Link - Workforce Planning - Handout 5

4 Executive summary

8 Portfolio planning provides workforce management options during

economic change

16 Assess your workforce’s ability to face economic uncertainty

28 Create a workforce planning portfolio that maximizes opportunity and

minimizes risk

38 Appendix: Case studies

48 Further reading

Q2 2009

Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy

Q2 2009

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Gartner Executive Programs

about GartnEr

Gartner, Inc. (nYSE: It) is the world’s leading information technology re-search and advisory company. We deliver the technology-related insight necessary for our clients to make the right decisions, every day. From CIos and senior It leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, we are the indispensable partner to 60,000 clients in 10,000 distinct organizations. through the resources of Gartner research, Gartner Executive Programs, Gartner Consult-ing and Gartner Events, we work with every client to research, analyze and interpret the business of It within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, u.S.a., and has 4,000 associates, including 1,200 research analysts and consultants in 80 countries.

For more information, e-mail [email protected] or visit gartner.com.

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Should this be Q2 2009?

1Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy 1Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy

Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy

Q2 2009

rEPorT For hr ProFESSionalS

2 Gartner Q2 2009

Creating workforce plans that are evergreen, or sustainable

through economic ups and downs, requires a new approach.

instead of locking into projections that could be knocked off

course by economic turbulence, the savvy planner prepares

for a range of possible futures to be ready to take advantage

of the opportunities that each has to offer.

ForEWord

3Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy

This report addresses the question, How can IT leaders create plans that sustain a high-performance workforce across economic cycles?

“Fasten Your Seatbelts: Workforce Planning for a Turbulent Economy” was written by members of the Gartner Cio research team, led by andrew Walker (research director), assisted by diane Berry (man-aging vice president).

We would like to thank the many organizations and individuals that generously contributed their insights and experiences to the research, including:

• Thecontributorstoourinterviewsandcasestudies.

• OtherGartnercolleagues:JimLewandowski,BillLink,AlessandroMisitiandDavidPack.

• OthermembersoftheCIOresearchteam.

Portfolio planning provides workforce management options during economic change a workforce portfolio planning approach compares and contrasts workforce strategies and how to implement them in economic and other contexts. it is a way for iT leaders to mitigate radical shifts by pre-identifying competing priorities and determining what resources need to be sourced and devel-oped. a workforce portfolio planning approach makes such shift in direction less painful and builds strength in response to economic change.

iT workforce planners need to recognize changing directions in iT by providing a range or portfolio of options for bringing out the best in talented people who know the organization and how to get things done. This portfolio is the core, differentiated skills mix essential to the business in all economic circum-stances.

Becoming a market leader involves not only continuous recognition of the assets the workforce pro-vides to the business but also the ability to adapt and to create new solutions. This means recruiting and retaining people with aptitude and versatility (known as “versatilists”), and continuously enabling them to adapt. The multiple benefits of this approach range from value propositions that support corpo-rate performance and stability to the flexibility that results from employee retention.

To address the challenges of workforce composition and talent procurement, workforce planning ap-proaches are becoming more rigorous. intuitive approaches that are unrecorded and lack consensus among decision makers fail the iT organization in times of uncertainty. Traditional approaches, though more formal, are rarely scrutinized, giving rise to belated questions that jeopardize plan implementation and breed cynicism about the process.

a portfolio approach to workforce planning requires that interested parties review possible scenarios and create a portfolio of workforce strategies that can be adapted to different circumstances. The best approaches are practical and inspire commitment.

This report proposes an approach to steering the workforce

through economic turbulence. it takes a proactive stance

by recommending that workforce planners assess business

context and plan workforce capabilities that can adapt to

multiple scenarios.

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exeCuTIvesuMMAry


a workforce portfolio plan encompasses three main components:

• Future resource requirements, including skills and proficiencies

• Commitmenttoaninvestment in people, so that future requirements will be met

• Sourcing possibilities, since not all the workforce requirements need to be met through internal staffing

When framing workforce plans, the most frequently asked questions concern financial resources and timing: how much money do we have? how far ahead are we looking?

in down times, process improvement and consolidation strategies create increased efficiency. Process improvement drives cross-functional restructuring and usually greater matrix-type reporting. Consolida-tion often drives centralization.

in preparing for an upturn, the focus shifts to agility and distributive strategies that enable iT profession-als to contribute to growth and innovation. agility stems from a flexible workforce with high skill breadth but often only intermediate skill depth. a distributive strategy requires more cutting-edge, pioneering abilities.

Assess your workforce’s ability to face economic uncertaintyTo prepare for economic change, include a contextual analysis of the workforce as part of any strategic planning exercise. Start with a review of STEEP (social, technological, economic, environmental and political) factors to gain perspective on how circumstances could impact the workforce.

Based on the most compelling external factors, the next step is to identify workforce opportunities and threats—the oT in SWoT analysis. Then conduct an internal strengths and weaknesses analysis to determine the iT organization’s ability to respond to external factors and achieve goals. Ultimately, this assessment component serves as the foundation for the scenarios in the workforce portfolio plan.

another critical component of workforce portfolio planning is to analyze a range of what-if scenarios. This iterative process leads to better understanding of enterprise direction and vulnerability, and the implications for the workforce. Consider intuitive what-ifs generated by the strategic planning process first. later, apply more analytical what-if questions.

iT professionals and their leaders are accustomed to continuous change and flexibility, but how they adapt to economic shifts will depend on their ability to foresee and develop agile responses to new and uncertain scenarios. anticipate change by encouraging more innovation and continuous improvement. Makeadaptabilityaworkforcegoalthatunderpinstheotherstrengthsneededtocreateaworkforceeffective in any economic climate.

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6 Gartner Q2 2009

Use SWoT to forecast workforce resource requirements by skill, proficiency and duration. Strengths are areas that are already well established. internal weaknesses are areas that have yet to receive proper attention. Opportunities are external areas that in the future may favorably change the direction of the business. External threats are areas that could damage the business, and mitigating them carries risks as well.

after conducting SWoT analysis, allocate funds to create a workforce that can respond to multiple scenarios. higher funding means accelerated building of agility. do not merely allocate funds effectively; also follow through and spend appropriately.

While all of this analytical input is time-consuming, it leads to better decision making that avoids the error of hiring people one day only to institute a riF (reduction in force) the next.

Create a workforce planning portfolio that maximizes opportunity and minimizes riskThe planning stage of managing the workforce through economic change should inspire and coordinate action. Talent—defined as breadth and depth of skills—is the essential ingredient for success during both up and down times. Talent management hinges on being able to reward appropriately and create career as well as learning opportunities.

To compete successfully for talent, iT organizations need to look for and develop new skills for new tasks, skill breadth and skill depth. Talent may have to come from multiple sourcing channels, including contractors if FTE hiring is frozen.

during downturns, invest in preparing people for career growth. Career development can help stretch individuals to aspire to higher performance standards. Use incentives as performance and retention tools, but design and understand them completely before implementation.

during upturns, invest in continuous learning and cross-training. Scenarios to address in the workforce portfolio plan include protecting core skills—not so much from competitors but from the seemingly inevitable cuts that a downturn entails.

exeCuTIvesuMMAry


agility and interchangeability (the result of initiatives such as job rotation, task forces, cross-training, and multiple and varied project assignments), along with breadth of responsibility, allow an employer to deploy people as needed against changing priorities. Specialists are less likely to thrive in tough times, so they should be made aware of the need for them to grow their skill base. Performance recognition lessens with flattened merit increases and incentives. learning opportunities are more easily funded in an upturn, so that is when to address them. Waiting for a recession is unwise because resources are likely to be exhausted by then.

Take action early to protect skills. Create learning assignments that deliver outputs as well as learning opportunities, and invest in agility so that the deployment of people matches organizational need. in ad-dition, procure hot skills as they become more readily available.

Taking advantage of the opportunities that economic cycles bring requires more than reacting to ser-endipity. it involves creating opportunity readiness, especially in iT, which is not always perceived as a direct generator of business growth.

To ensure access to the best talent in times of scarcity and adversity, deploy evergreen talent manage-ment techniques that keep an eye on both current and future needs. having talent with the right poten-tial may not be enough. Create ways for talented people to work collaboratively, and help them contrib-ute to a high-performance workplace using social networking technologies that emphasize outputs, not attendance. Virtual teamwork is a proven means to raise standards and build employee loyalty.

Creating workforce management options during economic change Traditional workforce management often assumes forecasting an extrapolation of the prevailing eco-nomic cycle for workforce planning. a workforce portfolio planning approach compares and contrasts workforce strategies and how to implement them in different contexts—the economic environment being one of the most important. Workforce planning can be like trying to set a budget that impacts people’s lives even when the world is experiencing significant change. as new information about the environment and about performance arrives, the budget inevitably adjusts up and down to support shifting priorities.

With a workforce planning portfolio approach, iT leaders can mitigate radical shifts by pre-identifying competing priorities and determining the resources to source and develop. doing so makes a shift in enterprise direction less painful and builds a stronger response to economic change.

1 POrTfOLIOPLAnnInGPrOvIDeswOrkfOrCeMAnAGeMenTOPTIOnsDurInGeCOnOMICChAnGe

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Economic cycles, both up and down, stimulate new demand for information and automation. An approach to workforce management that ensures availability of the right talent will sustain success through economic turbulence.


although changes in global economic activity impact demand for some types of iT workers, scarce talent remains so despite economic ups and downs. The contextual landscape for enterprises is in perpetual flux, and the service-based economy continuously stimulates reprioritization because of globalization, business/technology integration and technological change. in the quest for the efficien-cies that result from cost reductions and new practices, electronically enabled processes will take over. Moreover,businessexpansionthroughnewandenhancedserviceswillincreasinglyrelyonsystemsthat transform ideas into practical everyday solutions.

iT workforce planners need to address changing directions in iT by providing a range or portfolio of options that bring out the best in talented people who know the organization and how to get things done. This portfolio is the core, differentiated skills mix essential to the business in all economic circum-stances.

Becoming a market leader involves not only continuous recognition of the assets the workforce pro-vides to the business but also the ability to adapt and to create new solutions. This means recruiting and retaining people with aptitude and versatility (known as “versatilists”), and continuously enabling them to adapt. The multiple benefits of this approach range from value propositions that support corpo-rate performance and stability to the flexibility that results from employee retention.

Changes in formal workforce planning

Traditional workforce planning

• Extrapolation approach to replacement planning

• Assumes scarce skills will remain hard to fill tomorrow

• Assumes today’s jobs will be similar to tomorrow’s

• Changes in workforce are filled as vacancies are approved

Portfolio approach to workforce planning

• Scenario planning creates options for changing economic conditions

• Flexibility is fulfilled short-term by external suppliers

• Labor supply changes create long-term opportunities

• Changes in workforce mix require early planning

“our general approach is in the plan. it is a balance of long term and short term. if you have a robust, thorough and broad plan—with some of it short term and some long term—i think that’s okay. i think

the issue is when you don’t have a plan, and you get caught without having a strategy.”

senIOrvICePresIDenT,BusInesssysTeMs

MediaCompany

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Global economic impacts

Global prosperity• Positive GDP growth • Consumer optimism

Leads to… • Price/pay inflation• Increasing labor demand• Changes in skill availability

Global recession• Negative GDP growth • Consumer pessimism

Leads to…• Price/pay stability/deflation• Decreasing labor demand• Changes in skill availability

Difficult-to-hire positions remain a challenge across economic cyclesacross all economic cycles, a critical outcome of workforce planning will be to ensure that scarce tal-ent can be found when needed. Cios report that finding the right combination and proficiency of skills among iT professionals is a challenge regardless of economic trends. although the number of available candidates may grow during a downturn, the desired skill level can remain elusive. For the hardest-to-find skills, this means planning more time for recruitment and using sourcing alternatives, including contracting out and growing people internally.

decisions will also have to be made about inevitable pay anomalies, whether they arise from paying sal-ary premiums, offering premium skill bonuses or even retention bonuses. in addition, the benefits pack-age may need to be adapted to age groups with a greater desire for career development—for example, by introducing well-supported educational reimbursements and time off for education. With skills that grow in availability, the challenge is to find the candidate with the right fit in a vast, hard-to-manage population. a more specific definition of “the right fit” will make such decision making manageable.


Position

Database administrator

Enterprise architect

Project manager

Network engineer

ERP programmer/analyst

Business analyst

Web application programmer

Security analyst

Internet/Web systems administrator

Network architect

2005 responses (N = 105)

44.8%

*

55.2%

43.8%

30.5%

*

46.7%

45.7%

33.3%

33.3%


42.1%

39.7%

50.4%

39.7%

30.6%

32.2%

34.7%

31.4%

31.4%

34.7%


49.7%

37.1%

45.0%

37.7%

31.8%

35.1%

40.4%

30.5%

31.1%

31.1%


45.0%

41.1%

46.0%

40.1%

31.7%

40.1%

34.7%

32.7%

25.2%

33.7%


48.7%

42.4%

39.3%

38.2%

34.6%

34.0%

31.4%

30.9%

28.8%

28.8%

Trends in difficult-to-hire positions

*Position not surveyed in a particular yearNote: Five-point scale used, ranging from 1 (not at all difficult) to 5 (extremely difficult). Responses above reflect the percentage of respondents reporting a range of 3 (moderately difficult) to 5 (extremely difficult).

Source: Gartner IT Market Compensation Study. Based on U.S. data only.

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Workforce plans vary with context, but a portfolio approach is bestaddressing the challenges of workforce composition and talent procurement demands a rigorous work-force planning approach. at many enterprises, workforce planning approaches, if they exist at all, are of the back-of-the-envelope variety. The workgroup manager jots down ideas about how the group will adapt to unfilled vacancies, new skill requirements and changes in the sourcing of work. Unfortunately, in a consensus-based environment, this approach can backfire when it comes to making decisions.

The traditional approach is more formal, with the theoretical advantage that it is documented and thus can be used to build consensus among decision makers, perhaps even gaining their written approval. in practice, however, workforce plans are rarely reviewed with the scrutiny given to budgets and capital expenditure proposals. as a result, when such plans need implementation, belated questions arise about candidates’ feasibility, and delays occur while the proposals are revisited. This breeds cynicism among those who have diligently completed their workforce plans as part of the annual planning process.

in contrast, a portfolio approach to workforce planning requires that interested parties review possible scenarios—in other words, a portfolio of workforce strategies adapted to different circumstances. The parties share opinions on how each set of circumstances would affect the workforce. Scenario design takes a more collaborative, blank-sheet approach than the form-filling, structured extrapolation used in traditional planning. Each scenario and the plans that align with it help the enterprise adapt as circum-stances dictate.

Intuitive• IT leaders know their people • Ideas on sources and who

might move/replace others, but no formal records exist

• No comparison of ideas or analysis performed

Portfolio• Workforce scenarios/alternative

plans with differing assumptions on: – Mixes of work/skills – Comparative head count and

budget projections – Sourcing opportunities

Traditional• IT leaders build consensus on

people plans• Formal proposals on sources

and people for moves/replacements • Implementation is often reactive

to vacancies

IntuitiveInformal; used mostly by small IT shops; lacks consensus to endorse talent moves

TraditionalFormal; used by larger IT shops with stability; few organizations can be sure to continue to enjoy such conditions

PortfolioFormal; used by world-class, medium-to-large IT shops with high vulnerability in times of uncertainty; becoming more compelling to all in trying and changing times

The new approach to workforce planning


a workforce portfolio plan encompasses three main components:

• Future resource requirements, including skills and proficiencies

• Commitmenttoaninvestment in people, so that future requirements will be met

• Sourcing possibilities, since not all workforce requirements need to be met through internal staffing

When alternative sources are considered, a pipeline approach to talent development works best. Con-tractors, for example, are used to cover vacancies when talent is scarce. They remain a good source in downturns, when positions are easier to fill but the capacity to offer long-term employment is unclear. a contracting arrangement works because both parties expect no more than a temporary relationship. Mostlayoffscouldbeavoidedthroughsourcingdecisionslikethis,whichcanbeadaptedonshortnotice to fit multiple scenarios.

Workforce portfolio planning is a combination of scenario-based assessments and plans

Resource projections:

Matching business/IT outputs and workforce requirements/availability

Investments in people:

Prepares people for structural, skill and role scenarios

Sourcing possibilities:

Situational-based options for sourcing

Workforce portfolio planning helps lessen the possibility that IT leaders may miss the opportunities that economic cycles bring and that can be catalysts for desirable change.

Workforce portfolio planning improves economic resilience

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Workforce portfolio strategies incorporate flexible best practicesWhen framing workforce plans, the most frequently asked questions concern financial resources and timing: how much money do we have? how far ahead are we looking?”

When finances are tight and action must be taken quickly to protect a vulnerable business, a consolida-tion strategy is often considered vital. Common in economic recession, this strategy helps people work more broadly so that they can apply a wider range of skills on a highly prioritized, efficient basis. Cen-tralized organizational structures with resource pools and centers of excellence are the norm in such a context, and agility is worth investing in for future needs.

organizational agility results from expansion and enhancement of skills, making individuals more pro-ductive across both iT functions and business areas. This stimulates demand for people and requires investmentinordertogetthroughtheinevitablelearningcurvesofskillsacquisition.Jobrotationandcross-training are common ways to develop agility. When financial resources are greater in the short term, significant investment in process improvement can lead to a more streamlined organizational design, usually accompanied by upgraded iT systems. Cross-training opportunities may be part of the solution.

in the long term, a distributive strategy that supports innovation and entrepreneurialism—involving potentially greater returns but higher risk—can be better for stimulating business growth. Financial re-sources will be needed to develop more depth of skill.

High

Financialresources

Low

Short term Time-frame focus Long term

Process improvement Look for and invest in opportunities to get existing work done more efficiently

Distributive strategy to create growth Develop, source and reward increased capability/skill depth to take on new value-creating work

Survival through consolidation Review work structure so that essential work can be done with fewer people

Agility through breadth of skills Do more with less by building a flexible workforce with emphasis on breadth over depth of skill

Portfolio strategies according to time frame and financial resources


Enterprises that can adapt their workforce strategies to the times and deploy evergreen best practices that build resilience for both upturns and downturns remain strong through changing economic cycles. Such practices may require changes in structure and culture as priorities shift. Process improvement, consolidation, agility and distributive strategies are commonly used by the case study interviewees to determine which best practices to deploy and when to do so.

in preparing for down times, process improvement and consolidation strategies are essential for in-creasing efficiency. Process improvement drives cross-functional restructuring and usually greater matrix-type reporting. Consolidation often drives centralization.

in preparing for an upturn, the focus shifts to agility and distributive strategies that enable iT profession-als to contribute to growth and innovation. These strategies often fuel a less-formal culture and lead to decentralized and virtual structures. agility stems from a flexible workforce with high skill breadth but often only intermediate skill depth and can be obtained through resource pooling and well-designed processes. a distributive strategy requires cutting-edge, pioneering abilities for penetrating new markets and for creating products and technologies that challenge the status quo.

Adapting to economic change brings structural and behavioral change

Downturn strategies

Consolidation• Centralized restructuring • Regional centers• Core skill building• Direct report leadership • Centralized accountability

Process improvement• Re-engineering• Cross-functional training• Work elimination• Clarified accountabilities• Reduced duplication

Upturn strategies

Distributive strategy• Innovation• Entrepreneurialism• Virtual teams• R&D focus• Matrix structures

Agillity• Flexible behaviors• Skill interchangeability• Knowledge transfer• Shared ownership• Multiple sourcing• Process focus

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2 AssessyOurwOrkfOrCe’sABILITyTOfACeeCOnOMICunCerTAInTy

Assess the workforce’s requirements and capabilities To prepare for the inevitable slowdowns, corrections, blips and bubbles of economic change, it helps to make a contextual analysis of the workforce part of any strategic planning exercise. Start with an analy-sis that can be used to assess the opportunities and threats of the outside world. a good approach to such an external analysis is to base it on what is known about or expected from the selected factors. Then focus on selections from the initial scan, which involves a review of the STEEP (social, technologi-cal, economic, environmental and political) factors that impact workforce plans.

although analysis of these factors should be part of the corporate strategic planning process, many enterprises do not perform one and those that do may not share it with the Cio. in either case, this analysis must be conducted by the iT leadership team, and if done properly it will result in a thoughtful perspective on how circumstances might change and how this could impact the workforce.

Based on the most compelling external factors, the next step is to identify workforce opportunities and threats—the oT in SWoT analysis. Then conduct an internal strengths and weaknesses analysis to determine the iT organization’s ability to respond to external factors and achieve goals.

a SWoT analysis reveals capability gaps and drives tactical decisions about career moves and cover-ing of vacancies. it will also show where unique core skills that support enterprise differentiation lie and how vulnerable they are to changing circumstances. Such an analysis should include an assessment of fluctuations in financial resources. Ultimately, this assessment component serves as the foundation of the scenarios for the workforce portfolio plan.

Economic cycles, both up and down, stimulate demand for information and automation. In downturns, the quest for effi-ciency increases the need for automation, while upturns gen-erate new uses for information. The workforce that acquires and retains the core differentiated skills and competencies that the business relies on will be relevant across radically shifting economic cycles.


Using STEEP factors, build scenarios that represent changing business contexts. Brainstorm the fac-tors that fit each box in the tool below. Then weight them for probability and impact on both the busi-ness and workforce. next, write what-if stories based on the factors. review the scenarios as a leader-ship team and agree on priorities for creating workforce

“You prioritize your systems and your functions, and assess your environment. if people get displaced, you’ve got to create a path to get them where you need them in the organization.”

Cio

State Government

1. Analyze the STEEP factors that impact workforce plans

2. Assess the opportunities/threats of economic change

3. Conduct workforce strengths and weaknesses analysis

4. Incorporate four-lever analysis into the people review

Portfolio planning analysis

Economic upturns

Economic downturns

Social factors

Technological factors

Economic factors

Environmental factors

Political factors

Consider trends against each STEEP factor. For each trend, consider possible outcomes and financial, regulatory and workforce implications for the business and its competitors.

While the focus of this report is on economic factors and how they impact workforce planning, for workforce planning all five factors will require analysis.

Create three to five mutually exclusive what-if scenarios that reflect probable vs. possible and best- vs. worst-case scenarios that range from extrapolation from the present to significantly different scenarios. Consider the implications of each for workforce planning.

Tool: STEEP analysis

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Assess your readiness for a changing economyin response to changes in STEEP factors, consider the internal strengths and weaknesses with which iT addresses external change and business issues. This analysis will have implications for workforce requirements.

a list of common economic readiness questions is provided below. add questions specific to your enterprise and keep the answers up to date so that you can adjust direction more readily. Get input from different levels, age groups and other populations of the workforce in order to share perceptions of trends and generate internal response capability.

iT professionals and their leaders are accustomed to continuous change and flexibility, but how they adapt to economic shifts will depend on their ability to foresee and develop agile responses to new and uncertain scenarios. anticipate change by encouraging more innovation and continuous improvement.

an hr director and an executive director of financial planning and hr for a U.S. educational institution were among those interviewed for this report. The institution, which has 600 employees and annual rev-enue of $5 billion, faced an uncertain future as the recession hit, with the impact on student numbers remaining to be seen. This necessitated a more frugal approach to cost management while building on existing strengths. a recognized employer of choice, the institution already had much in place to ensure a high-performance workforce positioned to drive further efficiency. doing so would involve sustaining an open culture that recognizes desired behaviors and outstanding results (see the case study on page

Upturns

Downturns

Are you ready for the ups and downs of economic change?

Do you have …

A culture of innovation and high performance?

Performance recognition systems?

Efficient processes?

Core skills and talent?

Open communication? Clear accountability?

Assess readiness for the next economic cycle


Workforce management strategies

Communications

Development opportunities

Performance management

Reward and recognition

Strengths assessment

The means to create trust in leadership: open communication, right up to the CIO; town and team meetings; emphasis on social events to break down barriers and create camaraderie across all levels

Continuous learning opportunities, from informal lunch-and-learn sessions to educational qualifications;, increased emphasis on softer and business skills

Performance planning, followed through with regular informal feedback so that no surprises occur at formal reviews; coaching is the norm; 360-degree feedback has been piloted in other work areas and may come to IT

As budgetary restrictions result in fewer rewards, recognition (already important) is recognized as essential, too, with the goal is of retaining people even if skills are more readily available

Assessing strengths in preparation for uncertainty

38 in the appendix). Workforce portfolio planning can be used to jump-start the task of building a work-force with this kind of economic sustainability—a workforce valuable to the enterprise despite external pressures. To identify the strengths needed, assess the major impact areas of communications, devel-opment opportunities, performance management, and rewards and recognition.

SWOT analysis and workforce implicationsCommonly used in marketing plans, SWoT analysis tools are equally useful for preparing best- and worst-case workforce scenarios that address different economic conditions. They can also be used to create workforce portfolio plans and assess life-cycle management of the workforce. in iT, many factors influence life cycles, but technology is obviously a factor of primary importance.

answers to the SWoT questions below can be used to forecast workforce resource requirements by skill, proficiency and duration. Check that these predictions dovetail with business and technol-ogy plans, and with the STEEP analysis. Strengths are areas that are already well established. internal weaknesses are areas that have yet to receive proper attention. Opportunities are external areas that in the future may favorably change the business direction and the balance of resources. External threats are areas that could damage the business, and mitigating them carries risks as well.

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When building a workforce planning portfolio, assess financial resource implicationsirrespective of economic cycles, yet commonly because of them, the business must determine how much funding is available for workforce management. after conducting SWoT analysis, allocate funds to create a workforce that can respond to multiple scenarios. of course, with higher funding, more can be done, and the odds of fulfilling the long-term vision of the business improve.

higher funding means accelerated building of the agility needed to protect and grow the business. do not merely allocate funds effectively; also follow through and spend appropriately. all too often, for example, Cios allocate funds for training that never occurs. That money becomes expropriated in good times, while in lean times the finance department may simply cut it from the budget, arguing that it would support nonessential activities.

StrengthsWhat resource requirements are well covered internally? What investments can be made now in IT professionals?What current work is best sourced internally?

WeaknessesWhat resource requirements are poorly covered internally?What investments in IT professionals are too resource-intensive?What current work is best sourced externally?

OpportunitiesWhat new resource requirements exist?What investments can be made to meet future IT needs? What future work is best sourced internally?

ThreatsWhat new resources are underfilled or unavailable?What investments are not worthwhile?What future work is best sourced externally?

Tool: SWOT analysis


Tight funding$

Adequate funding$$

Superior funding$$$

• Minimize contractor usage and encourage flexibility, shared knowledge and responsibility• Use natural attrition to reduce staffing• Replace training with lower-cost options but do not stop learning• Substitute recognition for rewards

• Expand capability through selectively hiring depth of skills to drive new initiatives• Expand learning opportunities using education• Use a balance of rewards and recognition• Use time as a reward where dollars won’t stretch

• Expand through contractors but remain conservative with head count• Expand geographical and cultural capability through increased travel and broader

cultural exposure• Increase incentive opportunities while rewarding for retention• Provide work/family benefits that allow employees to improve work/life quality

Assess financial impacts on the workforce

While all of this analytical input is time consuming, it leads to better decision making that avoids the error of hiring people one day only to institute a riF (reduction in force) the next. heavy investment in preparing for economic uncertainty—sustaining an entrepreneurial culture while facing economic slow-down, for example—helps ensure success.

This has been the case for the SVP business operations at the European division of a fast-growth global media company. The 25-year-old firm has $3 billion in revenue, a strong entrepreneurial culture and 5,000 employees, 300 of which are in iT. it has used few contractors and outsourcers in the past, but an outcome of workforce assessment has been to increase external sourcing in order to gain scale and agility.

To protect breadth of skills in the face of attrition, the iT group has taken a strategic view on retention and redeployment of staff. Continuous assessment and scenario-type planning has enabled rapid reac-tion to economic change. as a result, resources needed to preserve an entrepreneurial culture persist despite cost pressures (see the case study on page 39 in the appendix).

22 Gartner Q2 2009


A four-lever, balanced approach to IT scenario planningThe media company profiled in the appendix uses a four-lever approach to iT scenario planning, plac-ing people and processes alongside technology and services to give a full perspective of iT capability. as you plan for workforce management through changing economic cycles, use the tool below to answer questions that arise when considering scenarios. The four levers should be taken in order. Bear in mind that they are integrated. Start by involving the business in an iT services analysis—what comes, stays and goes based on the desired cost profile.

review the technology profile and the pace at which it will change. decide what processes need to be changed or re-assessed and determine budgetary implications. all of these decisions will affect the mix of people required for the scenarios that emanate from the four-lever approach. how to get the right mix will be the focus of people planning.

Business stage (can be overlapping)

Business as usual (survival)

Preparing for growth and new opportunities

In expansion mode

Workforce impacts

• Focus on process efficiency, consolidation and agility• Continuous improvement while delivering services, with

recognition and positive feedback substituting for rewards

• Focus on technology design, development and enhancement of new business solutions

• Skills growth and career opportunities; performance rewards

• Emphasize retaining, growing and finding scarce skills through incentives, development and work/life benefits

Using portfolio assessment to sustain workforce capability through economic change


Lever for cost management

1. IT services

2. State of technology

3. IT process

4. People

Strengths assessment

• What services does IT offer?• What must be sustained and what can be cut?

• How can technology be simplified?• What applications are no longer needed?

• How can processes be simplified?• What processes should be reviewed?

• What are the risks of reductions in force?• Where is investment most needed?• What is the minimum staffing level?

Tool: Four levers of scenario planning

Analyze what-if scenarios to create a portfolio of possible responses analysis of what-if scenarios is a critical component of workforce portfolio planning that leads to an assessment of the appropriate direction and the vulnerability of the enterprise to changing factors. The scenarios can then be reviewed for workforce implications.

Planning becomes an iterative process as multiple possibilities are consolidated. initially, consider intui-tive what-ifs generated from the business’s strategic plans; then apply a more analytical set of what-if questions. if too many issues seem to arise, the management team may find it helpful to weight each issue based on probability and degree of risk, merging those of a similar nature.

as a general example, consider a 1% probability of flooding, which may be seen as such a remote risk that it is not worth including. however, if the potential impact of that 1% probability of risk would dev-astate the business, a contingency plan should be created. remember that economic change can be regional as well as global, with heavy impact on the labor supply, so include local economic changes in what-if scenarios and plans. With experience, this process becomes easier, exposing vulnerabilities for which contingencies are hard to find. The plans drive risk mitigation that strengthens the organization’s ability to deal with both adversity and opportunity. They also lead to questioning of long-held assump-tions that may not be valid.

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once the answers to a range of what-if questions have been compared, they can be contrasted in scenario format. The toughest challenges of economic downturns are those the enterprise has not pre-pared for. They occur because the significance of the downturn’s impact goes beyond both expecta-tions and the enterprise’s response capability. informal scenario planning can show others what options exist, depending, for example, on the funding provided by a federal government stimulus.

in this vein, the Cio for a U.S. state government describes a highly decentralized structure that had worked well in times of high revenue, but the downturn was pressuring the $800 million iT budget. as funding for iT was decentralized, each state agency decided for itself what to spend on iT, yet one agency had already cut iT costs by nearly 50%.

in this situation, the challenges stemmed from state revenues facing unprecedented reductions in business and employment taxes as demand for programs such as unemployment compensation were rising. The Cio reviewed cost-reduction options after accepting the need to act within constraints imposed by a unionized state government. To build consensus and plan for uncertainty, the scenarios allowed objective justification and enabled each state decision maker to choose the right course for a particular set of circumstances (see the case study on page 41 in the appendix).

What if ...

The law changes

Terrorist/pirate attack?

Adverse weather hits?

Banks freeze credit?

Competitors infiltrate our markets?

Then ...

High

Impact

Low

Low Probability High

Createcontingencyplans

Reviewscenarioplans

Monitor risk

Be preparedto mitigaterisk

What-if questions and analysis

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Degree of radical response

Scenarios

Scenario 1Federal stimulus creates greater opportunities through infrastructure investment

Workforce implications

• More jobs• Learning opportunities• Superior rewards• Career growth• High security

Scenario 2Redistribution of funding ensures that critical services/investments continue

Workforce implications

• Process redesign (gradual job reductions)

• Learning to stay current• Competitive rewards• Career preparation• Comparative security

Scenario 3Revenue fails to keep up with expenditure, resulting in drastic cuts

Workforce implications• Consolidation of work• Learning by doing• Pay frozen/potential cuts• Careers stilted• Low security

Using what-if scenarios for planning

The outcome of such an analysis is that workforce planners will gain confidence in their ability to ad-dress issues that an uncertain environment and economic change bring. The scenarios can be pre-sented as stories or bullet point analyses.

including such scenarios in the iT plan covers the different implications of workforce portfolio planning. The next task is to devise workforce planning strategies. These should address areas of vulnerability and build organizational strength, while providing ways to adapt to changing circumstances.

Examples of scenarios• Do nothing or business as usual. What are the implications and how realistic or desirable is

such a strategy?

• Implosion.Makesignificantchangesthatprotectonlythecorebusiness.howpracticaland feasible is such a strategy?

• Phoenix. a rising-from-the-ashes scenario that assumes survival is at stake but that something can be salvaged to create a new future.

• Polish the apple. Prepare for new alliances, a takeover or becoming another enterprise’s acquisition. What degree of control is desirable and how will it be retained?

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3 CreATeAwOrkfOrCePLAnnInGPOrTfOLIOThATMAxIMIzes OPPOrTunITyAnDMInIMIzesrIsk

The planning stage of managing the workforce through economic change should inspire and coordinate action.

Plan for economic uncertainty in Chinese, the word for crisis consists of symbols that mean both danger and opportunity (see figure below). This reminds us that possibilities both negative (risks and costs) and positive (opportunities and benefits) arise in crisis. Good planning and follow-up can be used to balance control, increasing the probability of coming out of the crisis stronger (opportunities and benefits) while mitigating negative ef-fects (risks and costs).

The Chinese symbols for “danger” plus “opportunity” imply more, however, than a literal translation of “crisis.” The underlying message is that an impetus for change has been reached and that change drives both preventive and opportunistic actions. The combination of danger and opportunity can spur thinking about risk tolerance: how much risk mitigation is required both to survive and to take advan-tage of opportunities?

Crisis

Danger? Opportunity?

The symbols for crisis in Chinese consist of two words, pronounced wei ji. Wei means danger and ji means opportunity. So literally, wei plus ji equals crisis—an alert that change must be expected. See a critical interpretation of this translation at: http://www.pinyin.info/chinese/crisis.html

Chinese symbols for initiating change


Create a workforce portfolio plan to take advantage of shifting economic opportunitiesManyITleadersaskhowtheycanrecognizeeconomicchangeinatimelyenoughmannertotakepreventive action. Even expert analysts can be slow at recognizing trends before they do damage or at exploiting trends that carry opportunity. in workforce planning, there are a number of opportunity indica-tors. look for changes in customer behavior and skills demand, up and down movement in labor costs and changing trends in labor turnover. Such economic shifts can create opportunities to rectify gaps in workforce demand and supply.

For example, as new business stimulates contributions from iT, additional skills may be required. With economic change, the cost of continuing to run outdated systems may no longer be justified, but those displacedmayneedreskillingtoremainproductive.Moreover,newopportunitiesdonotnecessarilyrequire full commitment to hiring. an alternative, at least initially, is to bring in contractors.

“What we’re seeing is an opportunity—and i keep telling people, ‘never let a perfectly good crisis goes to waste. This is a wonderful opportunity for us.’ and opportunity manifests itself in a lot of

different ways.”

AssOCIATeInsPeCTOrGenerALfOrMIssIOnsuPPOrT

Federal agency

Opportunities include:

• Filling long-unfilled skill gaps

• New business that requires IT input

• Replacing costly outdated systems

• Hiring contractors

• Reducing voluntary turnover

Economic shifts:

• Changing customer priorities

• New trends in skills availability

• Shifts in labor costs

• Changes in labor turnover trends

Examples of opportunities in response to economic shifts

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Build opportunity-ready capabilities to respond to economic ups and downs Taking advantage of the opportunities that economic cycles bring requires more than reacting to ser-endipity. it involves creating opportunity readiness, especially in iT, which is not always perceived as a direct generator of business growth. opportunity readiness comprises six steps:

• Clarifytheopportunitiestolookforandhowtheyimpactcandidaterequirements.

• TrainITmanagerstocreateacommonunderstandingofhowITcancontributetothenextwaveof business opportunity. also, train them to assess the potential of iT candidates, realizing that this may require consensus beyond the direct manager.

• reviewthemixofrequirementsthatputtherightmultisourcedworkforceinplacetorespondtoopportunity. look for candidates with aptitude in new technologies and assess what they can do for the business.

• hiretomorerigorousstandards.Lookforpotential—theabilitytotakeonbroaderresponsibilities—rather than taking the traditional approach of filling current job requirements.

• useobjectiveselectiontechniquestobringinthebesttalent,whetherascontractorsorfTes.Explore candidate interests and aptitude. Focus on those with breadth and depth of skills, and with aptitude to grow alongside future opportunities.

• haverecruitmentpartners(specificskillsuppliers)whocanhelpbuildopportunity-readycapabilityby alerting hiring managers to talented candidates coming into the market.


Building capabilit

y to be re

ady and cre

dible for in

vestm

ent and w

ork

Creating opportunity readiness

Being in the right place at the right time in order to gain investment is not serendipitous but the fruit of building high opportunity-readiness standards

Opportunity-ready capability

Review selection/sourcing approaches

Define higher standards

Build workforce/sourcing/planning capability

Determine the continuing contribution of IT

Plan requirements

Create opportunity-readiness capability

30 Gartner Q2 2009


Organizational needs

Succession capability

Superior performance

Capability

Agility

Organizational needs

Career development

Reward, recognition, job security

Skill development

Work/life balance

Aligning organizational needs with individual aspirations that transcend economic change

To develop opportunity readiness, the Cio and deputy Cio at a scientific and energy research institu-tion in the U.S. government began by discussing the impact of the changes in the economy. nearly 100 of the institution’s 1,500 employees are in iT, and another 20 are iT contractors. The 2008 budget was $300 million and will probably increase in 2009 with expected growth of 20%. Growth opportunities stem from alignment between the institution’s scientific research and areas of investment in the Presi-dent obama’s agenda.

These executives have found opportunities in all economic cycles by always being prepared to provide ideas for new requirements and demonstrate the relevance of iT to future plans. aside from creating the capability to work with new technologies, they paid attention to workforce and sourcing planning, which led to more effective sourcing and improved resource allocation systems. as a result, standards of selection rose, as did selection criteria (see the case study on page 43 in the appendix).

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Evergreen talent management practices are those that can be deployed across economic cycles. To ensure access to the best talent in times of scarcity and adversity, deploy evergreen talent management techniques with an eye toward both current and future needs. Current needs require enough resources to sustain business as usual while ensuring survival consistent with the core mission. Yet survival is only worthwhile if another eye is on preparing for a different economic future. This means always being open to finding and keeping the hardest-to-find talent regardless of the economy.

Keep one eye on current talent needs

Through economic change, work closely with specialist recruiters to find scarce talent that can help drive growth (upturn) or fill voids in skills (downturn). Be open to hiring or contracting affordable, rare and superior talent regardless of economic cycle or head count vacancies.

Keep the other eye on future talent needs

• Focus sufficient resources on business-as-usual and survival

• Assess breadth and depth of skills • Determine career paths/structure

requirements

• Determine what new technologies willrequire resources

• Stay in the market for scarce skills• Build integration skills that enable agility

Keep both eyes on talent needs

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Deploy talent management practices that bring evergreen benefitsThe case study on the grocery retailer, is based on an interview with the VP of iT innovation, who reports to the Cio and is responsible for architecture, strategy, planning and program management. recessionary ups and downs impact this role, but with many groceries being staples, the business is among the more recession-proof in retailing. Plans for future investment therefore remain intact, though some, such as new store openings, are rolling out at a slower pace through the downturn.

like most successful businesses, this retailer adapts quickly to economic change. it recognizes the importance of sustaining talent management through economic cycles and adapts to new customer needs as the business climate changes. in addition, a plan is in place to secure talent now in order to meet future needs. The hope is to use the downturn to gain access to talent that would otherwise be in short supply, which involves sustaining alliances with recruiters through the change. Business success, a virtuous circle, generates continual opportunities for investment, and this business benefits from an opportunistic approach (see the case study on page 44 in the appendix).

Opportunity identification through ...

Behavioral skills:• Communications• Teamwork

Business skills:• Information management• Process orientation

Technical skills: • New-technology awareness

How IT people can contribute

Communicate more by asking about and listening well regarding business and systems performance issues. Float ideas that will translate into requirements-gathering, gap analysis and solutions. Create a one-team spirit across IT and between IT and the business.

Gain insight into business processes and involve the business in identifying opportunities for improvement. Seek information on entrepreneurial and new-business activities, and translate these into opportunities for IT to help. Be realistic in prioritizing—create small steps that become giant leaps later.

Keep abreast of new technologies, especially those that customers and business peers can easily adopt (e.g., social networking). Execute existing technology well while looking for future enhancements

Being receptive to top talent regardless of economic climate

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Mitigate risks and maximize opportunities through virtual workinghaving the right talent with potential may not be enough. Create ways for talented people to work well collaboratively, and help them contribute to a high-performance workplace using social network-ing technologies that emphasize outputs, not attendance. Virtual teamwork is a proven means to raise standards and build employee loyalty. it promotes flexibility, agility, and transfer of knowledge and skills. in down times, virtual teamwork also helps reduce office costs. in any economic environment, it serves as a forum for innovation and significant change while enabling skill growth.

a major benefit of virtual teamwork is that individuals around the globe can work collaboratively without time or geographic constraints. Social networking techniques are enabling this change in work style and enhancing the productivity of remote talent. The workforce best equipped to resist the adverse impacts of economic cycles is most likely a virtual one, able to incorporate new members from multiple cultures as opportunities arise.

In down times when striving for:• Productivity • Ways to do more with less• High performance• Sustaining innovation• Continuous improvement

In up times when striving for:• Skills growth• Innovation• Big-bang change• Well-managed investment• Retention/attraction of talent

Virtual working can help by:

• Enabling teams to work with common tools and processes without physical/status barriers

• Opening the office 24/7

• Reducing office costs

• Providing work and learning tools

• Improving communication, especially through social networking techniques

• Providing work/life balance

Benefits of working virtually through economic cycles

34 Gartner Q2 2009


at a U.S. federal agency (see the case study on page 46 in the appendix), the associate inspector general for mission support is head of shared services. he explains the impact of recent economic and political change on the 70-member iT group plus a small outsourced group (total workforce: 800). The group was ready for opportunities to demonstrate the iT’s relevance and stretch capability.

Strengths such as the ability to work virtually made iT efficient and responsive. The group capitalized on past process improvements to deliver outputs at a higher pace than normally seen at a government agency. it also had well-established virtual teams able to work on tasks relating to the stimulus package over the winter holiday. in addition, ad hoc teams could be set up quickly and productively. With all of this capability, the iT group succeeded in providing timely information through document sharing.

A “virtual war room” is an online site for the storage and sharing of communications/documents. It acts as a knowledge source for projects. The concept arose when tools for effective teleworking were developed. Economic and political changes generated an unprecedented workload for a federal agency as it took advantage of existing telework arrangements to meet the challenge without incurring too much additional cost. Virtual teams use existing people assets that are both knowledgeable and already heavily deployed.

Virtualteam

Internalclients

Internalclients

Internalclients

Virtualteam

Virtualteam

Work outputsstored virtually

Virtual teams create work outputs

Work outputsaccessed byinternal clients

Social networking

Collaboration

Using a virtual team approach to sustain high performance

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Flexible working hours/locations

Agree on expectations re time, work and commitments

Focus on outputs over inputs

Information management

Set up online work repositories

Encourage peers and clients to access documents online

Social networking techniques

Maximize use of Web meetings, including online cameras

Use to sustain team spirit through stress

To create a virtual war room, clarify expectations of responsiveness, determine the information management systems to be used, and encourage others outside the team to use the repositories. Integrate the virtual team through social networking—most useful are Web meeting techniques that allow individuals to see work progress and to communicate with visual as well as audio connections. In high-performing teams, leaders use social networks to keep the team focused and to reduce stress.

Tool: Checklist for establishing a “virtual war room”

How to create a “virtual war room”a “virtual war room” enables virtual team members to share ideas, conduct meetings, store documents and gain support for turning proposals into decisions. Use the idea checklist below to establish your own virtual war room, adding items to make it more effective. With sponsorship from iT leadership and the finance department, set up a task force that can provide figures that demonstrate efficiency gains. Start small, learn from initial activities and build from there. Eventually, you will have information capabil-ity that enhances iT credibility—capability you can also share with business clients.

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Recommended workforce strategies for economic changeone of the first symptoms of an economic upturn is that labor becomes scarcer, creating concern about how to prevent competitive poaching and beat the competition in recruiting the best talent. Talent can be defined as breadth of skill (useful in downturns and upturns alike) combined with depth of skill (often too expensive to keep on the payroll during downturns).

in upturns, the need to differentiate and reward performance through financial incentives grows. Tal-ent management hinges on being able to create career as well as learning opportunities. To compete successfully for talent, iT organizations need to look for and develop new skills for new tasks, as well as breadth and depth of skills (while they are still available). Talent may have to come from multiple sourc-ing channels, including contractors if FTE hiring is frozen.

in downturns, invest in preparing people for career growth. if managed in accordance with clear perfor-mance criteria, this can significantly improve results. Use incentives as performance and retention tools, but design and understand them completely before implementation.

Upturn issues

• Competition and retention• Balancing breadth and depth of skills• Rewarding performance and benchmarking

compensation • Meeting demands for career and learning

opportunities

Upturn responses

• Seek/grow new skills for new tasks• Virtual teamwork for expansion• Look for/grow breadth and depth of

skills • Invest in career growth• Provide performance/retention incentives• Invest in continuous learning• Align incentives with performance/

marketability• Stretch assignments/task forces that

drive innovation

Maximize economic upturn opportunities within a workforce portfolio plan

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Downturn issues

• Protecting/growing core skills• Retention of agile, interchangeable skills• Acknowledging success without

using dollars• Providing learning opportunities• Finding funds for scarce skills should

they increase in availability

Downturn responses

• Protection of core skills base• Organizational consolidation: processes

and structural redesign• Virtual teamwork• Career coaching• Recognition• Stretch assignments for learning• Agility and breadth of skills: flexibility/

cross-training/job rotation• Recruitment partnerships to find hot

skills/scarce talent as availability increases

Minimize economic downturn risks in a workforce portfolio plan

To prepare for upturns, invest in continuous learning and cross-training. Preparing for downturns is more of a challenge. nobody wants to be seen as bearish in a bullish environment. Still, examination of scenarios that run counter to the prevailing trend is key to the discipline of portfolio planning. Preparing for downturns is so important because the transition to a downturn occurs faster than the transition to an upturn, and downturns can pose serious threats to survival. Scenarios to address in the workforce portfolio plan include protecting core skills—not so much from competitors but from the seemingly inevitable cuts that a downturn entails.

agility and interchangeability (the result of such initiatives as job rotation, task forces, cross-training, and multiple and varied project assignments), along with breadth of responsibility, allow an employer to deploy people as needed against changing priorities. Specialists are less likely to thrive in tough times, so they should be made aware of the need for them to grow their skill base. learning opportunities are more easily funded in an upturn, so that is when to address them. Waiting for a recession is unwise because resources are likely to be exhausted by then.

Take action early to protect skills. look for consolidation opportunities that build high standards and lower costs. Create learning assignments that deliver outputs as well as learning opportunities, and invest in agility so that the deployment of people matches organizational need. in addition, procure hot skills as they become more readily available. To summarize: Prepare now to overcome the limitations a downturn imposes.

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aPPEndix: CaSE STUdiES

This case study is based on interviews with the hr director and the executive director of financial plan-ning and hr for one campus of a U.S. academic institution. annual revenue is $5 billion, and iT has a staff of 600.

The most significant impact of the economic recession’s early stages has been increased uncertainty. as at other educational institutions, endowment investments have suffered losses, which led to cuts in staffing costs. There is great concern about the recession’s impact on student enrollments for the coming academic year. Tuition aid has been expanded to help students and their families afford a col-lege education. in addition, sponsorship has been extended to students with severe financial difficulties, addressing the concern that the situation may only get worse and dangerously lower enrollments while increasing dropouts.

Impacts on talent management

Some technologies were changing so fast that the institution had trouble keeping up with them. But a more critical need was for good communicators who were team players. Consequently, talent man-agement was given high priority, and leaders began assessing whether the talent was in place for the future. Because turnover remained low, plans emphasized adapting to change rather than finding replacements, with hiring limited to essential positions (though no jobs in technology were on hold). Workforce plans called for staffing levels to expand over time in line with technical requirements, and to address a growing need for managers and others who can coach, lead or run projects.

on the face of it, the recession made finding candidates and filling posts easier, but finding the right fit between candidate and post remained a challenge. obviously, access to appropriate skills was vital, so a process for searching against skill requirements was created. a BP contract recruiter now asks specific questions of candidates. The answers are scored to reduce interview referrals.

investment in career and professional development continues. Training costs are controlled by offering alternative internal delivery methods that reduce travel while increasing relevance and value. low-cost lunch-and-learns are also used.

Academic Institution—Dealing with the uncertainty of a recession


Impacts on rewards and work commitment

When the institution was voted a top 10 employer in an iT magazine, the interviewees gave much of the credit to communication and employee recognition programs. of course, such programs are vital for any enterprise trying to do business as usual in uncertain times. Salaries at the institution have been frozen this year, job reclassifications have been stopped until further notice and all spending is tightly controlled. To sustain morale and commitment to the work of iT and other departments, periodic social events, such as off-campus outings, continue.

These iT leaders know how important it is to show that they appreciate workforce members when pay cannot increase. Yet, iT has yet to institute significant layoffs, which have occurred in other depart-ments. “People are happy to be in jobs, but we don’t take them for granted,” says the executive direc-tor of financial planning and hr.

Because uncertainty can never be completely removed, open communications remain crucial to work commitment and a positive outlook. The leaders “walk the job” and thank people for their contribu-tions, while the Cio holds skip-level meetings to let a dozen people from two levels down (or more) ask questionsandgetdirectanswers.Aftertwoyears,theCIOwillhavemetwitheveryone.Meanwhile,theleaders take notice when people work long hours or go beyond the call of duty, particularly in contributing to process improvement. To create an atmosphere of appreciation, personal progress is also recog-nized whenever possible.

Whatever the economic change, performance planning and review continue, with ongoing feedback given equal importance to formal processes. Feedback provided at the end of projects has been es-pecially helpful. a calibration process ensures fair evaluations throughout the institution and enhances growing and learning opportunities.

This case study is based on an interview with the SVP business operations at the European division of a fast-growth global media company with locations in the U.S., denmark, the U.K., Poland, india and Singapore. Founded 25 years ago, the $3-billion company has a strong entrepreneurial culture, with 300 iT employees out of a total workforce of 5,000. The use of contractors and outsourcers, while his-torically low, is increasing to gain the benefits of scale and agility.

Downturn preparation preserves growth capability

Before the downturn, challenges already existed as the company’s audience switched from traditional distribution to new forms on the internet. now advertisers are looking for 11th-hour bargains rather thanlong-termcommitments.Meanwhile,cash-flowuncertaintieshamperplanning.Aswithmanyotherservice businesses, the media cannot easily translate revenue losses into reduced activity.

Media Company—Positioning the enterprise to adapt

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overall, however, the company was well positioned to enter a downturn, having experienced a year of transformation. a new Cio downsized the iT organization in relation to the services offered, and to re-duce silos, he restructured by taking advantage of global efficiencies and by aligning functional groups. Staffing cuts of over 30% brought the organization more in line with benchmark comparisons.

Realigning resources for growth while sustaining services

Steps were also taken to better align resources with where the business was investing. When the downturn hit, headquarters activities changed locations internationally, resulting in difficult staffing deci-sions to make the organization leaner.

“The business accepts that we in iT can cover the ground, but we won’t get the same depth,” says the SVP. “So that’s one of the big shifts we’re seeing in terms of staffing. We have traded depth, which is hard to fully employ, for breadth, which not only provides agility as needs change but also requires less information input to be successful. We need coverage across all of our services; without it, we’d run into significant business risk that we couldn’t address if one of our potential acquisitions goes through.”

Managing a downturn

The SVP and the enterprise as a whole have been managing the downtown as follows.

Reductions in force

despite the benefits that can be derived from initiatives taken in an upturn, a downturn puts pressure on workforce management. “as soon as we entered this downturn, everybody got a dollar value on their head and a value proposition to justify them,” says the SVP. “The highest-valued people are certain key utility-type employees: bright and very flexible, with a breadth of experience.”

retaining such people at the expense of those with less experience increases per-head cost. one out-come of this has been the loss of what the SVP calls the farm team: those who were building their skills and growing their careers with the company. “They hadn’t been with us long compared with how it is at more mature companies,” says the SVP.

Media Company—Positioning the enterprise to adapt (continued)


in the interview for this case study, a recently appointed Cio for a state government described a highly decentralized structure that had worked well in times of higher revenue. however, the $800 million iT budget, like that of all state agencies, has come under pressure. With decentralization of iT funding, each agency made its own decisions on what to spend, and one agency had already cut iT costs by nearly 50%.

The challenges of decentralization stemmed from state revenues facing unprecedented reductions in business and employment taxes, and from higher demand for state programs such as unemployment compensation. The iT population of more than 2,000 was matched about one-to-one by contractors and outsourcers (total employees number 65,000). annual revenue had fallen to $40 billion. at the time of the interview, the Cio was reviewing cost-reduction options after accepting the need to follow con-straints of a unionized state government.

Implications for the IT workforce

one cost-reduction option enhanced by an oversupply of iT skills on the labor market is to reduce con-tractor costs. The state government found that as much as $13 million could be saved by bringing jobs inside. Targeted skills included those in server virtualization, data center design, project management, Til, Six Sigma and iT governance.

State Government (U.S.)—Planning for cost reductions in a unionized state government

Squeezed training funds

Because the training budget also comes under pressure in a downturn, funds have been refocused on developing skills for projects that align best with business needs. Soft skills training has been cut and hr now serves as a cost-effective internal training resource, offering pre-existing products and services not fully used when external training was available.

Consolidation

With cuts and consolidation in the travel budget, funds have been pooled and travel must be well justi-fied. With consolidation of global workers, many people formerly managed from the U.S. office are now managed locally, or they are pooled into regional centers of excellence and managed via matrix by other “trusted managers,” or even by hr. results have been positive, with some skill development, cost sav-ings and agility gained in the process.

“all these changes put us in a better position for when things turn around,” says the SVP. “Because by keeping breadth now, we can later scale up and down, and bring specialists back into groups that need more depth.”

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The negative side of internal head-count reductions is that they may require union negotiations for which time is not available. The only alternatives were to create a shared-service structure using cloud computing software as a service and establishing pooled resources through centers of excellence.

“There are probably also things we’re doing internally, such as standard PC installations, that are more economically efficient for us to be outsourcing,” says the Cio. “in one project we’re working on, we know of 30 jobs that are going away in favor of outsourcing. This was a real struggle to negotiate.

“There are only so many ways to generate cost efficiencies. Ultimately, all these ideas are methods of consolidation: You can aggregate spending against the common enterprise architecture. You can defer or delay upgrades, make major system upgrades and do application development projects for a spe-cific business purpose. You can prioritize systems and functions in terms of what’s most critical and weigh these priorities against costs. You can shut down noncritical systems, especially those costing more than they’re worth.

“none of these decisions can avoid impacting labor. But this isn’t entirely negative, because some changes will create opportunities for new skills such as server/storage virtualization and cloud com-puting. The preferred path is to reskill some of those who are displaced. We may create a workforce development approach to acquiring skills, so that if people get displaced, there is a path to move them where they are needed. By preparing in advance, the problems of reskilling in a unionized environment can be prevented.”

Lessons learned

This situation has taught the Cio “that employees must be encouraged to communicate their core technologies through workforce development, based on the business strategy. They need to know where they’re going both short and long term. Then the organization has to determine how best to fund and deploy the training, as we are now finding with the transition to virtualization technologies. it will be even more critical to have a workforce plan as we start to face skill shortages. i think all the states will be challenged in this regard.”

State Government (U.S.)—Planning for cost reductions in a unionized state government (continued)


This case study is based on interviews with the Cio and deputy Cio at a scientific and energy research institution in the U.S. government. of 1,500 employees, nearly 100 are in iT, and another 20 iT staff are contractors. The 2008 budget of $300 million is expected to increase in 2009 with projected enterprise growth of 20%. Growth opportunities stem from alignment between scientific research and investments specified in President obama’s agenda.

Enhancing growth potential with workforce planning

Strategic sourcing plans look outside the institution’s laboratories to get some work done. “We aug-ment with contractors to avoid layoffs,” says the Cio. as capability has grown, vendors have begun looking to the labs for expertise, just as the labs looked to them. Work style is moving to a more collab-orative environment globally in order to augment key skill sets, especially integration skills. Because the workforce plan calls for more university students, the lab has established formal relations with universi-ties to uncover suitable candidates. a lack of women in the iT workforce has led to efforts to create a more balanced workforce by encouraging younger women to join.

Training in selection has brought the recruitment success rate to 90%, and voluntary turnover is almost zero. oracle dBas, for example, are available now, filling longstanding vacancies. Though the increase in new hires and contractors will require accelerated onboarding, ready availability of a stable workforce, and of leaders to guide them and answer their questions, should help.

Growth in a downturn benefits the workforce

after years of flat budgets and budget reductions, training for new skills is well funded, and more mon-ey is available for travel to conferences. Communications use best practices such as delta (skip-level) meetings to encourage upward interactions, and excitement about converging technologies is encour-aged. a “greenfield” site will house new research and iT technologies. These, in turn, will create learning and career opportunities for those who are interested.

Existing tools are also poised for investment: a mix of maintenance responsibilities for both legacy systems and the uncharted territories of new systems and upgrades will provide work for all levels of interests, making aspirations and opportunities a better match. at the same time, breadth and depth of skills will be sought to help drive agility, with support given to those who show interest in building expertise.

Research Laboratory—Preparing for an upturn during a downturn

44 Gartner Q2 2009

This grocery chain illustrates that even a recession-proof business cannot be oblivious to change. in a downturn, customers come into the stores looking for ready prepared, reasonably priced, restaurant-comparable food to eat at home—instead of eating out. What is bad for business for the restaurant turns out to be a premium selling opportunity for the grocery chain. in the upturn, though, the chain will have to be all the more innovative if it is to prevent customers from going back to eating out.

Retail Store—Talent with industry knowledge remains key through a downturn


Research Laboratory—Preparing for an upturn during a downturn (continued)Project resource processes complement resource availability

now that resource processes and availability enjoy a complementary relationship, the risks of resourc-ing iT projects are likely to be mitigated. a new process for resource allocation has been created, and already the lab sees the benefits of employee availability in terms of better project control—the result of coupling efficiency with relevant metrics and rationalizing the project portfolio to segment projects so that each has immediate application to the whole program.

“Getting the portfolio under control enables us to measure the workload on projects and determine more effectively what resources will be needed, based on past experience and projections for the fu-ture,” says the Cio. This will help the lab reduce single points of failure in human resources. as the Cio explains, “Before, one expert would be called upon for all projects. now we look at all projects to which experts might be allocated and spread the load. We’ll still have people working above 100%, but with better continuity.”

The new resource management system uses both skill set and job title, and the iT organization is small enough for iT leaders to know intuitively which members of their teams would be best for which busi-ness system. With growth, however, a skills inventory may become necessary.

Driving higher performance

letting people know how they are doing is a leadership priority. The iT organization’s manageable size promotes frequent communication between individuals at all levels. Still, to meet the needs of future growth, more formality may be needed, and use of 360-degree feedback is anticipated.


The iT organization has used this same core competency—the ability to spot trends and create oppor-tunities from them—to become a relevant force within the enterprise. Toward this end, iT ensures that the workforce remains high in talent, capability and effectiveness.

Downturns create opportunities for competitive hiring

despite the uncertainties of a changing economy, and unlike many enterprises facing lean times, the chain is committed to retaining its position as an employer of choice. it strives to keep onboard talent and seek out the talent of the future. With more iT people in the labor market, it is exploiting the oppor-tunity to hire the normally hard–to-find combination of breadth and depth of skills that an organization needs to stay agile.

rather than scour job Web sites for the right people, the chain’s downturn strategy is to target, find and recruit those with the right fit, which includes industry knowledge. These people often come from competitors, so recruiters are asked to refer such candidates. The recruiters themselves are treated as preferred suppliers owing to their special insight into the culture and into talents needed for the right fit.

“To show how serious we are about finding the best talent in this economy,” says the VP of iT innova-tion, “we equip recruiters to scan people from competitors, even if there’s no open position.”

Learning to focus on responding to economic demand

People who join the company move from one project to another through accelerated learning curves. having people with a broader range of skills makes iT more than nimble—it can actually be dynamic in termsofideasandcustomerinteractions.Moreover,IThassoundindustryknowledgeandsocanplaya leading role in downturns by reprioritizing and asking the right questions of traditional and new sources of information. it can then help devise changes in how to apply the business model.

according to the VP, all iT members think about how to contribute to the content and execution of interlocked planning horizons. For an 18-month horizon, they focus on infrastructure and overlooked efficiencies; for a 36-month horizon, they focus on business capability.

“if recession continues and the economy worsens,” says the VP, “then we’re looking at cutting muscle and bone. our focus then will be on how to achieve what the business wants with less. For example, we might have to pull back on research and discretionary funds, and get back to basics with value- adds. We are prepared to adapt according to the pressures we face.”

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This case study is based on an interview with the associate inspector general for mission support at a federal agency. also in charge of shared services, he explains the impacts of recent economic and political change on the iT group of 70, part of an 800-member workforce complemented by a small outsourced group. The agency budget is $150 million per year.

Workload challenges

The workload during the downturn has increased significantly, with most iT people and many of their colleagues working through the holidays to establish iT for new groups. “aside from the difficult econ-omy, the workload has challenges of its own,” says the inspector. “Still, it’s good business for us. right now, we’re working very hard to support the new presidential agenda. i tell people, ‘never let a perfect-ly good crisis go to waste. This is a wonderful opportunity.”

The agency sees the uncertain duration and impact of the new economic cycle as ripe for innovation. it is taking advantage of the constant flow of money in the federal sector to adopt innovative technolo-gies and practices. according to the inspector, these will be used to help create “a government that is fundamentally different and better. This requires a mix of institutional and technological changes that will make us more responsive. We are looking beyond the economy at what we can control in order to develop the workforce we need when we come out of this.”

Using social networking tools to step up to the challenge

“do a good job on training,” the inspector continues, “and do a good job on motivating your people. Then, invest in social networking tools and practices. This is one of our high-turnaround groups. They received refresher training in order to take on this major project with a tight deadline. We deliver it using Web conferencing technology.”

as an everyday tool, agency members rely on an internet meeting application—a low-cost, consumer-type product with low overhead. instead of buying a solution, they lease this at less than what a live meetingserverwouldcost.Teamscanthusdomoremeaningfulwork.Mostmanagershavebeenquick to understand social networking and other, more dynamic, computing resources.

The new tools are employed because they bring intimacy to a virtual, remote workforce. a recent reor-ganization, for example, was easier to manage by observing people’s body language when they were shown the org chart. (The org chart was in one window, the people, photographed by a webcam, were in the other.)

Federal Agency (U.S.)—Economic change spurs innovation in government bureaucracy

Because Web conferencing can be used both to meet and to do work, a “virtual war room” emerged, with all documents and notes stored as links to a real-time war room in WebEx.

“The idea was to go nimbly back and forth between asynchronous and synchronous,” says the in-spector. “Project and legal documents are all in the same place. We have found that these little special projects spearhead innovation in the rest of the enterprise. if you follow Everett rogers’ diffusion of innovation cycle, you know that you’ll never get the early majority unless you’ve gotten the early adopt-ers. So what we’re doing is seeking out the radical innovators and the early adopters who will drive the innovation.

“Business unit owners exposed to the tools are already demanding the technology. instead of asking why we are making them do this, they’re requesting licenses because they see the practical value. it’s not the technology that intrigues them but rather the possibility of institutional realignments and dissolved bureau-cracy. The beauty is that it no longer matters where we are—physically or bureaucratically.”

The agency’s experience confirms that simplifying and increasing customers’ ability to make electronic transactions generates opportunities for those in iT. While it’s true that demand for iT skills may lag or be deferred, demand for technological solutions still trends upward. Sourcing these opportunities exter-nally has been found costly and resulted in skills scarcity across the iT organization.


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48 Gartner Q2 2009

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otter T., “Best Practices: Workforce analytics Skills are Vital for Effective Cost optimization,” G00163536, 5 december 2008

Walker, a. and Gomolski, B., “Cost Cutting to Soften the impact of Budget Cuts on the iT Workforce,” G00155968,16May2008

Articleshamblen,M.,hoffman,T.andThibodeau,P.,“ITeconomyGoesfurtherofftherails,” Computerworld, 17 november 2008

hoffman,T.,“recessionrevisited:willThisTimeBeDifferentforIT?,”Computerworld,4March2008

May,T.,“Opinion:TheGood-newsrecessionandIT,”Computerworld,7April2008

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Thibodeau, P., “Economic downturn Creates rough ride for iT on Spending,” Computerworld, 22 october 2008

Weil, n., “iT Predictions for 2009: The Economy dominates,” Computerworld, 12 december 2008

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Gartner exP Hr rePorts From One Skill to the Next: Reskilling Strategies Quarter 1 2009

Role-Based Organization Design Quarter 4 2008

Candidate-Friendly Recruiting: Where Talent and Opportunity Meet Quarter 3 2008

Gen X Leaders: Creating a New World From the Best of All Worlds Quarter 2 2008

Employee Retention: Techniques That Work Quarter 1 2008

The One-Team Approach to an HR IT Business Partnership Quarter 4 2007

Talent War Winners: The Grow-Your Own Approach Quarter 3 2007

Knowledge Transfer: How HCM Practices Support Knowledge Management Quarter 2 2007

Managing the Multi-Generational Workforce Quarter 1 2007

Planning and Managing Change in the IT Organization Quarter 4 2006

Building the High-Performing IT Organization Through People Quarter 3 2006

Creating a Superior IT Leadership Team Quarter 2 2006

IT Skills Management in Action Quarter 1 2006

The IT Professional in the 21st Century Fall 2005

Revitalizing Performance Management summer 2005

Integrating In-House Career Development Processes spring 2005

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