Posting about staffing strategy. I think that staffing strategy applies at any level of the organization chart, and there are some basic principles that are universal and intuitive. I think that in Information Technology we sometimes lose sight of those basic principles, and skew our staffing strategy or worse, don’t understand or misapply the principles.
The Principle of Enterprise
The basic concept of the enterprise is that we convert time (the time our people are on the job) into value (something that we get paid for). We call this conversion “Work”. Work is different from activity, specifically in that work creates output, for which the enterprise can get compensated. We can only get compensated for output that someone finds valuable. Therefore when we create output that is not “wanted” it is not valuable. We consume staff time to create the non-valuable output (service, product) but cannot get compensated because there is no “demand”. Demand creates the value. The greater the demand the greater the value, and possibly the more we can be compensated.
The Principle of Staff Cost
Staff get compensated either for their time or for their output. The enterprise has to match output to demand, and time to output in order to be “cost efficient”. If there is more output than demand, the enterprise has paid for output that is not valuable. If there are staff who are idle, it costs the enterprise to pay them when there is no output for them to create. This is the simple relationship between staff and demand.
The Principle of Value
Of course in any enterprise there is activity that is not related to satisfying demand. This activity produces cost, but no output. It may be necessary to do this activity in order to maintain the enterprise, but it is still uncompensated activity. It is about “keeping the lights on”. Much of what is done in IT is uncompensated activity. Some activity like building software assets or installing systems that enable or enhance the organizations ability to meet demand are compensated and funded as capital assets. We call work that is related to satisfying demand – Value Chain Work.
Application of Principles
Of course, this is all fine, but I sense some of you asking “How does this have anything to do with staffing strategy?” The difference between activity and output is the way we manage them, the goals we have for optimizing our compensation. The enterprise wants to match output with demand, and then produce that valued output for the least cost and in ways that increase demand over time. As for activity, we merely need to reduce unnecessary activity and get necessary activity done for the least cost possible.
When we think about the goals expressed in the paragraph above we should recognize the following:
For Value Chain “work” our goals are:
1) Focus – Produce only the output that matches the demand.
2) Cost – Produce this output for the least (staff) cost.
3) Quality – Produce this output with the quality, service, timeliness that improves our ability to gain market share (increase demand).
Which is different than our goals for non-value chain work:
1) Focus – Produce only the output that is absolutely necessary to sustain the enterprise.
2) Cost – Produce this output for least (staff) cost.
3) Quality – Produce this output in ways that does not interfere with or inhibit our value chain work goals.
Each of the goals is correlated to its pair in the other section. Lets look at what staff needs to do to accomplish each goal:
1) Focus – this is the job of your leadership and management. They need to ensure that staff is working on the “right” work, and that unnecessary or non-valued work is not being performed. They need to develop systems and practices to help focus the staff on making sure the most important work gets prioritized.
2) Cost – there are two ways to reduce or adjust cost – the most obvious is to hire cheaper staff or pay lower wages. This strategy can be effective when the work is repetitive, and is not tremendously affected by talent. The other strategy is to focus on talent – because the talented resources can find ways to outproduce the average by a factor greater than their increased wage. In either case, competence plays a role, because the ability to learn from mistakes or to increase effectiveness by acquiring new skill over time is valuable regardless of whether talent is a key factor. In IT especially, automating the repetitive portions of the work, solving new problems, adopting newer and less costly practices all require talent. In these ways, a small number of talented people can increase the output of a much larger organization.
3) Quality – Talent and leadership almost always come into play here. Understanding what factors in the work relate to increased market share or potentially inhibit our ability to deliver other value chain work is important. It is a separate undertaking, and almost always requires talent at some level. This is a “leads” play within staffing strategy, as it is your leads who recognize when the work they are responsible for is having adverse impact on demand or on other valuable work.
IT executives would do well to consider how their current staffing model aligns with these goals. Do you have the right people in the right roles to ensure focus, drive down cost without sacrificing the quality required to maintain or increase demand? Moreover does your hiring strategy bring your model into greater alignment with the spirit of these goals?
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