In the technology industry, the competition for talent is fierce, and there is no letup in sight. Protiviti’s survey, The Top Risks for 2019, identifies the “talent crunch” as one of the three top risks for technology companies today and for the foreseeable future.
A 2019 Gartner study concurs, finding that concerns about talent shortages now outweigh those about accelerating privacy regulations and cloud computing. In its 2019 report, The Global Skills Shortage, the Society for Human Resource Management reports that 83% of respondents have had trouble recruiting suitable candidates in the past 12 months.
The war for talent is largely an economic issue of supply and demand — and today, the economics clearly favor the in-demand employee. According to Robert Half, skilled technology professionals are in short supply, and 43% of technology leaders are willing to increase the salary or compensation package when they hire for certain positions.
These economic rules apply equally to privately held, emerging technology companies and large, established organizations. All companies need to recruit from the same limited pool of talent, and they must compete to retain the best of that talent over the long term.
As Protiviti’s top risks report notes, “The talent crunch in tech isn’t just about the lack of skilled workers available for hire. It’s also about retention challenges, including at the highest ranks of the organization.”
Strategies for Attracting and Retaining Talent
A company with a vision that is truly compelling will have an easier time both attracting and retaining top talent, because employees will feel they are working to achieve something larger than themselves. Emerging tech companies have certain advantages in this competition. Their founders often have a powerful mission and vision that attracts some of the best, most ambitious talent in the industry. This vision might offer a new view of the future or a unique solution to a problem. For example, here is the vision statement for SpaceX, the space technology company: “SpaceX was founded under the belief that a future where humanity is out exploring the stars is fundamentally more exciting than one where we are not. Today, SpaceX is actively developing the technologies to make this possible, with the ultimate goal of enabling human life on Mars.”
Where a visionary company might run into a problem with talent is compensation. High performers with coveted skills often command large compensation and benefits packages, which may be a problem for startups, but which more established, deep-pocketed organizations are able and willing to provide. In areas with a high cost of living, like San Francisco or New York, the pressure on companies to offer competitive packages is even greater.
Fortunately, emerging technology companies have several ways to counter their competitors and fortify their supply of human capital for the long term. First, companies can reinforce and build on the strengths of their founding culture. If corporate social responsibility is part of that culture, companies can offer their commitment to addressing key social, environmental or industry issues such as diversity or sustainability as attractive incentives for employees who share the same values. Microsoft’s AI for Good, for example, is a social impact program giving employees and grant recipients a chance to contribute their expertise to help solve environmental and humanitarian issues. Protiviti has found that the responsible technology company has a strong brand image and reputation.
Second, companies should take a look at their workplace policies and practices and find ways to adjust them to better accommodate the needs of their employees. One good approach is to offer flexible work arrangements, allowing people to work outside of a traditional office setting, at least for part of the week. These arrangements are much appreciated by employees and can boost productivity and retention.
Companies should also make succession planning a high priority, as there is a real risk they could lose some of their most senior people to competitors or even to companies in other industries. This can be an especially risky issue at fast-growing startups that depend on a core group of leaders.
Take Advantage of New Labor Markets and Models
An increasing number of emerging technology companies are relocating to inland metro areas such as Austin, Chattanooga, Detroit, Huntsville, Nashville, Oklahoma City, and Omaha. Austin, for example, is known as “Silicon Hills” and is home to a number of established companies like IBM and Intel, and numerous startups. Huntsville, Alabama, is one of the fastest-growing tech cities in the U.S., according to ZipRecruiter.
The East Coast and West Coast are no longer the exclusive geographies where an emerging technology company can thrive. Costs are a major driver of this inland spread but access to fresh talent that is not being constantly wooed by competitors is certainly a factor.
Technology companies also are embracing a managed services model for various operations, such as finance and accounting, IT support functions, engineering development operations, and even product development programs. Managed services providers can partially or fully support entire functions, assuming responsibility for performance, productivity and service level. For example, they can support an entire accounting and finance function, providing skills that are in short supply, particularly in tech startups. Managed technology solutions offer a full range of IT support services such as IT help desk and IT operations, and are often adept at leading-edge technologies for increasing business performance, such as robotic process automation (RPA) and artificial intelligence (AI).
Take the Initiative in the War for Talent
Technology is a highly competitive industry, and companies need quality people to grow and thrive. Fortunately, there are proven approaches to attract and retain the talent companies need to succeed, but they need to establish the conditions for success first. Developing a clear and attractive vision; being open and responsive to employees’ needs; looking for talent outside the box, including internal development and succession planning; and taking advantage of managed services organizations can all pay talent dividends. It’s not too soon to consider employing at least some of these approaches. The competition for talent, especially in growing technology areas like automation and artificial intelligence, will only intensify, and taking action now is the best way to ensure future success.