Out Of Time, Out Of Talent – Why IT Departments Fail

by drjim on September 1, 2008

IT Departments Need To Hire From Outside To Avoid Business Stalls

IT Departments Need To Hire From Outside To Avoid Business Stalls

A business stall can hit a company / IT department at any time. There can be many reasons for what causes a stall including having a premium product or abandoning a good market segment too early as a company goes looking for greener grass. If that was all that could happen to a company, that would surly be enough. However, there is one more key contributor that can cause an otherwise successful company to lose forward momentum and go into a tailspin: they run out of talent.

In this day of IT layoffs and downsizings, it doesn’t seem possible that a firm could run out of the IT talent that they need. However, it’s having a lack of IT leaders and their associated staff who have the necessary IT capabilities and interpersonal skills that are so desperately needed in order to execute the company’s strategy.

We’re not talking about not having enough SQL knowledgeable programmers here. Rather what we are discussing is a lack of specific required capabilities that are needed by the firm. These capabilities can include such things as the ability to sell complex IT solutions, or perhaps some special skill in marketing IT solutions to a given market segment. This lack of talent becomes most glaring when it occurs at the executive level within the company.

How Do Talent Shortages Happen? It turns out that most internal shortfalls in skills are a result of a company’s too strict adherance to a “promote from within” policy. What’s interesting about this is that this situation is most often seen in company’s that are lauded for their strong sense of corporate culture. This internal promotion policy serves the company poorly when the company’s business environment presents it with a novel challenge or when their competition suddenly increases.

What Role Does Experience Play? A big one it turns out. Rapidly developing events in a company’s market place require the company to quickly respond by modifying how it does business. Having a narrow set of experiences in the executive suite means that the company’s ability to quickly respond to such changes can be severely limited.

So What’s The Solution? Quick question – does your IT department have any program in place to formally monitor the balance between both company lifers vs. those who have been brought in from the outside both in the executive team and lower on down the management ladder? It’s the outsiders who are going to bring in fresh approaches and perspectives. Even if the firm does bring in outsiders, does it incorporate them into the company? Studies show that between 35%-40% of senior executives don’t make it past their first 18 months. The correct way to solve this problem is to set up a formal IT department policy that states that HR will work to ensure that there is a mix of management. A good suggestion for a mix ratio that seems to work is to ensure that there is between 10% – 30% of management that is from the outside.

Where does your IT department’s management talent come from – inside or outside? Does your company actively hire from the outside? How long do new senior managers seem to last? Why do they leave? Leave a comment and let me know what you think.

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{ 5 comments… read them below or add one }

Jay September 10, 2008 at 5:31 pm

Ohh… I like this thread already! It all depends upon the culture. If the organization supports change, promotes innovation, and has a good method of sharing knowledge, a ‘promotion from within’ isn’t an inferior approach. Who wants to work for a firm that doesn’t have advancement opportunities?

Why aren’t firms looking more closely at ‘how’ they manage their culture and institutionalize organizational behavior? Look, I realize when a firm is faced with an opportunity to seize a strategic advantage in the market, timing and entry are significant factors in the selection process. However, something is always at risk when you must go ‘outside’ to acquire talents and skills necessary to leverage the advantage.

Whether it is alliances, partners, outsourcing, or recruiting in new talent, it really boils down to fully understanding all the risks associated with changing to meet the new opportunity. Is the talent required truly outside the scope and capabilities of the current staff? Are the policies, standards, norms, cultural artifacts in support of innovation and change in general? If they aren’t, what degree of success do you expect from the new talent within this culture? Is it to be centralized, or de-centralized to minimize the impact of a rigid culture?

Where does the talent go when you don’t provide an advancement program? Brain drain is a very real concern for many industries in relation to the upcoming ‘baby boomer’ retirement phase. What are they doing to offset this ‘known’, ‘expected’ loss? Flexible employment opportunities? Mentoring programs? Knowledge base or centers of excellence groups where such information/experience can be ‘downloaded’?

How do talent attritions benefit your direct competitors? Greatly I would assume. Technology centers generally collect related pools of talent, complementary products and services within a geographical location. It is unrealistic to assume your talent loss isn’t a competitor’s gain. Sure, there are no-compete clauses and intellectual property agreements to reduce the effects of ‘sharing’ proprietary knowledge, but those do not cover tacit knowledge, reverse engineering, and cannot prevent/deny someone from obtaining a job within the related field.

Experience is a tricky subject in relation to desired talent. I once had an interview for a job where the hiring manager confided that another applicant had ‘more experience’ than I did. Great! Good for them, good for the organization. I had one question relating to his perception of ‘more experience’ though. Was vertical experience what he was looking for in the position?

You can hire someone that has years of experience pushing one of 3 buttons on a panel and be reasonably sure they will accomplish the tasks and meet expectations in relative comfort. However, you may encounter significant disadvantages when those requirements change. People who are specialized, or possess deep vertical experience are often poor candidates for cross-functional skills. Recruiting talent is an important first step in sustaining long-term competitive advantages within a firm. If you recruit too many vertically-talented people, you are enforcing a cultural rigidity that will negatively impact the organization’s ability to change quickly, adopt new competencies, or even foster innovation by questioning norms.

I like your idea on mixing up management teams! Innovation, new directions, and strategic advantages are often unsuccessful because the leaders tend to bring in ‘what worked for them in the past’. Previously existing norms, standards and management methods.

Lol… If intelligence is determined by ones ability to move in a linear process from problem to resolution as rapidly as possible, I endeavor to remain unintelligent. Let’s look at this for a second. Intelligence corresponds to reality by identifying the optimum fit between individuals and environment. It is focused on achieving desired outcomes. Intelligence is also developed from an observing expert’s prespective, which focuses on stable categories. More importantly though, intelligence depends on remembered facts and learned skills in contexts that are sometimes ‘perceived’ as novel.

Now, what about a person who functions outside of the intelligence model? One that controls reality by identifying several possible perspectives from which any situation can be viewed. Develops a process of stepping back from both perceived problems and perceived solutions to view situations as novel. A process in which meaning is given to outcomes. Actors often display traits of this by experiencing personal control by shifting their perspectives. Instead of remembered facts and learned skills, you rely upon the fluidity of knowledge and skills and recognize both advantages and disadvantages in both.

How does this all apply? Well, conformity, rigidity are traits of the intelligence model. This is where diversity within your talent pools trump ‘known’ skills and abilities in a proven, ‘stable’ environment. If both perceived problem and perceived solutions are assumptions, flexibility will allow us to draw on newly available information rather than rely on preconstructed categories that overdetermine our behaviors and actions.

This is why the ‘fresh’ perspective is desired even within the collection of subject matter experts. It introduces an entity without without knowledge of existing barriers, norms, and preconditions so that ‘outside the box’ thinking can stimulate innovation to develop strategic advantages from existing resources.

Basically, if you engineer your culture to conform to a rigid, intellectual model, you sacrifice the fluidity of innovation in exchange. So, promote from inside or recruit from outside makes little difference if the environment itself is rigid and discourages free-thinking.

Why do new senior managers leave? Probably for the same reason new talent will leave… rigid cultures that don’t support their ‘new’ perspectives. How long they last can typically be calculated in how quickly they realize ‘nothing is going to change’ and their unique, desired talent is rendered ineffective. Seems self-explanatory to me, but I could be overlooking other perspectives so I will just say that is one factor I would use to determine my own tenure.

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Jay September 18, 2008 at 2:17 pm

No comments!? I had such high hopes for this discussion… a pity it isn’t delivering on my expectations.

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David, Business Technology Roundtable September 19, 2008 at 3:40 pm

Dr. Anderson, perhaps this issue can be re-framed, before the quest for new talent is initiated.

Meaning, I believe that the process to find a solution starts with this question — am I making the absolute best use of the talent that I already have at my disposal?

My point: it would appear that too many enterprise CIOs, and an equal number IT managers at SMBs, are not utilizing their time, effort and attention to the most compelling strategic business issues at hand.

Why is this so? People who are focused on the operational treadmill rarely stop to determine if there’s an alternative approach to solve this need. Even if they have made a determination, many still do not act upon out-tasking their “utility” requirements to a managed service provider.

Granted, there are often legitimate reasons for their apparent inaction — perhaps the most common is, somewhat ironically, they can’t find the time to research and select a best-fit service provider.

This rationalization essentially ensures the perpetuation of the problem — continued dysfunctional behavior, by misguided utilization of highly skilled talent on tasks that do not require their personal attention or intellect.

One of my mentors (now retired) shared an analogy with me to drive home the key point — true leaders have control over how they choose to invest their precious time, they are not mere victims of circumstance.

He said, “a Cadillac de Ville trunk capacity is huge. You probably could carry more than 50 pounds of manure in that space. But just because you could doesn’t mean that you should. See my point?”

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Dr. Jim Anderson September 22, 2008 at 9:56 am

Oh man, two great comments. To David’s thoughts first: YES! David didn’t actually come out and say it, but he hinted at what might be a real problem in IT (and other) departments: the leader does not have good staffing skills. Not only does getting and retaining staff require time (to David’s point), but it also requires a very highly developed sense of rapport – you’ve got to make people want to stay and work hard. Unless you’ve worked at this skill, then you probably don’t have it.

Jay touched on the other side of the coin. When outsiders are brought in to any organization, how does that make existing employees feel? Generally there is a lot of resentment and thus a quick trip to Barns & Noble will reveal a 4″ long section of books offering advice to new managers on how to overcome this resentment. I truly do believe that making sure that management is a mix of insiders/outsiders is the key to ensuring that a firm has access to new ideas. What is missing here is the ongoing communication to and education of the existing staff as to why an outsider is being brought in – what do they have that the company so needs. This won’t completely solve the problem; however, it will go a long way towards smoothing the waters.

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Jay September 22, 2008 at 1:25 pm

I know there are many other ways to go about introducing an outsider into a traditional culture. One of the more popular methods I have been part of was either as a contractor, or advisor. This essentially serves two purposes: getting access to the desired talent, and creates a relationship where current employees don’t feel as threatened because the position isn’t permanent.

Based on my experience in this role, much of the pressure is reduced and more efforts can be focused on actually implementing the skills you were brought in to do. It provides the firm with an opportunity to match their own personnel with the outsider to see where the disparities are between the desired competencies, and existing competencies.

As you stated, communication and information sharing play an important part of the process. I have found it to be significantly easier to integrate into a company by openly sharing and teaching my methods to those I work with. When the time comes for the contract to be renewed, or expire, some of my most avid supporters for becoming permanent are those people who would have surely felt slighted if I had been hired in that way.

David’s point about recognizing what skillsets/talents are readily available are indeed an excellent suggestion and would minimize some of the negative impacts of acquiring the wrong resources. I also believe real leaders choose how to invest their time and those choices are what allow them to grow an organization capable of reaching strategic goals.

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