One of the roles of an IT leader is the job of managing IT staffing (supply) with the needs of the organization (demand), to include infrastructure and support as well as IT investments that will drive innovation, new products and future growth. Although most leaders have an assumption that their IT organization will become more efficient over time, it is not unreasonable to expect that IT staffing numbers would increase in parallel with the growth and success of the business being supported. Yet, rather than a smooth trend line of IT staff numbers to match company or revenue growth, the staffing graph for many organizations resembles something like the following:
The graph itself may be troubling and raise several questions, yet almost without exception, any company that announces substantial layoffs, including layoffs within IT, is immediately rewarded with a share price bump on the news. It is difficult to find examples where this is not the case. It seems to me that the marketplace (specifically analysts) must be betting on one of the following scenarios in their positive reaction to layoffs within a company’s IT organization:
- There is little faith that the staff being eliminated were really needed, or were attached to specific projects/investments of value
- The projects/investments themselves were unlikely to result in growth or innovation, despite management assurances, and with the elimination of those IT investments the staff are no longer needed
- The company or IT department has become dramatically more efficient overnight, and can now deliver on all promised IT investments without the need of the staff in question, with no negative effect on future growth
Or are none of these the case, and the market is irrationally giving a bump based on short-term thinking only, without a concern about the long-term impact on growth and profits?
As a leader who manages the IT staffing plan for an organization, there are many questions to consider when faced with this situation:
- Did my run-up in IT staffing closely match the organization’s needs, or get ahead of it?
- Is the cost of delivering IT services to my customers becoming a better value over time, or a bad deal? What is the success rate for my IT projects? Would my IT staff and investments be on the chopping block if we were viewed differently within the organization?
- What does this say about the organizations’ management, specifically the confidence in matching staffing to demand?
- How will future growth occur if the investments that were planned to support it are cut? What is the backup plan?
- What is the real cost to stopping/starting a long list of projects over and over? How much is the total cost of each project increased or the timeline extended?
- When budget cuts occur, is every planned project “given a haircut”, potentially weakening the value of each, or are tough choices made between planned investments? How are those choices made?
- What is the real cost of laying off valued staff, then hiring other people with the same skill-set once the budget pressures have eased? It may be comforting to believe that we can always target the sub-performers in these layoffs, thereby raising the bar for all staff, but is this really the case? What is the impact on morale for the valued staff that see this cycle occurring year after year?
There has been a great deal of opinion expressed on the causes of the present financial crisis affecting the US, with much of it pointing toward incentives that rewarded very short-term thinking at the expense of the long-term health of the economy. It would seem that, rather than rewarding those organizations that are on a constant boom/bust cycle with critical staffing, we should identify and reward those leaders who have mastered the art of staff forecasting, finding the right mix of staff and hiring rates to match company needs, while limiting layoffs for each market blip or lost account.
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