Staff Alert

With outsourcing on the rise, CIOs are at the centre of a morale crisis. They see many of their workers battling stress on the job. The best leaders learn to help employees now - and keep them in the future.

Dianah Neff's staff was sick a lot last northern winter, but the CIO of the City of Philadelphia was worried that it wasn't just the record cold and snow that had her employees under the weather. With the city facing its worst fiscal crisis since 1991, Neff had been forced to cut 10 per cent of her staff through an early retirement program. She started cross-training the remaining 535 to deal with increasing demands being placed on IT. Meanwhile, as each new project request came in, Neff was openly looking at whether outsourcing some work might be more cost-effective - another anxiety source for her already stressed staff.

"People have become anxious. We're watching to see if we're getting increases in sick leave or if other issues are occurring. People deal with the stress of [retrenchments] and increased workloads in different ways," Neff says. "The staff is realistic. They know it's a tough job market. I don't know that you can ever really reassure people in these situations."

Neff expresses a pervasive feeling. According to META Group's 2003 IT Staffing and Compensation Guide, among the many areas of high concern to IT organisations this year, few are as evident as employee morale. In fact, among those IT managers surveyed, more than 71 per cent indicate that IT employee burnout is currently a serious issue in their organisations - an issue that could spell longer-range turnover, lower productivity, and less overall shareholder value to the organisation as a whole if not addressed.

CIOs who think there's no real threat of turnover in tough IT times and put off dealing with the situation may be in for a rude awakening even sooner than the highly anticipated spending turnaround. "Your best workers will leave and go somewhere else, and you'll be left with heavier workloads and fewer top performers," warns Diane Morello, a Gartner analyst. "We're already seeing the start of a workforce backlash. There's a subtle pulling back on the part of employees who are saying: 'If you're not going to help me put the brakes on [the workload], I'm going to do it myself.' "

Instead of waiting to see productivity slip, CIOs must to do everything they can now to prevent employee burnout, stress and doubt. (See "Eleven Simple Rules for the Care and Feeding of Your IT Staff", below. Read on to share the experiences of CIOs who have learned the importance of adjusting office conditions - from establishing project management controls and making staff workloads more reasonable to recognising top workers.

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A Familiar Feeling

High stress and heavy workloads are nothing new to IT; night and weekend work has been the norm for years. "It's an occupational hazard," says Rick Skinner, CIO of the Oregon division of $US3.3 billion Providence Health System. "IT staffs are responsible not only for keeping current systems and infrastructure running, but they're also responsible for a whole host of new projects. Some are planned, budgeted and scheduled, and some come out of left field with no budget, no schedule and only a fuzzy idea of the deliverables. That kind of environment is by nature high stress."

But if 70-hour workweeks somehow became the norm in the best of times, the hours being clocked by IT workers today - with budgets stretched and expectations on the rise - are potentially unbearable. "Like every other IS organisation out there, we're suffering from an incredible amount of demand. CEOs and CFOs want additional services, but they want it done for less," says Bruce Reirden, vice president and CIO of the Care New England group of hospitals. "So ultimately as CIOs, we're requesting people to work more just to get the jobs out the door. I couldn't even tell you what the average workweek is like here. Some weeks it's higher, some weeks lower. But it's always in excess of what people are scheduled for."

Linda Pittenger, CEO of People3, Gartner's HR consulting group, says that overburdening staffs is risky. "It can mean costs related to absenteeism and productivity decreases because people are depressed, or it can increase productivity but also increase the risk of burnout because people are working harder to keep their jobs," she explains.

Another downside to the current IT staffing environment is a decrease in innovation and a focus on the individual rather than the team. "In times like these people become risk averse. They don't want to share new ideas because there's no money in it," Pittenger says. "And what if the idea is bad? Do I want to be the guy who raises his hand and says we should do this, and then it fails?"

Some CIOs insert research opportunities, even modest ones, into their staff schedules as a way of developing staff skills - and relieving some of the workaday pressure. At Electronic Arts, a $US1.7 billion computer game maker, CIO Marc West insists his employees participate in niche R&D teams looking at where the business might be headed. "We run a pretty intense environment," he says. "But we ask employees to dedicate these very, very narrow time slices to R&D. They give up an hour a week, but it gives them something positive to engage in. As a result, they find more time for other things and are better able to prioritise the work at hand." West admits the R&D time can get sacrificed. About 15 per cent of the time (when things are really crazy), the teams meet for an hour every two weeks. And he will extend the time lines for ongoing R&D projects.

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Prioritisation Is a Virtue

One thing has become clear as employees and other resources have become stretched paper thin: the importance of prioritisation and project management skills. And that has to start at the top with the CIO. Otherwise the calibre of work coming out of the IT shop is destined to decline. "IT is the most project-oriented area of the business, but corporate IT still doesn't seem to be able to get project management down to a strong discipline," says Tom Pohlman, a Forrester Research analyst. "But if you completely overburden your staff and don't have good PM skills, the quality of work is going to suffer."

Darren Bien, CIO and COO of Keller Williams Realty International, found that out in 2001 when 20 major initiatives were in the IT pipeline and not one was implemented. Even in industries that are doing well (Keller Williams' revenue grew 40 per cent to $US530 million in 2002 thanks to low-interest rates in the US), the danger is still there. "We've had to drive a much more process-oriented focus on project management," says Bien, who had 25 employees trying to complete those 20 projects. "Steering committee processes and prioritisation put in place last year allow us to focus on what's important."

Providence's Skinner says he has to ensure that the projects his 300 employees are working on aren't ones more suited for a staff of 1000. "I have to make sure that the things they're being asked to do are reasonable not only in terms of business value but also in terms of the resources we have," says Skinner, who's been dealing with declining margins in health care for nearly a decade. "I've found myself changing from a cheerleader trying to sell technology to the business to the gatekeeper tying to ensure that we make only those investments that increase business value and can actually be accomplished."

An effectual PM office helps to keep man-hours in check. "We know roughly what resources it will take to maintain our systems and also know how much is left over for project work. What we don't know is which resource will be required on what project when and whether that might conflict with some other project," Skinner says. "The project management office attempts to coordinate all the work."

But the process requires continuous tweaking. "It's impossible to forecast how many DBA hours we're going to need on a given project, much less all our projects six months from now," he says, adding that the project management office makes weekly adjustments.

In addition, Skinner gives his employees more accountability. More responsibility to relieve stress? Sounds counterintuitive, but giving workers some control can go a long way. This year, for example, four employee action groups reviewed the annual employee satisfaction survey results and determined what direction to take - a process previously handled by Skinner's management team. The groups came up with creative recommendations with real business value that will be more widely accepted than if they were handed down from the top, Skinner says. One result: after employees pointed out that a 40-hour continuing education requirement did not ensure workers got the right kind of training, Providence managers will set training priorities and find ways to gain that expertise.

"Give people clear goals, resources to achieve them and the ability to make the day-to-day decisions. Even though they'll work harder, it's more enjoyable for them. That helps alleviate some stress," Skinner says.

Even with the best processes in place, IT employees still have to work harder these days. But CIOs can help alleviate the stress by simple communication - providing a light at the end of the tunnel for their staffs even if they don't necessarily see one themselves. "Most people can tolerate a certain degree of high intensity work if they see relief in the future - six, nine, even 10 months down the road," Gartner's Morello says, and leaders need to describe this road.

Cecil Smith, senior vice president and CIO of $US59.5 billion Duke Energy, spends significant time these days reassuring his troops. "If there's ever a time to be seen and be visible, it is now," Smith says. "With all the concern about job security, the economy, a war, and what we've been through in rightsizing the company, the staff has got to be wondering: Will we be working here next week? or Will we be working on creative stuff? I say: This is one where we all have to help each other. We will be OK. We'll come out of this. You have to help carry that message yourself."

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Acknowledge the Outsourcing Threat

Many CIOs are also looking to outside sources of help in meeting IT demands - either for cost, skills, strategy or a combination of the three.

"CIOs faced with an already bare-bones staff are told to cut another 10 per cent, and the most promising thing for them is to look at the offshore outsourcing market where they can theoretically save 30 per cent to 50 per cent in hard costs," says Morello. "If I'm a CIO . . . and I'm being asked to continue to reduce costs after already extensive and radical cost-cutting, I have to justify why I'm not considering offshore."

But while using outside sourcing options can be a good way for CIOs to meet business needs with smaller budgets and fewer full-time staff, their introduction can increase in-house staff malaise. This is particularly the case with outsourcing. "People are very reticent and nervous," Morello explains. "If you are someone who has shown that you're a great technical person but that's all you have - you don't have any business process or management skills - your role is at risk because that work is moving overseas, and chances are you aren't moving to India with it."

Electronic Arts' West understood this issue when he began outsourcing 15 per cent of the company's development work to two middle-tier Indian software companies, iEnergizer in Noida and Cybage Software in Pune. "We originally started sending work over there because of the nonavailability of talented staffing in the US, but that's not the situation today. Now we use it as a cost-effective solution," West says. To help address concerns that Electronic Arts' in-house developers will become obsolete, West has tried to position the Indian play as an opportunity. While he's discontinued hiring junior developers, he's encouraging his existing stateside developers to learn systems analysis and gain more strategic skills, such as getting to know the business's order management processes to figure out what commercial software might be a good fit. "We're trying to make it an opportunity to develop skills around managing offshore projects and managing a distributed development environment," West explains. "There is always an underlying concern, and you can never take the full fear out of it. But we make sure it's seen as a way to get the job done better and faster, and not just cheaper."

The same people issues crop up with onshore outsourcing. George Brenckle, CIO of the University of Pennsylvania Health System (UPHS), outsourced the majority of his department to First Consulting Group, a health-care IT services company. First Consulting took over 170 of Brenckle's IT employees in 2001 just after the hospital system posted a loss of $US200 million, leaving just 30 employees in-house. "You can never 100 per cent relieve the anxiety of outsourcing, but we were very open so the employees knew who we were talking to and what we were finding," Brenckle says.

Brenckle was so concerned about employee reaction that in the end, 25 per cent of the contract with the outsourcer addressed staff issues, such as guaranteeing that the outsourcer would retain all UPHS employees for at least a year and ensuring that turnover would be less than 2 per cent. The pact kept some benefits, such as tuition reimbursement, that UPHS employees have. Still, the outsourcer saw two turnover peaks - one at the switchover and another 18 months later when some workers transferred off the UPHS account. But Brenckle knows it could have been worse. Remaining employees, whose stress levels skyrocketed initially, eventually got used to the idea of managing staff that actually worked for another employer. "Outsourcing is the kind of thing where you have to include your staff on the journey. You have to be very open," Brenckle says. "Because the reality of it is that you have an IT department to run before you outsource, and you're going to have an IT department to run after you outsource."

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"CIOs will spend tons of money analysing who the right outsourcer is and on which piece to outsource, but when it comes to focusing time and money on people issues, they say they can't afford it. But that's the one piece that really matters," says People3's Pittenger. "Bring companies in to hire your people or have the outsourcer hire them. Take the business strategy and make it work for your employees. It doesn't have to be a win-lose situation. Besides, you have survivors inside who aren't going to stay if they see how you treat the people who don't stay."

Keller Williams Realty's Bien admits he made a mistake when he outsourced strategic development to an IT consulting group a year ago. "There's a lot of internal scepticism when you enter into a long-term relationship like that, and the outsourcer is doing all the neat and cool stuff, and your internal staff is keeping the wires together," says Bien, who recently reinsourced that work. "As we go forward, we only outsource commodity services in the short term. And what we will keep in-house forevermore is the development of strategic platforms that differentiate us. It's an employee satisfaction issue. And no one will understand your strategic needs better than the people whose livelihood depends on the success of the company."

Get Used to This

But what CIOs want to know more than anything is when will this period of deflated budgets, inflated stress levels and increased pressure to use outside sourcing options end? Unfortunately, there's no solid answer to that just yet. "There's a yearning [among IT employees] for things to go back to the way they were two or three years a go," says Pittenger. "But that period of time was so artificially inflated we'll never get back to that."

And while budgets have begun to inch up a bit, according to Forrester's Pohlman, IT hiring is still trailing the slight budget increases. "This problem is going to continue to get worse," he says. "Although we're seeing some CIOs start to increase their spending, they're not increasing their hiring [as much]."

Though not rosy, the situation does paint a clear picture of what CIOs need to do - everything they can to take care of their workers.

In Philadelphia, city CIO Dianah Neff seeks help and understanding. She's looking into automation tools that might help her small staff deal with bigger workloads. She's telling her city IT governing board that there's only so much her staff can do. And she's communicating like crazy with her employees.

"Communication is the best stress reducer. The staff feels at least a little less stressed if they understand what is going on," Neff says. "If they aren't worried about what management is doing, they can focus on their jobs or finding creative ways to do more with less."

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Eleven Simple Rules for the Care and Feeding of Your IT Staff

Techniques for doing more with less while keeping staff motivated

1Open up. The key to helping employees deal with their worries - from retrenchments to an outsourcing deal to a hellish project - is communication. "Employees are thinking, I'm a grown-up. Just tell me what's going on," says Linda Pittenger, CEO of People3, a Gartner company. "The great CIOs are very up front, and they keep the best people."

2 Be a good buffer. Don't take on more work than your staff can handle. Instead, explain the resources you have to business executives and invite them to help narrow priorities. If they have trouble understanding why IT can't do more, explain it differently. "Other operating departments are in the same boat," says George Brenckle, CIO of the University of Pennsylvania Health System. "The radiology department isn't going to be able to do more exams while it's decreasing its staff. And as long as they're clear on what it is you're delivering, they understand."

3 Put project management controls in place. "There are always going to be busy times," says Steven Agnoli, CIO of law firm Kirkpatrick & Lockhart in Pittsburgh. "But even when there's more work to be done, having a very sequenced, systematic process to go through makes it less stressful."

4 Identify individuals at risk. Overwrought employees may be hesitant to complain, so seek them out. "If someone's working on a 40-hour project that's now 40 hours overdue, I will assign an additional resource to the project temporarily and reschedule the delivery date to alleviate the problem," says Bruce Reirden, CIO at Care New England.

5 Increase employee accountability. Giving individuals more control over day-to-day decisions actually alleviates their anxiety. "They want to be in control of their own destiny," says Rick Skinner, CIO of Providence Health System's Oregon division.

6 Cut the dead weight. Consider weeding out the bottom 10 per cent of employees. "We have redoubled our efforts to manage poor performers out of the business," says William Miller, vice president of information services at Harris Corporation, a $US1.9 billion communications equipment maker.

"It's not fair to the rest of the workforce who are busting their humps in tough times to have these poor performers by their side not carrying their weight."

7 Walk a mile in your staffers' shoes. "Now more than ever, I've found that I have to get down into the trenches and spend more time in my staff's workplace to make sure I'm aware of the pressures they're under and to show my support," says Kevin Molloy, CIO of Vancouver International Airport.

8 Offer creative outlets. Giving employees just a little time each week to devote to strategic, forward-thinking work rather than the immediate task at hand can go a long way toward staving off burnout.

9 Get more bang for your training buck. While you can't offer big bonuses to reward your staff, you can offer them free exposure to new skills - and often without a big budget. Explore alternative training options. For example, Agnoli insists on cutting-edge training from his major vendors. (See "Where Has All the Training Gone", page 138 for more information on training employees while you're on tight budget controls.)

10 Alert employees that outsourcing does present opportunities. Show employees that the increased use of outsourcing or contract workers isn't just an excuse for retrenchments. Show them the more strategic skills they can acquire in the new situation, such as business process management and systems analysis.

11 Don't forget the recognition. Making time to celebrate employees' successes is critical, whether it's a mention in a company newsletter or just a pat on the back in the lift. And money (if you've got it) doesn't hurt either.