Sunday, December 16, 2012

Having a Flat Headcount

I hear this a lot:  “We’re not raising headcount!  We’re already too heavy in <one department or another>!”

You hear this from heads of industry.  You hear this from upper and middle management. 

And it’s an absolute crap idea. 

If you've read my post on technical debt, you know that it’s possible for companies to get themselves into trouble to the point where all their people can do is keep up.  This happened to a lot of companies in 2007/2008 when the economy tanked, and businesses shed employees to “keep the lights on” levels.  As the economy stabilized a bit, business appetite grew faster than staffs, and those “keep the lights on” employees were tasked with putting more stuff out there, usually just adding to the technical debt pile.

So here we get to why flat staff is a crap idea.  Eventually you get to the point where you can only handle the interest payments (maintenance) on your technical debt.  Once you get to that point, you now have no staff to take advantage of business opportunities that come up.

And come up they do.  They’re out there, even if you’re refusing to look at them.  Places where your IT technology group could be helping you make more money: know your client better, streamline your middle/back office operations, virtualize and automate processes, move applications or entire functions to the cloud.

But if you are swamped in technical debt, and are unable to pay principal on your old debt, you don’t have any bandwidth to take advantage of any profitable opportunities. 

So anyone saying that they have to stay with a flat or declining headcount no matter what the situation is indicating that they are willing to pass up present improvement or investigate possible improvement, no matter what the return on that improvement investment would be.  And that’s the real rub.

That’s like having all your money going out to the interest expense of credit debt and being unable to move when someone comes up and tells you about a great investment opportunity.  To take advantage of investment opportunities, you have to have cash on hand (or liquid investments with lower return).  By the same token, to invest in technology projects that improve your company, you need to always have people that are working on things that can be delayed or postponed temporarily.  You simply can’t afford to have no human capital on hand. 

I am aware you can get staff-aug with consulting services; that’s like borrowing a little money to invest, and that can be a winning strategy, too.  The point is, though, that you can’t get new work done if your staff is always paying unavoidable technical debt.

Ultimately, what I'm trying to say is that any business leader who says that staffing needs to stay flat is basically saying, "No matter how lucrative the opportunity to use new human capital is, we will not even consider it."  When put that way, I doubt any business leader would agree with that statement.  As such, when you are working with short staff, ensure you are able to articulate the value of new projects to the business.  Put the right way, pretty much any constraint can be worked around.

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