Unemployment in the UK has now risen to over 2 million for the first time since 1997 (19-Mar-09 Office for National Statistics) and with a surge in unemployment claims in February of 138,000, this upward trend shows no sign of peaking just yet.
The current state of recruitment is therefore very poor. This recession is not characterised by a north / south divide or secondary industry/service sector divide. All sectors and regions are equally impacted with the only variance being between public and private, with the private sector currently bearing the brunt of redundancies.
So what is happening in the specific world of project management recruitment? Initial resilience appears to now be worn away with the wider lack of business confidence now directly impacting new projects and investments.
The one area of project management demand is from clients engaged in strategic business change projects aligned with cost reduction. Smarter organisations are actively re-defining their strategy and translating strategic goals into programmes and projects. Cost reduction and efficiency improvement being the strategic aim for 2009.
Away from this particular area of demand organisations may find themselves with fewer projects (both internal and client driven) but with a pool of Project Managers. Is redundancy a quick win opportunity as part of cost reduction? My view is absolutely not.
The CIPD (Chartered Institute of Personnel & Development) recently estimated the real cost of redundancy at £16,375 per professional. This direct cost did not include a significant list of added hidden costs:
- Fall in staff productivity/moral
- Re-hiring costs on upturn
- Induction & training costs of new hires
- Reduced expertise/business knowledge
Redundancy itself therefore brings significant cost and this demonstrates why some smarter organisations are engaged in negotiating to reduce hours and shift patterns rather than out and out redundancy. This provides direct cost savings without the burden of redundancy (both direct and hidden costs).
So the argument for retaining staff is sound, but I believe significantly strengthened when applied to Project Managers and project management staff in general.
In our research the number one reason for project failure is poorly trained and inexperienced Project Managers, but don’t just take our word for it. The OGC conduced their own research and concluded that “lack of skills and proven approach to project management and risk management” was in their top 4 reasons for project failure.
Reducing project management skills will greatly increase the probability of project failure. Given that 60% of projects are run by people with no previous project management experience, we need to be looking at ways to reduce this percentage, not increase it.
In fact, I would argue that the best approach to reducing cost and improving efficiency is to embrace and invest in project management, not reduce existing capability.
Moving towards a project centric organisational structure with a clear project selection process (based on business case, profit or legal compliance) will cut out the fat and eliminate pet projects,
Improving project management maturity brings a wealth of benefits, including:
- Alignment with corporate strategy
- Prioritisation and governance
- Improved planning and ability to recover failing projects
- Improved scope and change management
- Improved risk management
- Improved cost (& therefore cashflow) management
So many organisations do not have a firm handle on true project costs, or which client projects bring in the most profit, or how much a client requested change is really going to cost. Now is the time to step up and use the well documented tools and techniques of formal project management to establish competitive advantage. Now is not the time to reduce project management capability.
How much are your Project Managers worth? Used wisely….they are priceless.