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The Power of Stakeholders in IT Staffing

In the Wictionary, a stakeholder is described as a person or organization with a legitimate interest in a given situation, action or enterprise. A stakeholder by definition will react when there is a change to their situation, and understanding the needs of stakeholders and appeasing their needs is a critical component to managing change.

In the IT staffing world there are multiple stakeholders in any large client situation. The client will have the corporate stakeholder and the hiring manager stakeholder. There is the agency or supplier stakeholder and then there is the IT professional stakeholder.

The corporate stakeholder will include purchasing, executive management, legal and HR. Their goal is to keep the staff augmentation spend as low as possible, to achieve cost savings by having effective processes and to keep the risks such as co-employment, intellectual property and insurance to a minimum.

The hiring manager wants to get the best person for the job as quickly as possible. They may have existing relationships with suppliers or IT professionals and wants to keep the "process" as easy as possible. They are very focused on getting their job done.

The agencies who supply the It professionals want to keep supplying this client! They want to maintain their relationships, which may have been developed over many years and they would like to grow that business.

The IT professionals want to get the best rate they can, do interesting work and get paid quickly and regularly. They also want to build on their reputation and maintain good relationships with all parties.

Over time most large organizations look at their IT staff augmentation spend and decide it is a big number and they really should understand who they are spending it with and whether they are getting good value. This also typically raises other questions about risk and good corporate governance.

The reactions can be extreme and with best intentions many companies end up alienating many of their stakeholders ... and the result is never good. Stakeholders will always find a way to "beat the system" and preserve their stake to some degree. This "phenomena" is why so many companies find themselves revisiting their staff augmentation strategy again and again, because they are not getting the results that they need.

They may have had downward auctions to drive the cheapest prices, they may have reduced the primary vendor group to a handful, they may have restricted the amount of margin those suppliers can charge ... but after a year or 18 months, their spend is not reduced, there are more suppliers than ever and no-one seems to know how it happened!

The immediate aftermath of the cost reduction program may well look like it is working. However the hiring managers will quickly become frustrated because they are not getting the people they need. The suppliers are focusing on other accounts because they can "do business" more easily. The IT contractors are in demand and will go where the best rates are for similar work.

Stakeholders are a powerful force ... suppliers will always find a way to do business with their friends, hiring managers will find new and creative ways to get their work done and unless everyone is working together towards the same result anarchy will prevail.

The worse problem is if the stakeholders do not find a way to operate because then the real cost to the company hits. If projects are late or cancelled because they cannot be staffed with the best people then the business cost is far greater than a few dollars to some contractors!

So ... if you want to effect change, you need to work with your stakeholders to develop your solution. The dictated solution will produce behaviors that you may well not anticipate!