Recruiting: The War For Talent

July 20, 2000
It s not just dot-com companies and Silicon Valley start-ups that are having a tough time getting workers.

It is certainly no secret that the labor market for technical personnel is tight, particularly in high-tech Meccas such as Boston and Silicon Valley. One indication of how employers are forced to compete for talent comes from telecom supplier Cisco Systems. It now has an in-house hiring operation bigger than most good-sized jobplacement firms. The company has hired 26,000 people over the last five years. It has also been driven to develop a corporate culture that involves every employee in looking for the best and brightest job candidates.

Although other Net companies may not match Cisco in terms of overall effort, many are just as eager to find people in these times of record-low unemployment. For some, recruitment threatens ambitious growth plans. For others, the labor shortage threatens survival.

At start-ups, high turnover or the wrong people can cause potentially lethal business problems, says one recruiter. "I wouldn't be surprised if some Internet companies go out of business because they can't staff effectively," he muses. And no one sees a cease-fire anytime soon in this war for talent.

Talent pools are dry
The stock-market correction this past spring may have forced some dot-coms to put workers out on the street, but not in significant numbers, and only temporarily. The loss of 110 jobs at or 60 jobs at are mere blips when the national unemployment rate is 4.1%. The rate was recently reported at only 2.1% in Santa Clara County and 1.9% in San Francisco, San Mateo, and Marin Counties. Though cutbacks such as these get wide coverage in the media, these reports generally fail to mention there are new jobs waiting for many of those laid off. BabyCenter, for example, made headlines when it let go of 80 people, half its workforce, after a merging with eToys. What got less attention is the fact it was hiring new workers at the same time. Though some Internet companies fail, there are still many old-economy players, including oil exploration giant Schlumberger, investing significantly in the Internet and looking for computer talent. Some have gone to the trouble of retaining recruiters who lurk around Net firms when the shares have tanked. "That's where you can find a lot of talent and recruit some good people," says one personnel director at a leading venture capital firm.

Universities, long a source of technical talent, are not coming to the rescue either. Although colleges are trying to make the Inter-net part of the curricula, even they can't turn out candidates with three to five years of Web experience. These sorts of credentials are pretty scarce.

And personnel professionals say not to bet on proposals for increasing the number of visas given to foreign technical workers. They characterize the demand for technical talent today as being like a sponge, able to soak up excess capacity as quickly as it becomes available.

What to do
To judge from a visit to a California job fair, companies are trying everything from robots, lights, and popcorn, to stock options as means of enticing workers. Perks for new engineers are still on the rise. Among the most publicized is a two-year allowance to lease a BMW convertible (with the option to get another car at a lower allowance, or cash).

A similar sports-car offer comes form Inter-woven, known for high-end Web tools. It credits the ploy as one of the reasons it has been able to round up more than 600 applicants for some of its toughest-to-fill positions. "It's an attention-grabber," says one newly hired software engineer who applied for a job after hearing about the program.

Another attention-grabber, of course, is stock options. They are still popular despite this past spring's market correction and fewer companies going public. "We pay hefty stock options that guarantees recruits will be multi-millionaires if the company succeeds," says one Silicon Valley CEO.

At Cisco, potential employees see well-rehearsed demonstrations dynamically showing how the company's stock options package, among the most generous in the industry, can boost long-term earnings for new hires. It is said to be a real attention getter and a powerful tool, especially when Cisco competes against smaller companies for talent.

Firms recruiting experienced high-level executives need to offer cash-and-stock deals that match the going rate, which is climbing. Though such deals are often controversial, companies can usually rationalize the practice. They believe the right CEO can lead a company to an IPO in six months and a market cap of over $2 billion.

Some recruiters argue that top-quality lead-ership is the most important difference between winning and losing companies. They believe a strong and stable management team reduces uncertainties in an emerging industry. And, experts say, strong, stable management helps recruitment while rapid turnover at the top hurts it. Turnover can create all kinds of suspicions, justified or not, in the minds of job candidates and investors. For example, iVillage, an on-line women's network, has had five chief financial officers since its founding just a few years ago. Its stock has slid to less than $10 from a 12-month high of $79.50, despite fast-growing revenues and an expanding audience.

Experts point to another key to success in getting top-notch talent: Careful examination of your recruiting practices. Experts say even mature companies don't have an orderly recruiting system. They point to this shortcoming as one reason for the under representation of minorities, particularly Latinos and African-Americans, at Internet companies. It seems recruiting plans aimed at creating a diverse work force get short shrift at fast growing firms strapped for time.

Recruitment experts say that making sure current employees are happy and involved in the company is another key to successful recruiting. Interwoven, for example, couples those BMW perks with a management strategy that keeps employees involved and informed about everything the company does. Employees even see slide presentations prepared for company board meetings, with any information that could lead to insider trading blacked out. A bulletin board lets anyone complain about work conditions, employee artwork decorates the lobby, and workers are often solicited for new ideas.

The BMW perk, for example, came from employee input. Engineers brainstormed the plan to help the company get top talent.

Turning the entire company into a recruiting machine is not easy. That's why many companies treat recruiters more as partners rather than hired guns.

A prime goal for many professional recruiters is giving companies a winning image and making them the subject of buzz among job seekers. "Prospective employees aren't stupid," says one business professor. "People just won't apply if they hear about working long hours and supervisors screaming at people. That happens more often than you'd think. Meanwhile, companies that are great places to work have no trouble getting good people."

Interwoven, for example, has a formal strategy to keep newly hired engineers happy. The idea is to retain engineers after using the BMW to get their attention. A veteran software engineer who joined Interwoven and took advantage of the BMW offer says perks are not deal makers. He also claims he could have had his pick of interesting perks wherever he went. "You want to find a group of people who are going to challenge you and help you grow," he says.

As a result of its aggressive recruiting and enlightened work practices, Interwoven has extremely low turnover. Of the 63 engineers hired in its short history, not one had left as of May.

Cisco also trades on its reputation as a pleasant place to work. In January, Fortune named it one of the top three places to work in the U.S. Even Cisco's warm-and-fuzzy commercials seem aimed as much at potential employees as its customers. The company receives thousands of unsolicited resumes every month and lands 90% of those to whom it offers jobs.

CAD skills are key in a design engineer's job hunt
Mechanical engineering is a hot job area right now, with employers eager to field new technology and willing to offer competitive salaries, stock options, and guaranteed bonuses to build technically oriented staffs. Job seekers with at least a Bachelor of Science degree in engineering can expect to benefit from the fluid job market, if they also have the right skills. Michelle Nelms, a recruiter at Southern Recruiters and Consultants Inc. in Aiken, S.C., said she usually sees the job market drop off in the holiday season, with companies preferring to start hiring in January after their budgets have been prepared. Not so this year. Nelms noticed hardly any drop in the number of available positions or job seekers during December. She credits the booming job market in part to millennial madness and expects to stay busy all year as people hunt for new jobs to go with the new century. "The millennium is going to spark a lot of changes," she said. "A lot of people are going to be seeking to change jobs or even just looking to see what's out there."

John Allen, vice president and recruiter at Tesmer Allen Associates Inc. in Westborough, Mass., agreed. "The market is very fluid right now, it's very volatile," he said. "The perception is that companies are having trouble filling their positions."

That fluidity is due at least in part to a change in the work-place skills that employers emphasize, said Stan Witt, a recruiter for Fortune Personnel in San Antonio. "Anyone with a technical engineering degree is in demand," he said. "It used to be the thing to go and get an MBA, but nobody wants that anymore. They want technical degrees."

Although there is no shortage of mechanical engineering positions, few companies are willing to invest excessive time in training new hires, said Witt. So having the right skills and knowledge before venturing into the job market could make the search quicker and easier.

Right now, those vital high-demand skills are in 3D solid modeling. "If a person is a design engineer, or claims to be, and doesn't have experience with 3D modeling, they'll have a harder time finding work," he said.

And Nelms cautioned that a general familiarity with 3D modeling is not always sufficient to impress an employer. "Companies are now more specific as to what software they're looking for," she said. "But anyone who has used a 3D solid modeler can go out and take an introductory course and probably pick up on another." This emphasis on the latest software and technology can foster the perception that companies prefer fresh-from-college hires over older engineers, said Nelms, but the reality is that employers are blind to age as long as an applicant has the right skills. Allen emphasized that experienced engineers should never see new, unfamiliar software requirements as a barrier to finding employment. "A 50-year-old can take a course in SolidWorks just as easily as a 22-year-old," he said. "It's more a question of refining and channeling those skills."
Heather Brack, Editorial intern

Tips for getting world-class workers
Be prepared for hard work. Recruiting is hard. Those in the Internet industry should already know this.

Trust your gut. Recruiting deals with people, not PCs or cars coming off an assembly line. Sometimes it's better to listen to your heart rather than your head.

Think networking. Maybe your company's vice president of marketing has an administrative assistant with a best friend whose brother just earned a graduate degree from Stanford. Let as many people as possible know what you are looking for in terms of employees. A company should use everyone from the CEO to the receptionist to bring in new people. And be nice to that administrative assistant. Those types of people are really out there, and so are those college-trained computer geniuses

Recruit all the time. Even if you're not hiring, you want to get your name out and keep it in circulation. Besides, for someone with the right technical skills, you're always hiring.

Target your efforts. Get a blimp, buy an ad, fly a plane trailing an advertisement over competitors. The trend is evident in Silicon Valley where companies hire mobile billboards — trucks carrying job ads — to drive around corporate campuses of competitors and at industry events.

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