Jan 10, 2009

What is happening? part 2

 In order to cut costs should I fire? Who? Are you replaceable ?

In the midst of the current Israeli economic slowdown it is clear that the good old days are over. At least for the first half of 2009, more likely for the whole year, we are in for some gloomy times.

Companies are being forced to cut costs and let people go. Some IT managers, even CEOs (vendors) and CIOs (users), aren't sitting around waiting to be downsized - instead they're jumping ship and hopping aboard another.

Whether you are let go or you leave on your own, there is an impact. Of course conventional wisdom says that everyone is replaceable. That may still be true, but the really important question is: at what cost? Is the cost of replacing someone today the same as it was 20 years ago when I worked for DEC-Israel?

Just because technology is cheaper and more abundant it does not mean that it is cheap to replace people.

Increasingly, modern business is becoming a complex, distributed real-time information processing system. The nodes of this system are employees, tirelessly passing bits around to each other, crunching and filtering with the goal to compute, to gain competitive advantage, and to help the business survive. Each one of us processes an increasingly large amount of unique information on a daily basis.

Knowledge-based workers are very different from workers in a building site or factory and the cost of replacing them is also very different. While companies save money in the short term, the longer term impact of losing a person is not so clear.

The problem is that unlike building sites, factories or even the boxes in the “computing cloud”, employees in the modern company are not identical. Each one knows a unique piece of the information puzzle that makes the company tick. This is why the old adage that everyone is replaceable may need some re-thinking.

Certainly, there are still plenty of examples where slackers are growing old getting paid to work their 9-5 jobs while getting little done. But safe havens for slackers are rapidly diminishing, because they are losing out to smarter, more agile, and faster competition.

In a way, the pressure of real-time information is polarizing - the hard-working people are becoming harder to replace, while slackers and perhaps less knowledgeable people are just not needed. We have seen this trend in IT for a while - a handful of smart people can accomplish much more than an army of mediocre workers. A skilled, quick professional stands out these days. The people who shine are the people who get the new world - a no-nonsense approach, courtesy, and most importantly, speed.

Are IT Leaders and Visionaries Replaceable? Losing leaders and visionaries is very, very costly. The knowledge, the vision, and the game plan that was in his head are unique and cannot be replicated.

Great companies are defined by the great people behind them.

There are no great companies without visionary leaders. And if you agree that all knowledge workers are becoming increasingly more valuable, the leaders are then 10 times more valuable. Retention of key leaders and managers is paramount to the success of modern large companies.

And yet, change is such a huge part of nature! Our world is based on transition and change. Changing jobs is an integral part of our career path. If people move around we all benefit. We benefit from knowledge sharing and new alliances that can lead to great new ideas. Remixing is good for both individuals and companies, so there is no way that change will ever stop.

But still, it is now becoming more costly for the companies. Because of the increasing amount of information processing done by individuals and the uniqueness of each, living without or getting replacements up to speed is more costly.

Retaining and motivating the digital elite should be recognized as a high priority for any company even in this hard times.

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