2.6 The Labour Shortages from the Black Death to High-tech Skills

Labour shortages occur when the demand for people possessing specific skills exceeds the supply of individuals who are qualified, not committed to other activities and prepared to do the job. In the seemingly fast-paced, high-tech world, shortages in talent appear from time to time with the introduction of new technologies, tools and software. This begs the question: Is there really a skill shortage of high-tech talent in today’s business world, or are individuals simply located in the wrong places at the wrong time?

Perceived labour shortages are not new. However, their effects are often felt by businesses eager to capitalize on new opportunities and yet unable to take strategic action because of a shortage of talent. Labour shortages are a direct result of either a lack of people possessing a specific, desired talent or a lack of access to a talent pool which can provide the necessary skill. It is important to review briefly the fundamental aspects of traditional labour markets and their relationships with business in order to develop an understanding of the dynamic nature of talent, its subsequent availability and, more importantly, how talent will affect companies operating in a global marketplace.

The Black Death of the mid-fourteenth century resulted in a dramatic alteration in the relationship between a labourer’s worth and his/her role in society. Europe experienced a drastic reduction in population across all demographic sectors of society. Some social pockets were devastated to a greater degree than others, but overall the death toll was catastrophic. The demand for foodstuffs, goods and materials was reduced owing to the reduced population, but the needs of the surviving population remained similar to pre-plague economic times. One could argue that segments of the surviving population were the recipients of the largest transference of inherited wealth between two generations in history. Reviewing the spending habits of the second half of the fourteenth century, one notes an upsurge in the purchase of luxury goods, attributable to the increased purchasing power of the surviving population.^[88] This demand created an identifiable labour shortage and a realization by craftsmen that their services were now much more valuable than before. This change in attitude was also reflected in sudden changes in the cost of labour, moving governments to set limits on wages. Even with this intervention, the change in attitude was irreversible and eventually led to the capitalistic behaviour we have today.

The medieval change in attitude was rapid, brought on by the sudden change to the socio-economic structure because of the massive loss of population. Today, concepts such as ‘virtual organization’, ‘free agent nation’ and ‘collaborative co-opetition’ which use technology and have the potential to alter drastically how organizations view labour are moving at a much slower pace. This is because they lack the same level of societal stimulation. In the current business climate, when a labour market tightens and the number of individuals decreases, business must make concessions on the quality of the labour it requires, find a new source of labour or else invest in individuals within the corporation to retool them with the necessary skill sets. The underlying problem in any dash for talent is firstly related to the way corporations view labour; secondly, to their inability to redefine the social contract between an individual and the value he/she brings to the organization; and thirdly, the way in which firms apply labour. These three factors are exacerbated when coupled with the concept of ‘collaborative partnership’, in which the lines between what is part of the firm and what is not are no longer discernable.

The first talent-related problem is that organizations with aspirations of global operations whose mindset is to treat labour in a traditional manner and simply link operations, products and services together with technology will be disappointed with the results. Davis and Meyer recognize that the fundamental corporate attitude must be unlearned:

The industrial company operated as if labor were another factory part. Men were interchangeable; they turned a wrench every seventeen seconds. This interchangeability made the labor market a buyers’ market: Here’s the job take it or leave it. Even when organized labor helped to balance power, union members were a commodity differentiated by seniority, not capability.^[89]

Talented labour now has options regarding where and when it can add value to an organization. Investors are beginning to realize that talent is an asset that needs to be managed like other assets, with periodic investments and measured performance. This means that retention is as important as recruiting new talent, and that talent requires regular continuous investment in order to work at maximum productive levels. It is possible that in the not so distant future, prospective employees may factor into their job selection process the kind of technology the company has to offer. This may not be as outlandish as it first appears. In the 1960s to 80s, technology professionals considered what type of technology the company had to offer and whether it resulted in providing a set of skills that would keep them marketable.

The second aspect of the talent equation is a firm’s ability or inability to redefine the social contract between an individual and the organization. Individuals should be valued by their direct and indirect influence on contributions to the bottom line. The value added to the business processes which they serve or the administrative process that supports the business should be considered in the overall relationship between the firm and the individual. Traditionally, business was viewed as: divisions of labour; functional organizations; hierarchy; standardization; these four items influenced the working conditions, relationships and organizational behaviour reflected in the contract between the individual and the company. Today, organizations must consider the changes in the working environment which encourage sharing knowledge in a network of work teams; a focus on core competencies; and a process of continuous learning and innovation which are sometimes not reflected in the often one-sided employment contracts. Building corporate loyalty and esprit de corps is paramount in retaining talented individuals and pivotal in promoting concepts like mentoring and thought partnering, as noted by Micklethwait and A. Wooldridge:

Focusing on core competencies might mean outsourcing peripheral employees, but it also means creating a core group of long-term loyalists who are committed enough to the firm to transmit its ethos to new employees. Firms may not be able to offer people jobs for life, but most companies go out of their way to offer people employability.^[90][emphasis added]

The new relationship with labour should treat each employee with the same basic understanding as that of entering a partnership, affiliation or association contact with another firm. In fact, one could argue that since companies will be entering into more and more associative agreements with external firms in the new connected economy, treating employees as if they were an equal source of talent would simplify the total number of agreements and contracts administered. Employees would simply have miniature versions of the larger agreements and the depth at which they are linked to the firm would then be relative to the value they add to a process. Plainly, individuals who have the highest contribution are linked to the firm in the same way as a partner; people who add value to specific process areas may be affiliates and highly skilled individuals who are only needed for specific tasks and can serve several organizations may be considered associates. These relationships are all predicated on an organization addressing the third facet of the labour equation – the application of labour.

The third issue of the talent equation also resides in the area in which many organizations can make substantial gains without having to embrace the aforementioned issues in any depth, simply changing the way in which labour is applied. To illustrate this point, we will single out the technology organization, not because it is the greatest problem area but because technology plays a larger part in the corporate value proposition and it is an organization worth studying as a bureaucracy on its own.

Many corporations that took the business reengineering journey assumed that the IT organization would just go along for the ride. Business process reengineering teams expended a great deal of effort learning to ‘think out of the box’, ‘bust paradigms’, and ‘question the traditional process’. This process of business discovery assumed that technology organizations were already functioning at an optimum level of performance, since technology was part of every recommended solution. Technology organizations needed to re-examine their fundamental beliefs and question how they were developing systems to support the business community. IT organizations were needlessly hampered with a legacy of dated software development life cycles (processes, methods, work products and deliverables). Reengineering advocated that a new business process is the key, not the IT documentation. The new working models – which in many cases were simply high-level process designs lacking any significant details – often created a conflict within technology organizations in that the reengineering process did not allow enough time for proper analysis. This was a point of contention for many technology groups in the early years of reengineering. However, some entrepreneurial technology organizations jettisoned the traditional waterfall development methodologies of the 1970s and eventually embraced the concepts of prototyping and later laboratory simulation.

The Dupont Information Engineering Associates

One of the early adopters of this concept in the mid-1980s was a group composed of Scott Shultz, Adrian Merryman, Deborah Pulak, Kitsie Holcumb and a select group of managers, software professionals and process experts formed within the E.I. du Pont de Nemours Corporation, later called Dupont Information Engineering Associates (Dupont IEA). Bringing business unit personnel together with technologists to rethink the process of software development, they created a methodology to speed up software creation called ‘rapid iterative product prototyping’ (RIPP). What was revolutionary about their methodology was that it created a new way to solve the software development problem by rethinking the composition of a project and calling it a timebox. It was similar to medieval holistic thinking; the beauty of their method is in its simplicity. It rejects the typical project management mentality of a team governed by a project leader who maintains a balance between four variables (people, time, cost and scope of the project) and changes the dynamics of the project by fixing three of the four variables. The timebox states that a project has a limited number of full-time people assigned to it and a fixed amount of funds culminating in an immovable deadline. In this model, the only aspect of the project that has to be managed is the scope of the work which is now the responsibility of the entire team. Therefore, instead of the single project leader managing four variables, three of the four are fixed and the entire team manages the remaining one. Dupont leveraged this new variation of the software development life cycle by embracing the embryonic CASE tools. CASE tools, although plagued with early development problems in their own right, made possible the ability to develop rapidly basic structures of software applications and test their designs with business users in a matter of days as opposed to months. This process eventually led to the development of prototyping laboratories, simulation laboratories and ultimately reengineering laboratories.

While reengineering was transforming the process of business, the business of technology organizations was experiencing a revolution in ever-increasing hardware speeds, continuously upgraded operating systems, new versions of applications software, and a quantum change in the methodology of systems development.

What the Dupont and other software development experiences have identified is that the process of software development has evolved over the last 25 years into a complex method of engineering information and designing features and functions for business users to do their job. Through successive generations of technology, tools have advanced the early process of translating that information into a series of procedural instructions which the computer can understand to a more complex process that looks remarkably similar to the new tools and even more complex tasks. As the art of software development aged, the variables that controlled it became more complex; technologies changed, skills required changed and how we used the computer changed. Consequently, the software development process changed for the worst. As the tools for software development became more efficient in automating the design and construction aspects of developments, IT organizations used this opportunity to erect a monolithic organizational structure to compartmentalize the functions, creating more and more areas of specialization. As new hardware is introduced, new programming languages come and go, and a myriad of software components move in and out of favour, as do the skill sets of people within the technology group and in fact in all parts of the organization. This state of waxing and waning skill sets is exacerbated throughout organizations as more and more jobs become inseparably linked with technology. Eventually, this leads to a mismatch of skills to tasks and labour shortages occur, creating an oversupply of non-vital skills and making previously desired people redundant, as we shall see next.

^[88]E. Hunt and J. M. Murray, A History of Business in Medieval Europe 1200–1550 (Cambridge: Cambridge University Press, 1999) p. 166.

^[89]S. Davis and C. Meyer, Future Wealth (Boston: Harvard Business School Press, 2000) p. 42.

^[90]J. Micklethwait and A. Wooldridge, A Future Perfect: The Challenge and Hidden Promise of Globalization (London: William Heinemann, 2000) p. 325.