Mull before you cull

Headcount is highly visible in a recessionary environment, and you can be sure the CEO and CFO will be counting, and costing, their people. A determined headcount cut is one way to be seen to be improving operational margins at once, to almost certain stock market and shareholder approval.

Later, and with the benefit of hindsight, ill-thought-through headcount reduction will be seen to have weakened a business's performance capabilities at a crucial time, resulting in difficult-to-recover strategic damage. And all this to equally certain stock market and shareholder disapproval.

Headcount reduction is not to be opposed per se - it is a rare firm that does not, over time, accumulate resource that is no longer delivering real business value. At ICI in 1993, I inherited a worldwide in-house email system based on Digital's All-In-One and IBM's Profs. Established policy was to implement every new software upgrade that Digital and IBM offered - keeping a 30-strong ICI IT team busy. A more selective take-up of new upgrades ensured that a smaller team of five was sufficient. Customer satisfaction remained high, and costs were significantly reduced.

So what are the factors that the captain of the good ship Enterprise IT should be seriously weighing now? I propose he asks himself two key questions.

The first is: ‘On what main business tasks are my people focused?'. Is their work integral to delivering the core competencies of the business, or focused on back-office operations and underlying technological infrastructural operations? Last month, I argued that with back-office and underlying infrastructural ‘stuff' increasingly commoditised, enterprise IT should be about delivering the core competitive competencies of the business.

In the face of the world recession, wider initiatives are at play that will work to strengthen this reality.
In the US, the Information Technology and Innovation Foundation (ITIF) has published detailed proposals to the Obama administration under the heading The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize America (see www.itif.org). One of the proposals that it details is to give America an effective broadband digital infrastructure with job creation over the several years of its construction, and the potential to sharply raise both corporate and national productivity in subsequent years as economic growth returns.

Intellect, the UK trade association for the hi-tech industries, has made a similar case to Gordon Brown, and his communications minister Lord Carter - in his ‘Digital Britain' initiative - looks set to urge investment in a nationwide high-capacity broadband capability. Such an infrastructure will speed the consolidation of data processing and storage capacity across most sectors of the economy and feed the growth in technology-enabled business services.

So the challenge implicit in my first question is: speed the reduction of enterprise headcount devoted to back-office and underlying infrastructural ‘stuff' by moving to the direct and competitive sourcing of relevant business services.

The second key question is: ‘Are the right people focused on delivery of the core competitive competencies of the business?'.

Are their innate competencies aligned to delivering their specific responsibilities? Attention to detail? Strategic influencing skills? Psychometric profiling is the best tool set here.

Have they the skills relevant to delivering their responsibilities? Project management qualifications? Fluent in designing contemporary technical architectures? This must be measurable with suitable diagnostics.
Are they building experience relevant to delivering their responsibilities? Endlessly accumulating experience by ‘just doing it' under real competitive pressure is the one of best means of sustaining the core competencies of a business.

The challenge implicit in my second question is to have a proper understanding of your business's core competitive competencies, and how technology is integral to their delivery at the customer. This scopes the human contribution required to enable the relevant technology to deliver, and thus where to firmly protect people and their roles in the current recession. It also tells you where to wield the scalpel in a determined fashion.

People are also about process: and in the face of the recessionary challenge, it is vital that processes as well as people are correctly scoped and business-aligned. Rolls-Royce monitors more than half of its aero-engines in real time as jets fly the world, enabling it to provide clients with tightly controlled and business-responsive engine maintenance schedules, and provide its own engineers with endless real-time learning to feed their ability to keep ahead in the very competitive battle for survival with Pratt & Whitney and GE.

In tough times, it is even more about ‘the people, stupid', but in particular the right people focused on the right roles in delivering the firm's core competencies, underwritten by the right processes.

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