Is diversity suffering because of budget management?

Tech’s fluid ecosystem

Andy Heyes is Harvey Nash’s managing director for the UK, Ireland and Central Europe.

“Workloads have been rising, and there’s an element of hoping the grass may be greener elsewhere,” he says. “Millennials and the younger generations are also very mobile in their outlook. Add to that what some are describing as the Big Stay so far this year due to market conditions, and the result is the potential for a lot of movement and change.”

James Lloyd-Townshend is Tenth Revolution Group’s chairman and chief executive. In his view, “tech has traditionally been a fairly fluid ecosystem”, but “there’s no doubting this has accelerated in the last couple of years as people have re-evaluated what’s important to them”.

For instance, a better work-life balance and increased levels of working from home has shifted for many people from a nice-to-have to a must-have. Others are keen to work for an organisation where they feel they can genuinely make a difference. More than that, it’s about wanting to feel challenged and work with the latest technology.

“Yet some employers are unwilling to offer career progression or invest in learning and development,” says Lloyd-Townshend. “All of these things are making tech workers rethink their current career options, and it’s unlikely to slow down any time soon.”

The perception challenge

But there is a perception challenge here, too. Many employers have poured significant resources into enhancing their EVPs by offering salary increases, enhanced benefits and promotions over recent years, but, according to Gartner, as few as a third of employees believe their organisation consistently delivers on its EVP promises, which is damaging to engagement.

Keyia Burton is senior principal in Gartner’s research and advisory division. “There’s not a magic list of EVP ‘offer-it-and-they-will-come’ solutions,” she says. “It’s about the company culture, how you communicate what you’re offering, how you implement it, and how employees feel about it.”

Burton cites the hypothetical example of one company that offered 20 days of paid time off and another 40. Counter-intuitively, she says, the first option generates more positive feelings among employees.

This is because despite being provided with less time off, they were able to take their leave in hourly increments and found the automated approval process easy to use. The second organisation’s system, on the other hand, was less flexible and harder to navigate.

Another factor in the EVP conundrum, meanwhile, is the pivotal role line managers play in terms of communicating effectively. “Employees are five times more likely to believe EVP promises that are delivered by managers, and managers are the biggest enabler in seeing those promises actualised,” says Burton.

A further important – but often neglected – consideration in EVP terms is the tech sector’s traditional long-hours culture.

Cary Cooper, professor of organisational psychology and health at the Alliance Manchester Business School, explains: “A lot of IT companies are saying how much they invest in health and well-being, and creating a good quality of working life. But the reality is there’s still a long hours culture, and people are often micro-managed, managed by fault-finding rather than praise and reward, and not given much autonomy.”

This situation is particularly marked among “big US IT companies that have a very workaholic bottom line”, he adds.

Another significant challenge for many tech employers is the changing attitudes of the young people who make up the bulk of the industry. Some of this shift stems from the 2008 financial crisis when “they saw their parents suffer” either due to being laid off or working extremely long hours, says Cooper. A second factor was the pandemic, when a lot of employees, particularly in the highly pressurised tech sector of the time, burned out.

“But what younger people want today is different to what many older people tolerated in the past because they had mortgages and other financial commitments,” he says. “The younger generation generally can’t afford mortgages these days, so it’s much easier for them to just say ‘goodbye’.”

In fact, some are so disaffected, they do not simply intend to switch jobs. They are instead turning their back on the entire sector.

Others appear more disposed to explore opportunities abroad. A survey undertaken by jobs board Totaljobs and global recruitment alliance The Network revealed that a significantly higher than average 75% of UK tech workers would be willing to leave the country for work. The figure compares with 61% of the wider population. This is despite London being viewed as the most attractive city in the world for tech workers. The UK itself is also considered the fifth most attractive destination, behind the US, Germany, Canada and Australia.

Talent troubles ahead

Matthew Whipp is senior director of executive recruitment firm BIE Executives’ technology practice. He forecasts that things could get even bumpier in talent terms during 2025.

“Through 2023 and much of 2024, the whole market has been somewhat suppressed, and fewer people have been moving around as businesses weren’t expanding due to financial pressures,” he says. “But there’s now anticipation that market conditions are improving, with the number of available roles being up in both September and October.”

This means that, despite only modest future growth forecasts from the Office for Budget Responsibility, a moderate rebound in market confidence is leading to a return to “more of an investment mindset rather than cost-cutting”, says Whipp.

“There’s been a lot of indecision on the market, especially over the last nine to 10 months, where we’ve seen many companies be about to undertake a project but then change their minds and delay the commitment,” he says. “But I feel some market confidence is re-emerging, and it certainly feels there are more possibilities out there now.”

As a result, employees, particularly if they feel disengaged, will “look for new opportunities in 2025”, or at the very least be more open to them, says Whipp.

Focusing on employee retention

What this means for tech leaders is that they will need to make a more concerted effort than ever when it comes to staff retention. “If you want to retain talent today, you have to create a well-being culture,” says Cooper. “This isn’t about mindfulness at lunch. It’s about allowing people to work flexibly if they need to, not requiring them to work consistently long hours, managing them by recognition and reward, and getting the employee voice from time to time by doing a well-being audit.”

Lloyd-Townshend takes a slightly different tack. “It boils down to transparency,” he says. “Regular feedback sessions should not be seen as a box-ticking exercise, but an area where employees are listened to and able to drive genuine change within an organisation.”

Employees should also benefit from a personalised approach towards their career development, in which their personal goals are aligned with business objectives and the pathway forward is clear, adds Lloyd-Townshend.

Again, the key players here are line managers – however: “A fundamental problem for the tech industry is that promotion to management roles is usually based on an individual’s technical rather than people skills,” says Cooper. “If managers were recruited or promoted with parity given to both, companies would find they could retain employees for longer and create a culture the next generation is looking for.”

While he has observed this approach being adopted in other industries, Cooper adds: “I’m not seeing it happening in tech.”

But it’s clear tech leaders will need to do something if they are to have the resources in place to act when project funding does bounce back. According to Lloyd-Townshend, this will, on the one hand, mean turning to “contract resource to keep the wheels turning on projects”, which will necessitate “successful workforce planning”. On the other, it will involve focusing more closely on how to engage and motivate existing staff.

“Retention isn’t just about preventing people from leaving – it’s also about making them want to stay,” he says. “By focusing on progression, purpose and creating a positive workplace culture, companies will give themselves the best chance of keeping their tech talent.”