The technology labor force in the US has been in full employment (4% or less) for 22 of the past 30 years, and has been below 2% unemployment the last 3 years. With US GDP growth now above 3%, the overall labor market has become very tight, and for technology professionals even more so. This tight technology labor market fin the US is also reflected in much of Europe and parts of Asia. In Copenhagen, one of the key locations we source talent for Danske Bank, it has been estimated there are as many as 30,000 unfilled tech jobs in the greater Copenhagen area alone. Without an adequate supply of new skilled workers — not just technology, but many types of skilled workers — we are seeing companies lower their forecasts for growth. This has also reduced productivity and wages gains in many countries with lower levels of available skilled workers. From aircraft workers in Canada to skilled manufacturing workers in Germany to construction workers in the US, the talent deficit has broaden and deepened across many sectors and in many geographies. And this talent shortage will be with us for a while. Even if the economy cools off in the next few years, the large number of retiring baby boomers will make it difficult to replace all of the required skilled workers employed today with new graduates. And in IT, the shortage appears to be particularly acute.

So how should the technology leaders approach building or maintaining their teams in such a tight labor market? Nearly every organization that has a good reputation in the market will be recruited heavily, so even if you have the talent now, it will be difficult to hold on to all of your staff. Thus, you must plan to not only be able to fill your additions, but must counter the likely attrition that will also occur.

The only sustainable way to achieve this is to build your team. If you try to buy your team, where you go out to the market repeatedly to recruit both senior and mid-level talent, it will be expensive. And even with the best recruiting process you will have misses. When you recruit senior talent, based on the top grading assessment, it can result in 1 in 4 duds. And these are expensive misses, as the senior mis-hires result in further mis-hires or greater attrition in their division, or poor subsequent technical decisions. It is far better to be highly selective on which positions to recruit external, and where necessary, try to leverage talent that has been previously successful in similar situations in their career, and utilize a filtering process like topgrading. Thus, good leaders should minimize the buying of talent – use external recruiting only for critical position or skill gaps – and focus your efforts on recruiting outstanding junior talent and then building and growing your team.

To build a high performance technology team takes time and disciplined effort by the entire leadership team. You must start from the ground up. Presumably, you have located your primary technology sites where there are good technical universities nearby. The local universities are where you start your pipeline of talent. Your senior managers and recruiting team should be fully engaged with the local universities: sponsoring programs or projects, providing seminars, and just being active and providing a link to your firm. More importantly, invest in a student worker or intern program that is both wide and meaningful. Bring onboard students to your firm to do real and meaningful work that enables them to contribute and grow as well as to understand the technology work done at your firm. If you provide these opportunities and ensure active and effective interaction between the students and your senior engineers and managers, then the students will gain valuable skills and insights and become positive supporters of your employer reputation. When it comes time for recruiting the graduates, all of them will be much more familiar with your firm and what it offers, and those that were student workers will likely be highly inclined to join your team. And even better, you will know from experience which students are the best fit for your team.

In addition to building the pipeline of junior talent from the local universities, you must filter and develop the talent on your current team. To bring structure and clarity to staff development, I strongly recommend defining and implementing a career path program. A career path program maps the skills and competencies for each job position within a job family across your technology organization. From network engineering to project management to business analysis to software development, each job family is defined from its junior levels to its most senior levels, showing the additional skills, experience, and competencies required at each level. Further, certifications or demonstrated levels of excellence are noted for positions. Typical career paths are mapped through these job positions to show what an individual can both expect and accomplish in their career. This clarity enables your staff to understand what their next steps are, as well as to emphasize the importance of the development and acquiring of new skills and capabilities. And while a career path program requires an upfront investment in its definition, it pays back dividends in terms of employee satisfaction and improved staff development. Once you have the competencies, skills, or certifications defined, then you must work with local universities, training contractors and your senior staff to provide the content and curriculum in accessible formats so your team can drive their own development. And you must provide the budget and encouragement for your staff to take the initiative and accelerate their professional development.

With the foundational elements of a pipeline and staff development in place, you will have plentiful rising and ready junior staff. But, they must be able to step into their next spot up. To enable a free flow, mid-level positions must be vacated due to growth and promotion. If you have not ensured that the vast majority of the positions on your team are growth positions, that is requiring your staff to develop and have the potential for the next level, then those positions can become ‘blockers’. Having a large number of ‘blockers’ (staff that perform adequately but are not capable of moving to the next level) results in a stagnated and frustrated junior pool of talent underneath. This ready pool of talent will leave your organization if they do not see adequate opportunity when they acquire valuable additional skills that can get them to the next level in the market. This is often a major flaw in legacy organizations, which have maintained too many personnel who have key knowledge but not strong skills or potential. Your leaders must identify such situations and either encourage the blockers to become higher performing, or remove them. If you are not sure how best to carry out this ‘pruning’ or improvement – read the best practice page to gain the methods. I strongly recommend there should be ‘no escalators, only stairs’ in your organization. That is to say, one must work and gain skills and competencies to move up in the organization (i.e., take the stairs) and just because someone has been in the organization for an extended period of time, one is not promoted based on length of service (i.e., there are no escalators) but instead only on merit and capability. Rewarding staff development and performance with opportunity and promotion will further encourage your team to take their development responsibility seriously and build their capabilities.

This ‘build’ approach should be used at each of your strategic locations for your IT staff — and you should leverage the overall Global Team approach explained here on our reference page for the entire IT organization.

Given the current environment, it is likely that some of your best engineers or leaders will gain opportunities elsewhere. This is to be expected, especially if you have a reputation for being a strong technology shop. Of course, you should work where possible to minimize such losses, but you will still have losses. So it is better to prepare for such attrition, by developing a strong bench that is ready to step in or step up, into the newly vacant positions. Each of your leaders should understand the development of a bench for the key positions in their organization is a critical and ongoing responsibility. With a strong pipeline and development program in place, you will have a good flow of up and coming talent that can then step into these roles and allow your shop to keep humming. In sum, in a tight labor market, the best technology leaders build their teams with strong pipelines to enable them to obtain enough talent to get the work done, to have the mid and senior expertise to do key technology work and apply best practices, and to have a bench ready to step up when there is attrition.

What experience have you had as a leader with building teams? What has worked best, build or buy?

Best, Jim Ditmore