Monday, March 15, 2010

Challenges of an upturn

All the analysts have just wound up their discussion about the challenges faced during a downturn. There have been many stories, case studies, and insights on how to survive. In a few cases, the focus even went to topics such as how to thrive in an economy that challenged everyone.

Some parts of the world continue to face issues, albeit to a lesser degree. The turnaround time required for these players is slower than developing nations, where the upswing is visible, and there is already talk about withdrawal of government instituted stimulus. With the sun just beginning to raise its head over the horizon and returning growth, the problems of economic growth have already started bothering companies.

Problems? Yes, economic growth has its issues. I’m referring to the problem of talent retention.

During recessionary trends and slowdown, organizations tightened their belts. Increments were frozen cold, and many took a cut (which hurt), but then it was better than losing your job. Bonuses and variable pay were also victims of the reducing top lines. Most business units squeezed out costs. Thus, fixed costs came down, and helped generate better profitability ratios than ever imagined by many enterprises. Employees stayed put, and worked diligently to help companies tide over difficult times.

By the turn of the year, growth was back in the black. Suddenly, there were murmurs within companies about reinstatement of imposed cuts. Will bonuses be paid again? What kind of increments can employees expect? Predatory companies also saw this as a great opportunity to cherry pick bright talent from competitors, and across verticals. In a few cases, these organizations even targeted high potential individuals by name.

With no clarity, communication or delayed reaction from their own companies, these individuals decided to take the mercenary approach and move on to the highest bidder. The trickle that started late last year, has suddenly assumed scary proportions in many companies. Talent retention has come to the fore, and is now the highest priority for some of the impacted companies.

Inhouse IT organizations will see a high impact due to the coming back of “good times”, since most technical skills are not industry dependent. At the same time, IT companies are hiring (or announcing targets for people acquisition) with a frenzy similar to the scene witnessed during Y2K days (there used to be a standing joke “Trespassers will be hired”). Can CIOs work around this problem with proactive steps (or in a few instances, even go against the enterprise timelines), to retain their best?

I believe that a few CIOs will be able to ring-fence their teams, but many will suffer through the year. Some will end up hiring the best talent from other companies. However, no CIO can afford to sustain a lack of action, as status quo is not an option.

1 comment:

  1. Retention is a huge problem, especially in sectors like IT where talent is scarce relative to the supply of talent. Every CIO has to have some arsenal to counter this challenge. I would like to read your reflections on some possible solutions.