Last recession skill shortage lesson

According to Professor Michael Vitale of the Australian Graduate School of Management, the main difference between IT companies and the rest of the economy lies in the ongoing, severe shortage of people with the right mix of talent, skills and experience. He says, “It has been going on for some time and shows no sign of abating. The recession might see some companies slow or halt their recruiting, but that’s just like a starving person skipping a few meals – at the end of the day they’ll still be undernourished”.

Importantly, Vitale says despite a severe shortage of talented, skilled, experienced IT workers, there’s no room for compromise. “Every word in that phrase is important. IT workers need to be talented, skilled and experienced. Anything less won’t do. The shortage doesn’t mean you should be any more tolerant of people who aren’t performing.”

One of the problems peculiar to the IT industry is that companies can’t ease the skill shortage simply throwing money at the problem. Vitale says that most people working in the IT industry already earn more than enough money to cover their basic needs and that extra money isn’t much of an incentive. The skills shortage means workers can leave one job on a Friday afternoon and find another position by Monday morning – and if they are not happy that’s exactly what they’ll do. He says, “Pay is not the issue here, for many key people it is more important that they can work for a company that has a set of values aligned with their own”.

So, in order to hire and retain the best people companies need to define and then clearly articulate their key values. Sometimes this looks clumsy in practice, but when it works it can be extremely powerful. To illustrate this point Vitale points to a business card from a Deloitte Touche Tohmatsu employee. It clearly outlined that companies key values in unambiguous language. The list reads: recruit and retain the best; talk straight; empower and trust; continuously grow and improve; aim to be famous; play to win – think globally; have fun and celebrate.

Vitale says that most people’s immediate reaction would be to dismiss such explicit and corny sounding statements. However, he says, “At least they have said it. These statements are everywhere, on company business cards, on wall posters around the office and on Deloitte web site. It’s very hard for managers to deny these values when, say, someone argues they are not being empowered”

The interesting thing about explicitly such stated values is that they act as both a positive and negative recruitment filter. Some people will sign up because they like the words. He says, “Of course there could be people whose values don’t line up with the company. For example, lots of people don’t play to win and there are plenty of people who don’t want to have fun. Ultimately they won’t want to work for such a company.”

Building a company culture that attracts and keeps the right kind of staff is not the only key to success in the IT world, but it is of overwhelming importance. Vitale says, “If you manage to get the people right, everything else flows. If you don’t every step you take is painful.”

As far as Vitale is concerned, the only thing other than people that really matters for IT success is a degree of flexibility. Markets and industries are now changing so fast that managers are not really able to predict what lies ahead. So instead of contingency planning for expected events, he says companies should develop overall resilience to help them deal with inevitable external shocks. Vitale describes this resilience as an ability to bounce back into shape after being badly stretched.

An example of flexibility and resilience is to make sure employees have the right kinds of expectations. Say, for example, a company has had a long-term policy of giving its employees a job for life. If an external shock causes the management to lay off workers, there will be considerable damage to morale. On the other hand if during the boom years the company creates an expectation that jobs may go in a down turn, then when they actually do go there is less damage. The survivors get over the change quickly and can rebuild for the next boom.