In the good old days, hiring was something organisations simply did rather than endlessly strategized over. Talent needs were predictable; attrition rates could be mapped against elements like retirement, and talent could be hired accordingly. Today, with default retirement being a thing of the past, and the job-for-life being a hope rather than a reality, a company’s resourcing needs are far less predictable and require much greater thought.
Nowhere is this more necessary than in IT. Not only are product-spans shorter, (but investment periods longer), the continental economy is moving into what is likely to be a sustained period of acute skill shortages. Experts argue the IT sector needs to grow at 1.6% every year until 2020. That’s the equivalent to the sector hiring 129,000 new people every year – a major headache for recruiters trying to find (and hang on to) the best.
According to Kathryn Haralabidis, head of IT at search firm Communicate, there are, or course, certain hiring strategies that never change. Firms need to offer good pay and benefits and be able to demonstrate potential for progression. “Currently, good IT people are moving for an extra £10,000, with bonuses/car packages worth another 15%, but once in, presenting opportunities they have to grow could be very valuable,” she says. “Because, despite the apparent buoyancy in the market, very skilled talent is still quite nervous about quitting what they know for somewhere they don’t.” A problem HR professionals will need to factor in, however, is just how realistic this is, since the IT sector has recently become one of the most de-layered in Europe. Research by UK firm Randstad Technologies (September 2014) shows that IT firms contain just 3.5 layers of management (i.e. promotional potential), compared to an average of 4.4 across all other companies.
There are also various other considerations for hirers at present. IT firms have traditionally ridden out peaks and troughs by hiring contractors rather than permanent employees, and one of the biggest dilemmas now is whether to simply hire permanents – so-called pre-emptive employment.
Another issue is the HMRC’s tougher stance regarding IR35 legislation, which is designed to tax ‘disguised employment’ – which the contract market is often accused of facilitating – the same as regular employment. Matt Huddleston, CFO at FPS, an umbrella group for contractors in the IT market, comments: “The legislation isn’t new, but the whole political landscape around tax avoidance is such that it is something hirers need to be aware of.” He adds: “Another huge area is pensions, particularly pensions auto-enrolment. If contractors opt in and out of schemes as their projects start and end, these mobile workers will be accumulating lots of pots which they can’t access.”
This latter point could play into firms’ hands if they’re able to offer permanent jobs – stability that contracting doesn’t always provide – even though the contract market is buoyant. “Demand is back, across the permanent and contract space,” observes Adrian Carboni, managing director at IT recruitment consultancy RED. “One strategy certainly could be to pursue permanents more.” But, he advises the need to be smarter. “Tech is moving at such a pace now, that your strategy should be to hire not just for IT skills, but also for business insights – people who know, and can articulate the challenges of a particular industry. These are the people firms need to hire.”
Finding these people isn’t easy. It’s often said hiring techies is harder than typical staff, because they are often motivated by different things, and tend also to be introverts. Maurice Duffy, former HR director at Nortel and author of New Mindsets for New Times, says: “Hirers need to remember that skillsets are important, but often what’s listed on their CV has little to do with their productivity. I’ve often found that the extent to which people are engaged and passionate has a much greater baring on how well they will do, and how likely they are to stay.”
Psychometric testing can be one approach, but another, cheaper option is tapping into who existing staff know – by asking them if they can suggest people from their own networks. More and more companies are formalising employee referral schemes, with IT firm Sapient, for instance, now recruiting 30% of its people from friend referrals alone. Why? It realises its own staff know best the sort of people who will fit in and flourish, and respond well to their corporate culture.
Creating talent pools and introducing better diversity awareness (including steps to help women not drop out of their careers after having children), are all ways IT companies can also future-proof their hiring. Can hiring be improved? Yes, always. But if you plan from the start, there’s a far better chance you won’t experience unexpected talent shortages in future.