We share perspectives from our latest CIO peer group meet-up, where we discussed how recession planning, talent retention and acquisition, and data governance will help prepare businesses for the future.
Economic signals have been mixed throughout 2022 and will likely continue fluctuating during Q1 of 2023. Inflation is creating havoc across the economy, and enterprise IT is feeling a direct effect right now. Demand for talent remains very high, and competition for that talent is fierce and more far-reaching than ever before.
How are CIOs addressing these issues and others? What are they focusing on to continue creating enterprise value and support their company’s growth and profitability?
These issues and others were focus areas in the two CIO peer groups I recently hosted. CIOs from companies ranging in size from $100 million – $2 billion shared their thoughts in the closeout to our 2022 peer group series.
I had the pleasure of attending an economic forecast breakfast hosted by the Greater Cleveland Partnership and featuring Dylan Chun, Director and Portfolio Manager for Bank of America. Chun made a compelling case that a recession in 2023, while not inevitable, was an almost certain outcome. Citing historical markers and current conditions, along with his view that the current administration’s fiscal policy is to use a recession to tame inflation, Chun strongly argued that a downturn was far more likely than not.
CIOs in my groups are approaching planning for this possible future in different ways. First, they began considering the likelihood and doing scenario planning last year, early in Q2. As we’ve gotten closer to the timing with more clarity on likely impacts, most are not overly concerned.
The consensus was that it was likely to be sector-specific, and their related business diversification would shield them from overly painful impacts. Most are addressing the looming challenge with short-term capital spend reductions and targeted holds on hiring.
The Hunt for Talent
The demand for talent continues to be strong, not only in IT but across the enterprise for most companies. Our group shared various scenarios of their talent acquisition struggles.
One company in the financial services sector has been turning away clients for almost six months due to their inability to add staff. Meanwhile, upward salary pressure continues to be strong, and more than one CIO reported losing staff to salary increases of 50 percent or more. Talent acquisition costs are increasing: recruiting, vetting and negotiations are all taking longer.
Companies continue to have difficulty navigating the talent – from the level of competition to the impact of hybrid and remote work accommodations. These businesses are addressing talent retention issues in different ways: across-the-board increases in PTO allowances, spot salary bumps and promotions that occur outside the normal cycle, customized hybrid and remote work opportunities, unique in-office events and perks (for example, food trucks and so on).
Talent attraction is another matter. Most attendees are focused on salary offers, targeting remote candidates outside the region, employee referral programs, and so forth.
Focusing on Data Strategy and Governance
Finally, as we wrapped up our time, we discussed data strategy and governance. Data-informed decision making remains an important focus area for these CIOs, and they’re making investments to capture, digest and return valuable insights to their business units. However, at the same time, they realize the importance of data governance and good stewardship. Factors influencing this realization include: a general proliferation of data across the enterprise, disparate or conflicting data resulting from acquisitions and divestitures, and shadow IT.
They’re investing in applications and business processes to help ensure a single source of truth for the enterprise. And probably more importantly, they’re investing talent capital in the form of business-line dedicated business analysts and relationship managers to help focus efforts and reduce data-related shadow IT.
While the current market is in flux to a degree, the general feel of these CIOs was confidence and cautious optimism – optimism that the expected economic turbulence would be very manageable. Talent remains a vexing issue, not only in IT but in most parts of the business. While they’re actively working to address the talent issue, they know a solution to this challenge is not imminent. Optimizing their hybrid work environments is a continuing priority.
We’ll convene again in late February, I’m looking forward to another robust discussion and hearing about the progress they’ve made on these challenges and others.