Tech executives positioning their companies to thrive amid macroeconomic fluctuations share three key characteristics: They are cognizant of how macroeconomic dynamics affect employees. They communicate their core missions. And they proactively establish operational efficiency.
Recessionary environments like the one now afflicting the tech landscape require decisiveness spanning various operational categories to ensure a tech company’s viability.
Forward-looking leaders are aware of the mixed messages from the labor market. The country’s total job openings plunged by 10% in August. But the 10.1 million available openings still surpassed the 6 million unemployed searching for jobs. Unemployment fell to 3.5% in September as organizations added 236,000 jobs. Still, layoffs make headlines daily, particularly in the tech sector. By September 30, tech workers at companies including Apple, Netflix and TikTok who lost their jobs surpassed 42,000.
In mid-August, a PwC survey reported that 63% of business leaders “have changed or are planning to change processes to address labor shortages.” Executives in the survey shared that they “see the distinction between having people and having people with the right skills.” Thirty-eight percent identified talent acquisition and retention as a “serious risk” to their businesses.
Recruiting and retaining top talent requires knowing what’s most important to IT professionals today: working with and learning technologies at the bleeding edge. They want projects and bosses that challenge them intellectually.
Astute tech leaders provide such opportunities to current and prospective employees. This promotes workforce satisfaction and positive output. It also prevents tech employees from sliding into “quiet quitting,” which some have described as the latest stage of the Great Resignation.
According to a 2018 McKinsey & Co. study, top performers can be 800% more productive than average performers in high-complexity jobs.
When I was running OVHcloud in the United States, we acquired vCloud Air from VMware in 2017. More than 225 new and excited employees joined the team. But they also wanted to understand the company’s direction, how they could make a difference, be continually challenged and develop their careers.
After we sold Media Temple, where I was president and chief operating officer, to GoDaddy in 2013, we conducted cross-company learning seminars. We increased engagement and retention by enabling our employees to learn new technologies and methodologies.
Enabling IT professionals to work with state-of-the-art technology results in a balancing act for leaders, as overinvesting in new technology can also increase bottom-line costs and impact profitability.
For example, many companies did a “lift and shift” to their applications in a rush to move to the cloud. They built an identical environment in the cloud and moved their legacy applications to another data center. That provided additional redundancy, but many companies chose not to invest in rebuilding their technology to be fully cloud native. Rebuilding applications to be cloud native helps reduce costs and increase reliability and security.
Conveying the core business
Many leaders overlook the significance of another critical leadership practice: explicitly delineating the company’s core business to employees—and how each worker’s responsibilities contribute to it. Especially in a down economy, you will see companies focus on their core products. For example, Amazon, Apple, Google and Microsoft consistently exit products and services that are not significantly contributing to their bottom line.
Repeatedly communicating that message yields many benefits. It enables every worker to prioritize short-, medium- and long-term goals. It allows everyone from the executive team to discard any activities irrelevant to the core business. It boosts job satisfaction by underscoring that each person has a role that matters. It elucidates how department heads and the executive team should allocate time, resources and money.
The three pillars
A coherent tech approach may be developed after the corporate strategy has been nailed down. This approach should rest upon three pillars: security, efficiency and redundancy.
Each of these is critical regardless of the external macroeconomic environment. They also must align with the company’s core business.
Wise CEOs and executive teams can partner with outside firms when looking to refine their tech approach. External experts can provide cost-effective solutions to hurdles. This can save a company from wasting limited resources. Finding, for instance, third-party cybersecurity providers or a strategic advisory firm that enhances IT operations can help companies solve problems and save money—without putting the onus on the internal team. Acting before a downturn increases the likelihood a company’s IT solutions and processes are secure and optimized.
Finally, top leadership teams are most effective when they track the right things. Not all company metrics are critical. The metrics that matter measure what’s relevant to the core business.
When the data show a change must be made, leaders must be courageous enough to pivot. Be fearless about making data-informed adjustments. Economic unpredictability, tracking non-salient statistics and the wrong strategic plan equal disaster.
One must then, task by task, decide what must be done and by whom. As Sakichi Toyoda, the Japanese inventor, said, “By repeating why five times, the nature of the problem, as well as its solution, becomes clear.”