People Powered: The New Millennium IT Organization - Industry Trend or Event

Understanding and managing both the changing workforce and the changing IT employee are the keys to transforming IT organizations from tech-heavy drains to business-savvy specialists.

"It ain't the technology, it's the people," to paraphrase the '90s mantra concerning the economy. And increasingly, the people powering the economy are tech-savvy. Let's face it, in major multinational enterprises, the technology is not only ubiquitous, it's largely the same across companies, with minimal levels of differentiation among businesses of similar size or scope. It's having the right people that matters, to innovate, facilitate, and drive the "business of the business" through the IT organization's capabilities to deliver products and services. Without the right people engaged in high-value activities that foster a competitive edge, a corporation is sunk.

And hence, more than ever, despite the well-publicized softening of the technology sector of the economy, companies large and small are looking to better understand and leverage their IT employees to give their organizations the edge necessary for the hyper-competitive market realities of the global economy.

At the same time, organizations are beginning to feel the change-inducing effects wrought by an increasingly larger percentage of "free agents" or contract employees in their midst. Contractors have always been part of the IT project landscape, whether because a hot project required skills that were unavailable internally, or because the speed necessary to deploy a key initiative required extra resources. The current environment, however, is witnessing ever-larger numbers of contractors working alongside full-time employees, which threatens to fundamentally alter the nature of the standard command-and-control paradigm familiar to most of us. With employees coming and going in a regular cycle, from contract worker, to full-time employee, and back again to contractor status (depending on such factors as job responsibilities, mergers, and the opportunity to work on "hot" projects), managers must begin to view employees more as service providers than subordinates.

Partner/Customer/Problem Solver

Who are IT employees today, and what skills are necessary for success in this new millennium?

Among the attributes currently in demand for IT personnel, none is more important than an overall understanding of business and business processes. A "techie" who is incapable of communicating and resolving business problems has limited value to an organization, whether he or she is a business analyst, systems programmer, networking specialist, or help desk associate. Being in IT today is about understanding the business issues clearly, and having the ability to deploy the right technology in pursuit of attaining business goals. Indeed, whereas the 19th and 20th century definitions of an employee centered on a hierarchical relationship of subordinate to superior, focused on task completion, with adherence to specific inflexible rules, the current paradigm requires IT employees to demonstrate their capabilities as:

* partners;

* customers (internally but often externally); and

* problem solvers.

These employees are:

* performance-driven;

* self-directed;

* business-focused; and

* team players.

And finally, it is critical for IT employees to be able to "turn on a dime" and engage in activities whenever the business imperative requires this. Organizational agility is a key goal for global companies, which must quickly respond to market changes. Thus, brick-and-mortar firms struggle to create robust business-to-business networks and marketplaces, with the staff available who can make such initiatives a success.

Managing Human Capital

An organization's efforts to have the right staff in place are enhanced by establishing processes for managing the human capital linked to projects, budgets, and overall business imperatives. This "human capital center of excellence" (see diagram above) enables a variety of IT employee processes to proceed, from allocating and developing resources to ensuring that legal compliance is met. Operations excellence is assured because IT employees know what they are required to do, and have the right tools and organizational support to do their jobs.

A large part of managing human capital is recognizing that not only is the IT worker changing, but the IT workplace is also changing.

IT today is increasingly a virtual profession. More than any other group of employees, except perhaps sales, technology staffers are increasingly virtual. META Group's annual survey results of IT human capital tends and best practices show that nearly 80% of respondent companies have employees who are teleworkers. Within the next three years, META Group expects that 75% of the Global 2000 (the largest 2000 multinational firms) will have specific policies for teleworking, with more than 30% of these firms using teleworkers as a way to reduce costs by 2004.

This represents a major shift in the use of telecommuting from a flexible work benefit to a perceived necessity, both for lowering costs associated with maintaining large groups of employees in centralized locations, and for enabling 24x7 global business and computing operations. Currently, most organizations offer telecommuting as an option offered on an ad hoc basis for a quality-of-life inducement to employees--providing greater flexibility for dealing with child or other home care, enabling disabled staff to work remotely, etc.

The rise of virtual teams is another consequence of the proliferation and ubiquity of computing, and the concept is slightly different from telecommuting. It's now possible to create "virtual" teams--groups that exist solely for the purpose of working together on a project across time and space. Many IT employees increasingly seek out this option, regardless of the type of work they do--development or operations. Some of them may be remote or telecommuting employees, operating out of a home office, or they may only be linked to a common task or project. The concept of virtual workers resonates for many companies, enabling a just-in-time approach to staffing and project management that is irresistible.

The policies and practices for governing such an approach take work, however, with clear rules and guidelines dosed with heavy quantities of regular and consistent communications. Otherwise, these efforts will fail and can potentially lead to chaotic--rather than streamlined or enhanced--work situations. However, once the initial investment and transition to this paradigm are in place, the benefits are:

* Improved retention. Employees are 50% more likely to remain with an organization that offers this type of flexible work arrangement.

* Lowered costs. Establishing employees in home or satellite offices is nearly always less expensive than direct costs in large, urban centers.

* Greater organizational agility. Employees who can work within a "virtual" team can be assigned to any "location," facilitating project management. (Basics to get the job done are a separate issue, such as equipment, office supplies, etc.)

Shifting Employee Landscape

One inescapable quality of the new millennium employee is a greater willingness to change jobs than existed even a decade ago. Along with this greater capacity to be mobile is also a lack of loyalty to the organization, for several reasons. Since the mid-'80s to early '90s, which represented a period of major corporate downsizing accompanied by a shift from mainframe to distributed computing, the concept of remaining with a single firm for an entire career, much less a mere five years, has disappeared. Loyalty is gone.

For employers, the conundrum is how much loyalty to (re)build. How many full-time employees does a company really need or want? In the decade to come, META Group expects the relative number of full-time employees to contact workers to reverse from a current average of 2:1 (two-thirds of IT workers currently are full-time, and one-third are contractors). By 2007 META Group expects as much as 70% of the IT workforce will consist of contract workers (it is currently about 30%).

A protracted IT labor shortage and expanding demand for IT services are requiring greater attention to retaining full-time employees. Many companies realize that it is preferable to retain fulltime employees (and the company's investment in those employees) than to go through the costly exercise of hiring and rehiring. Given that it costs at least 1.5 to 2 times an individual's salary to rehire a lost employee, there's a good reason for this approach. A training budget, onsite day care center, or other employee services amortized as a business expense make more sense than continuous, costly rehiring, which is costing the U.S. in excess of $5B annually. The direct costs don't take into account opportunity costs or learning curves, either, putting the actual cost of rehiring much higher.

Over the last few years, this has made employers willing to invest in developing employee commitment through expansive retention programs and perks. Most companies are in for a rough ride where retention is concerned, however. Loyalty, once destroyed, does not come back quickly. Should the current soft economy persist for long, with staff cutbacks prominent, some employees will sit out the storm and will be more likely to stay with a company in the short term, but the longer-term trend is toward less time in a job. The current tenure in many IT positions, especially those in the development and networking areas, is 12 to 18 months, down from an average of three years only a few years ago.

Indeed, one aspect to the older, hierarchical employer/employee or paternalistic paradigm was that fewer job changes cultivated higher degrees of "loyalty" to the organization, minimizing disruption. In some cases, this led to the development of an expertise about a single organization and its business. This expertise is rare in today's world, in which most IT employees currently will change positions seven times in their working lifetimes, compared with just two or three times as little as 15 years ago. The current 20-something generation will have as many as 12 positions over a lifetime, or a different job approximately every three to four years. Most organizations are not prepared for managing this type of highly mobile workforce.

The clearest way organizations can foster loyalty in full-time employees is through developing commitment levels. Employees are most likely to be committed when they have:

* a clear perception of their direction;

* meaningful work;

* recognition (both tangible and intangible) for their efforts; and

* fair compensation.

Fostering loyalty requires solid communications as well as clear career paths. It demands that employers and workers engage in open, bidirectional communication. Companies must demonstrate the values and the behaviors they want from their employees. This process is facilitated when each employee starts with a skill and competency portfolio that provides an employer with a view of the whole person. Such a portfolio indicates technical competency and business capabilities in one place and enables career development, succession planning, and resource allocation, when executed in line with business needs.

An organization that fosters this type of resource management will also provide a continuous learning environment, with training a central component of the life-cycle for skills management. The learning environment combines coaching, mentoring, job rotations, and traditional learning environments with new media and Web-based delivery of training and business-related information. Knowledge acquisition and transfer occur on a continuous basis; information is the product of IT organizations with a "use-it-or-lose-it" imperative.

Over the next decade, this will entail a greater use of e-learning tools, which will enable both synchronous and asynchronous learning. Current technology from vendors such as San Francisco-based DigitalThink and SmartForce, Redwood City, Calif., will be able to offer a greater variety of rich-media environments, including real-time video interaction with instructors via a standard browser, for as little as $100 per seat (or even less) to deliver a course.

Traditional delivery of training won't disappear completely, but companies are already beginning to demand greater accountability for the costs of instructor-led programs. If, as Marshall McCluhan said, the medium is the message, the medium of the Internet will ultimately mean faster, cheaper courses, delivered on a constant basis to employees around the globe.

The Means. Not the End

The high-performing IT organization of the new millennium uses a combination

of full-time employees and ever more contract workers, managing both groups as required by business needs. The skills necessary for IT success in the new millennium are an interwoven combination of communications, business acumen, and leadership.

As a group, dot-coms (prior to their bubble exploding) attracted this type of individual and represented (and in some cases, still do) the kind of environment that is such a lure to these types: open, flexible, and passionate about what technology can accomplish.

What was missing from this picture, though, was a "compelling" (read real) business model! Though the dot-commers tried to ignore them, the business imperatives exist: IT organizations need to get better at understanding them, and companies who "get" this piece of the equation will be tomorrow's market leaders.

Developing strong business and technology skills is what being in IT in the 21st century is all about. Agility and flexibility are also required of both organizations and the people within them. Each individual employee, whether a contract worker or full-time employee, is regularly required to demonstrate the specific value that ties him or her to the organization. Solid technology skill will always be important for IT workers, but as the foundation for enabling business success, not as an end in itself.

Maria Schafer is program director, Executive Services, for META Group Inc., Stamford, Conn. Schafer has researched IT human capital management, staffing, and compensation strategies for nearly 20 years.

COPYRIGHT 2001 Wiesner Publications, Inc.
COPYRIGHT 2001 Gale Group