In today’s economy, it is imperative that CIOs understand what resources they have and may need in the short and long term and avoid making deep staff cuts without first considering their effects on the organization’s ability to attract and retain talent. However, a recent survey by Gartner, Inc. showed that nearly 66 percent of respondents do not currently have a formal IT workforce planning process that will enable them to leverage the opportunities presented by this downturn.
“Considering that workforce-related spending is the largest part of the IT budget, one of the primary challenges for CIOs and HR leaders for the remainder of 2009 and into 2010 will be finding ways to control labor costs while engaging and retaining the workforce,” said Lily Mok, research vice president at Gartner. “Since it will still take time for the economy to establish a new normal, the impact of this recession will continue to be felt on an organization’s bottom line, as well as on the overall job market. This could cause companies to consider making further cuts in workforce-related spending.”
According to a survey of 325 U.S.-based organizations in March of 2009, 64.1 percent of survey respondents indicated that they will put hiring on hold for the next 12 months (March 1, 2009 to February 28, 2010). In contrast, a total of 35.9 percent of respondents projected an increase in IT head count. Although some geographic markets, such as the Northeast, were seriously affected by hiring freezes and layoffs, survey respondents continue to have difficulty in finding skilled enterprise architects, database administrators, ERP programmers/analysts, project managers, Internet/Web architects and Web application programmers.
“The issue isn’t about the number of candidates available for hire, but rather their quality and skill profiles. IT professionals with skills such as Oracle, SAP, Java EE, Microsoft.NET, SOA, Java and PeopleSoft are still in high demand,” said Ms. Mok.
As expected, the survey also showed lower turnover rates across all industries. The median voluntary turnover rate with retirements dropped from 7.1 percent for the 12 month period before March 1, 2008 to 5.4 percent for the last 12 months. “One of the most significant changes in this year’s survey results is a lower percentage of respondents who cited dissatisfaction with their direct supervisor as a reason for employee turnover. There was also a notable drop in the percentage of respondents who listed noncompetitive compensation as a reason for IT professionals leaving their organizations,” said Diane Berry, managing vice president at Gartner. “These changes may be attributed to the overall weak job market, which discourages people from quitting their jobs. However, this is not the time to be complacent with a zero- or low-employee turnover rate. Employees may be willing to deal with a poor relationship with their supervisor for the time being, but as soon as the market improves they will leave.”
In a financial crisis, companies can’t reward everyone in the same way as in good times and one of the first items to be cut is the annual salary increase budget. Results from this year’s survey shows there will be an across-the-board reduction (IT and non-IT) in salary increase budgets for 2009 and 2010. The median IT salary increase budget (including 0s) for 2009 is 3 percent, a half point drop from the 2008 figure of 3.5 percent, and it will remain at 3 percent for 2010. The median 2009 salary increase budget for all other departments outside of IT dropped to 2.8 percent and is expected to move up to 3 percent in 2010.
“Economic crisis is the best time to 'stress test' the endurance and agility of an organization’s workforce practices. IT and HR leaders should learn from painful experiences of the past and make a conscious effort to not repeat the same mistakes,” said Ms. Berry. “Now is the time for CIOs and HR leaders to review and revise IT human capital management programs to ensure they can continuously attract and retain talent during and after this economic period. Make employee engagement and retention top priority because it will be the key to ensure that critical talent stays long after the economy rebounds.”
Gartner’s 2009 IT Market Compensation Study provides strategic and tactical benchmarking information for IT human capital management in the area of recruitment, retention, reward, recognition, work/life balance, career development and training programs. This study provides base salary, total cash compensation and short-term incentive/bonus data for 152 benchmark jobs that were grouped into 26 job families.
This study provides HR and IT leaders with a guide to help them craft a total rewards strategy to bring their IT organizations ahead of the curve to ride out this recession. Additional information about this report is available on Gartner’s Web site at http://www.gartner.com/hcm/human_capital.jsp.
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