Since the mid-80s, CIOs have been fighting an uphill battle to retain their top IT talent. Headhunters solicit their best people, offering salaries that are outside their scale, stock options their company doesn't offer, bonuses and perks they can't match, and "way cool" work-spaces they can't provide.
According to data from the Information Technology Association of America, turnover averages 20 per cent per year in the IT sector, the cost of recruitment can be as high as US$100,000 per employee, and over 350,000 positions are currently unfilled. In Canada, there are 30,000 vacant IT positions, according to Gaylen Duncan, CEO of the Information Technology Association of Canada.
How can you keep the best IT talent without completely violating your organization's compensation practices? What can you offer if you are only a mid-sized firm with the average combination of traditional and emerging technologies? Well, you may have overlooked a rather paradoxical solution -- one with big payoffs for you, the company and your IT employees. Keep your IT professionals in the company, but let them go out into the business units as business partners.
This article looks at how Clarica Life Insurance Co. has done just that, and achieved some very impressive results along the way. And stay tuned for some suggestions as to how CIOs can accomplish similar results in their own company.
Clarica found a solution to the IT HR problem even though they weren't looking for it. By enabling dozens of IT people to move to career opportunities in the business units, they managed to keep a large number of skilled employees who might otherwise have left. And we aren't talking about job rotations or decentralizing the IT workforce.
By the early 90s, over 70 IT people at Clarica had moved into non-IT jobs in the business units. Over 85 per cent of them were still with the company after an average time out of eight years. Some of them have been out for over 20 years. These former IT professionals moved into marketing, administration, sales support, human resources and other positions.
These people were not unhappy in the IT department, but they were ready for new challenges and opportunities to make business decisions rather than just recommend solutions. They were familiar with the systems that supported various business processes and had strong project and people management skills.
As we begin the new millennium, these career transitions are still happening and the feedback we are hearing from Clarica's business people, IT people still in IT, and those who moved out is, "Do it!"
What Clarica found when their IT people started moving into the business was that they didn't lose IT talent, they gained business partners and IT champions.
A good example of this payoff is found in the story of Wayne Sigurdson, Vice-President of Customer Service. He spent 15 years in IT, from 1972 to 1987, in a number of increasingly responsible positions. He then moved into the line, most notably with the Investment Division and then the Group Insurance Division. In his three years with the Investment Division, he led the implementation of many IT-enabled changes, including securities administration, retail mortgage administration, and electronic applications in commercial mortgages. He also sponsored the Customer Service Workbench project, which won the 1999 Silver ITX award.
"The Group Insurance Division automated most of their administrative, policyholder and policy issue systems after Wayne was recruited from the IT Division and became their VP," said Bill Yeo, the former Vice-President of IT. "He's the kind of individual we really like to see go out from IT into the line area because he's always pushing us to expand the envelope. He's constantly coming back and saying, 'Could we do this?' or 'Will it let me do this better?'" Another former IT employee who has become a member of the senior management team is Frank Preston, Vice-President, Group Insurance (Service). After 11 years in the IT Department, Preston moved into Individual Administration, and for almost two decades has managed different business departments. He is the champion of a process approach to enabling business with IT, stating, "As managers, we have to manage the total process. And if you don't understand the systems, you don't manage the full process. It's all part of the package."
While these are people whose names appear on the back page of the annual report, there are 60 more in the various business units, putting IT together with business problems to create innovative solutions.
One major payoff cited by many of the people at Clarica is their pervasive strength in project management, a skill that was transferred to the line with the IT people. Clarica has a history of innovative, first-mover projects. Sometimes these projects have been bet-the-company efforts. They believe that having former IT professionals in the line makes a crucial difference to their ability to take on large projects and succeed.
As Dirk Garlichs, Director, Group Insurance Systems, described one such undertaking, "This project was the implementation of a new agent-manager relationship. The rest of the industry was sitting back, waiting for us to fail. We spent over 17,000 IT days on it. We got it in and it was successful. It was a make or break for the company. If we can do that, we can do anything."
The result of this infusion of IT staff into the business is a company that can innovate with IT from any corner of the business in a time when costs must be driven down and competition is coming from all quarters. So, the obvious question is: can your company do this as well?
By synthesizing the lessons learned at Clarica, we have created six action items for the CIO who would rather turn talented IT people into business partners than lose them to the competition.
1. Create Personal Networks with Senior Managers Creating personal networks is always a good idea for a CIO, but in this context it has a very practical purpose. If one of your people expresses an interest in moving into a line area, you need to be able to pick up the phone and get him/her an interview. If you have spent time getting to know the different individuals in the business units, you will have a better chance of marketing your people, creating a good match, and aiding a successful transition.
2. Influence Salary Policies In almost all the cases at Clarica, IT people made a higher salary than was being offered for the positions they transferred to in the business units. Flexible HR policies, which allowed a person's salary to be frozen for a period of time, or which facilitated creating a bigger job responsibility, made the moves possible. In many companies we have talked with, salary policies are directly responsible for their inability to move IT people. As CIO, you must make time to influence the salary and job policies before you need them.
3. Get Your People Ready for a Move There are always people in the IT department who are interested in the business areas. These folks need to be nurtured in a number of ways, so that when the time comes they are ready to move into the line. As CIO, you will need to:
- Ensure that your people understand the business of the business units. This could entail assigning them to cross-functional business teams, sending them to sales or strategy meetings, or bringing in business executives to speak to them. Any methods you can employ to help your IT people make the language of business their language will be well worth the effort. - Ensure your IT staff take industry accreditation courses. For example, many of the analysts at Clarica have taken most or all of the 10 courses to be a Fellow of the Life Insurance Industry (FLMI). - Conduct your department in the same manner as your company conducts its business. Adapt the business metrics (e.g. Balanced scorecard, MBO, Sigma 6, income statements) to the IT Department. Get your people ready for life outside the walls of IT. - Encourage and train your people to be good people managers. This skill will help them to be successful wherever they are.
4. Send Your Best People First The best people will always be successful and will pave the way for more IT people to follow. In addition, great people will be great partners for you in the projects ahead. Don't encourage your deadwood to move into the line; it will only poison the way for others. As one business manager put it: "Success begets success. Send your best people first." Failure is not an option here. As one IT human resources specialist recommended: "Move people out of IT for the opportunities they can't get in IT. They move for challenge and more control. And don't expect them to come back."
5. Manage the Turf Battles The IT people you help to move into the line will no doubt be back with good ideas for projects, and they may be considered a threat by your existing IT people. You will need to intervene, prepare your people, and make an opportunity out of a potential fight.
6. Maintain the IT Knowledge Base in the Line When your people start moving out, you can't forget them if you want strong partnerships to continue. The last thing you want is ex-IT people in the business units proposing solutions that are clearly out of date. Since technology changes rapidly, this scenario will be inevitable unless you take action to keep them current.
There are many options. Clarica created an IT Council, which creates organizational technology standards and commissions research on emerging technologies. Many of the ex-IT people are members and keep up to date by attending vendor demonstrations and conferences. Other companies have lunch meetings for business people on IT topics, technology fairs, and demonstrations to keep new ideas rolling into the business areas.
It might have occurred to you that the strategy outlined in this article will take a few years to really pay off. Will you still be a CIO at that time? Do you really care? Interestingly, three CIOs from Clarica made the transition into the line. All in all, Clarica has 16 people in senior management positions in the Canadian Business Unit, and six of them are current or former IT managers. You never know, the next person you move out of the IT Department may very well be yourself!
Blaize Horner Reich is the Westech Associate Professor of Information Technology at Simon Fraser University, Faculty of Business Administration. She has over 20 years of experience as an IT professional and consultant, specializing in strategic planning and facilitation. She can be reached at firstname.lastname@example.org.
Michelle Kaarst-Brown is an Assistant Professor of Management Systems at the University of Richmond in Virginia. Drawing upon two decades of business and technical management, she now specializes in how social, cultural and knowledge factors impact the strategic use of IT. She can be reached at email@example.com.