demand and supply of key IT skills.  And, right now, like most organizations world-wide, you are probably struggling with key IT skills shortages – and the pressures of BEE (Black Economic Empowerment) do not make this situation any easier.

There have been a number of research papers and white papers published recently regarding the “war” for IT Talent that was predicted to start in 2006 and get even worse moving towards 2010.  Admittedly, most of these are “developed world” reports, but this does not mean that the impact will not be felt by the “developing world”, especially English-speaking countries.

The following are indicators of what lies ahead:[1]:

  • According to an IBM study, the 500 largest USA companies will lose 50% of their senior managers over the next 5 years to retirement;
  • The USA Bureau of Labor Statistics reports an increase of 50% in workers aged 55 to 64 from 2004 to 2014;
  • The USA will face a 10 million workforce shortage by 2010 with an unemployment rate of just 2% for US graduates;
  • Booz Allen estimates the replacements costs for management level positions can already exceed 150% of annual salary;
  • The current average turnover time for USA employees is 3 years – for those employees 18 to 24 years old, it is just 18 months;
  • As early as 2005, the demand for IT talent exceeded the supply – world-wide.

What are the Causes?

This is a complex issue so the causes are many, varied and complex, but the most significant are:

  • The pending retirement of the “baby boomers”.  This is being felt mainly by the “developed world” countries that have had near zero or negative population growth rates.
  • Internationally, the education and training institutions are just not producing the numbers of suitably trained IT candidates – besides the experience and knowledge gap between new entrants and the retirees!
  • The current economic growth throughout most of the developed world and the leading developing world countries.  Long term economic growth is not possible without the skills and competencies needed to sustain and build on that growth.

What are the Results?

The result of the IT talent deficit will be felt, not only by the developed world countries, but also by developing world countries, especially India and South Africa, already the number 1 and 2 countries identified for having good IT talent.  The “draw” to work in the developed world is just too hard for good IT talent to resist.

This, in turn, will push up employee costs as competition for good resources increases – already almost one-third of the typical IT budget.  The cost of attracting and retaining, and the time lag between resignation and the new recruit being up to speed being the most significant of these costs.

It also pushes up training and development costs within organizations.  A recent survey of training costs in the USsaw an increase of 7% in corporate training costs in 2006 – way above the inflation rate[2].

So – What to DO About IT …

The general consensus of the “experts” in this area is:

  • Improved Knowledge Management.  Organizations need to implement Knowledge Management as a process throughout the organization.  They need to establish where the important knowledge exists within the organization, and create ways to capture and distribute it.  This knowledge is found in two distinct areas – explicit and tacit knowledge.  Explicit knowledge refers to information that can be easily explained and stored, manually or digitally.  Tacit knowledge is much more difficult to capture and distribute because it includes experience, stories, impressions and creative solutions, often very difficult for the “knowledge owner” to identify and verbalise.
  • Strategic Workforce Planning.  This addresses two critical needs: (1) aligning an organization’s human capital program with its current and emerging mission and strategy and (2) developing long-term strategies for acquiring, developing and retaining staff to achieve the strategic goals.  Now, more than at any time before, it is necessary for IT organizations to start a process of predicting skills and competencies needs – for at least the next three years.
  • Engage your IT Talent.  “Engagement is defined as a state of full-strength, enthusiastic dedication to work in which an employee is passionately connected to her or his job.  Another way of saying this is that engaged employees are their employers raving fans”[3].  Employee engagement is the willingness and ability of employees to contribute to the organization’s success.  Design ways to analyse, build and implement strategies that engage your IT workforce – especially key IT talent.
  • IT Talent Management.  Talent Management is a continuous process that plans talent needs, builds an image to attract the best, ensures that new hires are productive in the shortest time, helps to retain the best, and facilitates the continuous movement of talent to where it can have the most impact within the organization.  Evaluate your Talent Management processes and procedures and make the necessary changes to ensure that your organization is attracting, retaining and utilizing it’s IT talent effectively.

We are in a “knowledge / information” economy.  Our employees are now one of the main “sources of income” for the organization – especially IT human resources.  More and more research is appearing from a variety of well-respected sources that informs us that organizations that “manage” the human resources better are those that are better able to be competitive and deliver on organizational goals.

According to Forrester Research, more than 85% of the market value of typical Standard and Poor’s top 500 companies is the result of intangible assets.  And for many companies, the bulk of these assets are the people – the human assets.

Can you really afford to “wait and see”?  Or should your organization be doing a lot more preparation for the “War for IT Talent”.

 


[1] Josh Bersin, Bersin & Associates, “The War for Talent”.
[2] “Enterprise Learning and Talent Management 2007”, Josh Bersin, Bersin & Associates
[3] “Fully Engaging Your Top Talent”, Joe Santana, CIO Update, August 2005