Good As GoneGood As Gone

As CIOs digest recent news from the Labor Department about improving U.S. productivity, they should consider another factor: Many of their employees are working with one foot out the door.

Technology professionals, like many U.S. workers, have been dealing with increased workloads, job uncertainty, salary freezes, and pay cuts for so long that they're poised to jump ship to new jobs at the earliest opportunity. While job alternatives are scarce, company execs need to do what they can now to prevent a brain drain as soon as the economy improves.

Managers are particularly at risk of bolting. Almost half, 48%, across all business functions say they're looking for new jobs or plan to do so once the economy picks up, according to an Accenture survey. Fifty-five percent of business-technology managers say workloads have increased in the past 12 months, according to a recent Robert Half Technology survey. And median pay for IT managers remains flat this year, according to information Research's National IT Salary Survey.

"Resentment is approaching unprecedented levels among mid-managers," says Marc Lewis, North American president of IT executive recruitment firm Morgan Howard Worldwide. Lewis predicts a "mass exodus of mid-managers" when the economy solidly recovers, perhaps next year or in 2005.

Business-technology workers have it tough, but many with jobs aren't about to complain, given how hard it is to find work these days.

Last December, Andy Baumel, who has computer science, math, and MBA degrees, plus 17 years of IT experience, lost his job as an IT manager supporting traders at an investment firm in San Francisco when the firm went out of business. After eight months of searching, Baumel landed a job last month as a consultant. The pay is about half what he was making before, he has less responsibility, and no direct reports. And the job is in Los Angeles, so he's commuting weekly from his San Francisco home. "If you look at all my skills and experience as a big pie, I'd say this new job uses about 20% of my skills," Baumel says. Like others in this article, he asked that his employer not be named.

Still, Baumel considers himself fortunate. "I'm definitely lucky," he says. "I have a job that pays my bills and is still interesting, even if it's not exactly what I was looking for."

Smart companies are looking for signs of dissatisfaction and taking steps to head it off. For example, mutual-fund company Vanguard Group does regular employee-satisfaction surveys and charts changes over time. Hewitt Associates, the human-resources consulting and outsourcing firm, takes similar steps and has increased internal communication since deciding to hire IT staff in India, a hot button in many IT shops. Companies that take steps like these have been rewarded with lower turnover.

Losing management talent could be costly. Research by the HR consulting firm Towers Perrin suggests IT workers value leadership and management more than employees in other business disciplines. Four of the top 10 factors that motivate tech employees relate to management, compared with just two in other professions. The same research shows management performance deteriorating, comparing surveys done in April 2001 and in January 2003. In the 2003 survey, only the leadership attributes "supporting teamwork" and "acting with integrity" got positive responses from more than 50% of employees. Though productivity and economic-growth numbers suggest the economy is improving, the job market is still weak. Employment figures released last week showed companies shed 93,000 jobs in August. A survey of 148 senior executives by recruitment firm Christian & Timbers shows almost half say they're short-staffed but have no plans to hire substantial numbers of employees in the next year.

Brian Hencey, an E-commerce IT manager at a Texas financial-services company, found out what it's like to look for a job. His company recently reduced overall head count by 10% and IT staff by 20%. Every employee--including the CIO--had to reapply for a job. Like most of his colleagues, Hencey started looking for work just in case, sending out 200 to 300 resumés and applying for about 100 jobs. "I only got about five call-backs," he says. Many of the hiring companies had long lists of job requirements that seemed to Hencey to combine the responsibilities of several positions. Hencey feels fortunate to have been rehired at the same pay, responsibilities, seniority, and title.

The most-surprising finding in the Accenture survey is the top reason managers give for looking for new jobs: money. Ed Jensen, partner of Accenture's Human Performance Service Line, says compensation is always among the reasons people look, but it's never been No. 1. Middle managers seem to feel that "even if the [work] situation isn't better somewhere else, the pay might be better," he says. Managers, whose pay is more often tied to bonuses and company performance, are less likely than staffers to have received raises this year. While median total cash compensation for managers was flat at $89,000, median IT staff pay rose 3.2% to $65,000, according to information Research's salary survey.

No matter who you are, the road to raises is difficult these days. Companies reward IT professionals less generously for key skills and certifications than in the past, research suggests. In the last six months, professionals in 57 certification categories saw average bonus pay for certifications fall to 7.7% of base salary, down from about 8.2% last year, says David Foote, president of IT-consulting and research firm Foote Partners LLC. Foote blames the slow economy, in part, but also points to offshore outsourcing, which puts pressure on U.S. IT workers' wages. For the same reason, Morgan Howard's Lewis calls outsourcing the "Achilles' heel" of the recovery of IT employment in the United States.

Software-quality professional George Bedarf has seen the results. While looking for work the past several months, he received calls from Indian-based services firms seeking U.S. workers at about $30 an hour. That's about 50% less than Bedarf was used to getting from American companies for the same work.

With 20 years IT experience and an MBA, Bedarf spent a year looking for a job after he was laid off as a software-quality engineer. He found one at a software company, only to be laid off again in April. Sending out 500 to 600 resumés yielded little response, and he's been driving a special-education school bus to make ends meet.

Bedarf tinkered with 23 versions of his resumé until a recent iteration, highlighting the five years he worked in biotechnology, seemed to do the trick, resulting in 24 job interviews. "That's a lot in this type of economy," he says. The payoff: Bedarf is due to start at Abbott Laboratories Inc. on Sept. 15 in a temporary job, with the possibility for it to become a full-time position.

Bedarf's success indicates there may be hope for unhappy IT managers. One IT recruiter goes as far as to say the things that have workers most discouraged--heavy workloads, tight resources, increased outsourcing--may be their tickets to success. Umesh Ramakrishnan, a partner at Christian & Timbers, says if hiring picks up, the best candidates will be those who can talk about how they've successfully done more with less. "Those people might be miserable in the conditions they've been working, but that group is a desirable one to hire from," he says.

All the more reason for people running IT departments to figure out who's unhappy, how much they need them, and how to keep them. --with Chris Murphy