By Scott Grossman, Chief Financial Officer, Ensono
The Great Resignation permanently changed the calculus for business success. How will your organization win in the new world order? A ruthless focus on differentiation is the place to start.
The Great Resignation is a crisis unlike any other. The employee exodus we’ve seen over the past two years—especially in the tech sector—is not, as many businesses unfortunately believe, a phase to simply power through, or one to tackle with outdated pre-COVID-19 tactics that have proven successful in the past. It’s time to abandon this kind of myopic thinking.
The Great Resignation now requires a “Great Realization”: The game has changed. The old rules won’t work anymore, and ignoring the new ones puts your organization at risk of becoming one more post-pandemic cautionary tale. Don’t let the central banks’ recent inflation-containment efforts, and the wave of layoffs they’ve triggered across some sectors, lull you into thinking employers will soon be resuming their former place as the supreme leverage holders in the hiring equation. The war for tech talent isn’t ending anytime soon. In fact, it’s only going to get tougher. A recent CompTIA Tech Jobs Report by the IT nonprofit CompTIA identified more than 500,000 tech job postings in June of 2022—a 62 percent increase over the same period last year. To paraphrase Microsoft CEO Satya Nadella, “Digital technology is a deflationary force in an inflationary world.” And even in the hyperautomated environment businesses are (wisely) evolving towards, cloud, AI and big data don’t run themselves (see our related article “Is your organization ready for hyperautomation?”).
People who have true expertise in harnessing the power of these technologies to drive deflationary outcomes—cloud-native engineers, dev/sec ops engineers, data scientists, cloud architects and the like—will be in as high demand as ever; potentially higher, given their impact on cost reduction. The best candidates for these roles will continue to have their pick of opportunities and can afford to sit back and be choosy. Employers, on the other hand, need to act now.
The way to win this war is to focus on differentiation, and fast. The reason is simple—differentiated companies grow and generate sustained free cash flow to reinvest in the business. And employees want to work for growing companies! They offer far better stability and can provide more resources toward employee engagement.
Differentiation can take many forms—from Nordstrom’s customer service to YETI’s premium products, from Google’s company culture to Apple’s product design (and their brand, too!). In this new world, executive teams need to be vigilant about allocating capital toward areas of the business that create a differentiated client experience. At the helm of this change should be the CFO, driving clarity and alignment for the entire company. While differentiation may boil down to one key element of the business, CFOs should challenge their executive teams to focus a critical lens on how each functional area supports the business’ differentiated strategy. Once the team has narrowed down the key components of the organization that align to their differentiation, they should develop a plan to invest in those areas and set the entire company on track to be successful in the core competencies on that shortlist. Finally, they should measure employee engagement through a tool such as Gallup or eNPS to track progress.
Even more important than the investment, however, is the divestment. In all remaining areas that didn’t make the list, be prepared to pull back. This divestment can be financial, strategic or cultural. Consider not just the dollar cost, but its foundational layers—for example, the cost of distraction. If the business is pursuing initiatives to grow employee engagement, the initiative should be laser focused on the departments that matter. Otherwise, you’ll find that you have spread yourselves too thin.
Don’t be afraid to say, “We’re not going to do that.” You must start thinking differently about the cost of everything, including distraction. Forrester, in its December 2017 report titled “Engineer Your Technology Environment to Improve Employee Productivity And Flow,” cited a study revealing that the organizations boasting the most engaged employees achieved 81 percent higher customer satisfaction, as well as a 103 percent reduction in employee turnover. With a sharper focus and fewer distractions, employees can better serve clients, boosting the bottom line.
Letting go of some non-core areas of your business can be a difficult decision. But remember, we’re in a completely unforeseen environment. The Great Resignation is not happening in isolation. It’s come on the heels of a global pandemic that has caused massive disruptions to the supply chain, compounded by a military conflict in Ukraine, inflationary pressures everywhere, and a global recession on the horizon. You can’t do it all in a moment like this.
In fact, it’s the perfect time to start thinking about which functions can be performed by a partner. Perhaps you’re a manufacturing business that should consider a partner for logistics, or a state government that can turn to a partner for call center operations. In the IT managed services world, we have heard from countless clients who have realized that running their own data centers is not a core competency and that a partner can help. A recent Forrester Total Economic Impact™ (TEI) report (see infographic) found that 95 percent of interviewed execs currently working with an MSP agree these partnerships have enabled their business to focus on higher value and more creative initiatives.
The multiple existential threats of this unique market moment should be a clarion call for CFOs to apply ruthless discipline and focus on that which truly differentiates their business. Here are three steps your team can take right now to position your organization for ongoing success in the new game:
#1) Define your core – If you haven’t already, gather your executive leadership team to identify the areas of work in which your organization truly shines, and that directly reflect and drive your mission.
#2) Dig into your data – Once these areas of work are identified, assign KPIs across key areas to measure progress. In particular, look carefully at metrics across client satisfaction, revenue churn, employee satisfaction and productivity.
#3) Leverage an ally – Lastly, identify work that, while essential to keeping the lights on, does not differentiate your business. A good example of this might include managing IT infrastructure. Resilient and performant IT infrastructure may be critical to delivering disruptive capabilities, but is it really a differentiator? If not, find a trusted ally whose business is differentiated by managing IT infrastructure. There are likely many more examples of this across your enterprise today. Look for them!
In the TEI report referenced above, interviewees who work with a managed service provider noted that the partnership has enabled them to concentrate on more strategic work like growing their customer base, supporting new initiatives, and accelerating time to market.
Not only will curating your business in this way help realize total cost savings; it will also lead your teams toward greater alignment and focus, eliminating the distractions that disrupt their flow. In today’s highly competitive, rapidly evolving market, this is the only way to thrive.\\
