Monthly Archives: June 2012

IT Labor

Just to provide some support for point 1 in my last post:

Cringely: A lesson on IT labor economics from Memphis

When ServiceMaster announced its decision to cancel its contract with IBM and to in-source a new IT team, the company had to find 200 solid IT people immediately. Memphis is a small community and there can’t be that many skilled IT workers there, right?  ServiceMaster held a job fair one Saturday and over 1000 people attended.  They talked to them all, invited the best back for second interviews, and two weeks later ServiceMaster had a new IT department.  The company is reportedly happy with the new department whose workers are probably more skilled and more experienced than the IBMers they are replacing.

Read the whole thing. No, really, read it.

Labor costs represent a very high percentage of IT support costs. Managers who note this usually think the solution is to find cheaper labor. This is invariably wrong.

Why we did it that way

I’d like to expand on Adam’s post on recruiting and retention, and also tie it in to our earlier policy to build our own administrative applications instead of buying commercial packages. This was the reasoning behind Lawrence and Randy and company managing Data Processing the way they did:

  1. The key to any successful organization is the people who make it up. You should do whatever you can to recruit and retain the best people you can get.
  2. The University can’t compete with private industry on salary. If we want to hire and keep good people, we have to provide something they can’t get in another job.

So what were the non-financial incentives they used?

  • We recruit and hire people with little or no experience, but strong aptitude and people skills, and train them. In this way we get good people that other IT organizations miss.
  • We provide interesting and challenging work. This is where the “build” strategy beats out “buy”: developing your own application requires more creativity than installing and maintaining something bought from a vendor.
  • We show respect and trust by allowing by providing direction and resources, but allow individuals to work out their own creative solutions to problems.

I agree with Adam that it wasn’t just the creation of ITS that changed this. It started with the simultaneous dot-com boom and Y2K remediation. For one thing, outside salaries increased more quickly than the University could keep up. Your job needs to be really interesting to justify not leaving when doing so could mean doubling or tripling your salary. At the same time, the kind of remediation that was needed for the Y2K stuff wasn’t all that interesting. Then ITS was formed and we had to do SSN remediation and by the time that was over the culture (and people in management positions) had really changed.

Still, I wanted to point out that there was a well thought out, coherent philosophy and strategy behind the way Data Processing/ACS was managed, and that it worked quite well for many years.