December 03, 2020
IT’s 2021 Workforce Transformation
As companies try to find their footing in 2021, the IT organizations is expected to undergo accelerated transformation, driven by a record number of staff working permanently from home or alternate locations.
Among the challenges facing CIOs is overcoming a shortage of change leadership skills, exacerbated by the virtualization of teams. In addition, they will need to take on team restructuring and skill upgrades to ensure that strategic relationships between IT and business stakeholders do not deteriorate.
This past October, IT leaders responding to The Hackett Group’s 2021 Key Issues Study predicted that the coming year would be one of upheaval in IT’s workforce model. Although updating talent has been prominent on past IT annual agendas, disruption from Covid-19 has brought new urgency to the objective.
Changes include a greater percentage of staff working from home permanently, combined with a greater willingness to hire remote talent. In addition, there has been recognition of a pressing need for more change leadership. These shifts are logical outcomes from existing as well as pandemic-driven workforce trends. But such transformations come with substantial consequences and challenges.
First, it is clear that there is urgency behind IT’s workforce transformation. In our Key Issues Study, aligning IT skills and talent with new business needs ranks third among priorities in 2021, behind securing systems and acting as a strategic partner to the business. In terms of actual initiatives on IT’s 2021 agenda, updating talent also ranks third, behind automating workflows and improving data’s ability to drive business value. For more context, consider that updating the workforce actually outranks priorities such as application and platform modernization, innovation, resiliency, agility and more (Fig. 1).
FIG 1. IT 2021 priority objectives and confirmed transformation initiatives
What skill gaps (i.e., the difference between demand and supply) are we talking about? Unsurprisingly, the largest in IT are associated with emerging technologies such as artificial intelligence. But the skill CIOs say they need most among staff is change leadership – the third widest of all the skill gaps predicted for 2021 (Fig. 2).
FIG. 2 Anticipated IT skill gaps in 2021
Besides staff who can lead and sustain change, success in 2021 will also depend on having more IT managers who can think strategically and design customer-centric solutions. The urgency of closing these skill gaps aligns with the high priority of associated objectives: acting as a strategic partner to the business and cultivating a customer-centric culture (as shown in Fig. 1).
The outlook for closing skill gaps is better in 2021 than it has been for many years. There are two reasons, both related to the pandemic. The first is that IT’s performance in mitigating operational disruption from the coronavirus shutdown has elevated the function’s credibility and support across the C-suite and business units. Now, if IT leaders say they need new talent to achieve critical goals, they are more likely to be taken seriously and accommodated.
The other reason is increased permission to hire talent wherever it is located, rather than where the corporate offices happen to be. The effectiveness of remote workers, long understood by many IT leaders, has finally become apparent to the rest of the C-suite. For IT organizations in geographies with a limited supply of needed skills, or in locations where such talent is too costly, the ability to tap into a global talent pool is a game changer. More than half of companies that responded to our Key Issues Study plan to take advantage of this opportunity. Indeed, more respondents plan to hire remotely than plan to hire for existing office locations (FIG. 3).
FIG. 3 IT staff hiring locations in 2021
IT’s embrace of remote hiring is part of a transformational shift that will have many more staff working remotely after the pandemic than ever did prior to it: Before the crisis, respondents averaged only 5% of their IT staff working from home (WFH) more than 80% of the time. Slightly more, 11%, had staff who worked a hybrid home/office schedule (working from home between 20% and 80% of the time).
During the spring shutdown, those numbers spiked to 61% WFH and 31% hybrid. Having seen little reason to reverse the trend, IT leaders expect 59% of their staff to work primarily from home or a hybrid schedule once the pandemic ends (FIG. 4).
FIG. 4 IT staff trends in working from home
Percentage of IT staff working remotely
While the move to remote staffing should facilitate the updating of talent and closing of skill gaps, it gives rise to a new set of concerns for IT managers:
- Will productivity improve or deteriorate?
- Do IT managers have the skills to lead their teams virtually and facilitate change?
- How will IT maintain or form strategic relationships with business stakeholders?
- What will happen to IT’s existing culture and efforts to transform it?
- Is it practical or even possible for largely remote teams to truly drive innovation?
Although we call it out specifically only in the No. 3 concern listed above, the capability of relationship building – between IT and business stakeholders, and between IT managers and their staffs – is fundamental to solving all of these concerns.
Some CIOs feel that IT teams should maintain a high profile among their constituents, and that the best way to do this is to bring them back to the office after the pandemic has subsided, where they can be seen working with and on behalf of stakeholders. Others are concerned that IT’s influence on the business may suffer if remote senior leaders are more easily overlooked and not invited to the table when strategic decisions are being made.
Strong, inclusive governance models can help avoid such oversights, ensuring that key IT leaders representing architecture or cybersecurity, for example, are required for specific strategic meetings. Another remedy is structural. That is, ensuring that IT leaders are embedded in or tightly aligned with business product, platform or LOB teams. But it is the ability to partner with business peers by building rapport, trust and credibility that enables governance and structural alignment to work effectively. The problem is that most IT organization have a shortage of staff with this capability.
Remote workforce models, besides distancing IT staff from stakeholders, exacerbate another shortcoming – weak leadership skills among IT middle managers. Strong individual contributors typically get promoted to positions of team leadership, but many find they lack the skill and experience to succeed in that role.
This weakness is only aggravated by the virtualization of teams. Strong relationships between managers and their teams will mitigate the effects of distancing, but managers must be committed to frequent and meaningful two-way and intrateam communications.
The bottom line is that the future IT workforce needs more effective relationship builders. Our data shows that IT organizations that report a small or no shortage of relationship skills are 70% more likely to achieve remote-worker effectiveness.
The coming year will be one of experimentation to find the right formula for success in the new normal. How well CIOs manage the evolution of the IT workforce model and skill base will largely determine how well those experiments turn out.