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How do you identify which talent in your technology teams create the most value for your business?
This question plagues IT leaders and gets at the heart of a conundrum many organizations face today in their quest to transform digitally. All CIOs know they have star engineers on their teams who are more motivated, creative, and productive than their peers. But what sets them apart from solid but middling performers? Most organizations have no reliable way of pinpointing these crucial differences in performance. As a result, leaders struggle to retain stars, reward them fairly, and hire others of equal caliber.
But things don’t have to be that way. A few companies have started to adopt a new model for evaluating talent — one that helps them build the advanced tech capabilities they need in a digital age without inflating costs. In some of these companies we’ve studied, IT leadership has been able to reduce technology costs by as much as 30% while maintaining or improving productivity.
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The best companies reshape their IT organizations around small cadres of top-performing engineers to create highly motivated, self-managing, agile teams. The secret lies in first learning how to spot your top talent and then working out how to keep them — namely, by valuing performance over cost, celebrating craftsmanship in coding, and building a culture that nurtures engineering talent.
Establishing a Model to Identify Top Performers
Over the past decade or so, many organizations have pursued an offshoring and outsourcing model to meet their technology needs. That made sense at a time when IT was less complex and large companies could reduce their IT spend by contracting out most of this work to external organizations overseas.
But today, companies are different. Across industries, technology has evolved from a support function to a source of competitive differentiation. At the same time, advances in the way code can be modularized and reused have streamlined the process of creating software. With these recent trends, the balance of advantage has swung back from outsourcing to developing in-house talent.
A few leading companies have recognized this shift and changed course, but many others still struggle with the old model. Their IT departments tend to be well stocked with managers and coordinators but severely lacking in people who can actually write code.
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1. This finding was first reported by researchers studying engineers and computer scientists at AT&T’s Bell Labs. See R. Kelley and J. Caplan, “How Bell Labs Creates Star Performers,” Harvard Business Review 71, no. 4 (July-August 1993): 128-139.
2. P. McCord, “How Netflix Reinvented HR,” Harvard Business Review 92, no. 1, (January-February 2014): 70-76.
i. This classification is based on the Dreyfus model for acquiring, applying, and transferring skills. See S.E. Dreyfus and H.L. Dreyfus, “A Five-Stage Model of the Mental Activities Involved in Directed Skill Acquisition,” University of California, Berkeley Operations Research Center, 1980.