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Hiring Sprees are Here Again--Without the Bells and Whistles

June 18, 2004
Related Topics: Candidate Sourcing, Featured Article, Staffing Management

If there’s one thing that Amy McKee does not want to see, it’s a repeat of the frenzied labor market of the dot-com era. "Recruiters were pulling out all the stops to land talent. It seemed like, at many companies, there was an ‘anything goes’ mentality," observes the employment manager at Autodesk, a San Rafael, California, software firm with nearly 3,600 employees and $952 million in sales.

    Indeed, billboards on highways, beer bashes in parking lots, banners on buildings and lucrative stock-option deals for college grads were just a few of the tactics that tech companies embraced. Then, when dot-com firms tanked and the labor market turned sour, the laws of physics once again took hold. "We were suddenly in a position to pick and choose outstanding candidates," McKee says. "But now that the market is heating up again, one can only hope that the industry doesn’t revert to chaos."

More intelligent management
Plenty of others share McKee’s concern. Recruiting is expensive and difficult enough in any era. According to various industry sources, the typical cost per hire is anywhere from $2,000 to $5,000. However, the peaks and valleys of the last few years were enough to give recruiters whiplash and leave many companies in the high-tech sector reeling.

    "During the dot-com era, standards dropped as organizations became more desperate to fill all the available slots," says Richard Spitz, global managing recruiter for technology in the Los Angeles office of Korn/Ferry International, an executive recruiting firm. "Companies weren’t always making good decisions."

    This time around, recruiters say, they are trying to manage things a bit more intelligently. Despite a trend line that points toward ongoing labor shortages for certain key positions--particularly in engineering, sciences, information technology and other highly technical areas--many companies are now attempting to sell recruits on stability, opportunity and name cachet.

    "There’s a growing feeling that more conventional recruiting methods aren’t so bad after all," explains Bertrand Dussert, vice president of global services at Recruitmax, a Ponte Vedra Beach, Florida, recruiting technology firm.

Actually reading résumés
The beleaguered tech sector is once again seeing signs of life. In May, Cisco Systems announced that it plans to hire 1,000 employees in 2004--primarily in sales and engineering. Most of the workers will fill specific skill sets currently lacking within the organization. Biotech firm Genentech is about halfway through hiring 1,500 workers for 2004, mostly in manufacturing. And smaller Internet firms such as Google and Yahoo! are posting an increasing number of openings at their sites.

    According to Spitz, most hiring managers were ill-prepared for the employment bubble of the late 1990s. "Companies wound up in a reactive mode, and things became so competitive that people just threw up their hands and hired almost anyone," he says. "The thinking was that if a person didn’t work out, you would just go on and hire someone else." This time around, he says, managers are planning ahead and looking at how to handle the situation proactively.

    Many are putting a great deal more emphasis on collecting résumés and applications. Rather than simply ignoring them or deleting them--a practice that became particularly common during the economic downturn of the last few years--employers are spending more time and energy trying to ferret out top candidates. They’re also revisiting a broader and more conventional mix of strategies to find candidates, including newspapers, recruiting fairs and employee referrals.

Finding people who will stay
    Dussert says that some of the extreme tactics have been abandoned, including radio ads and recruiters staking out competitors’ parking lots (one client flirted with the idea of placing ads in movie theaters, he says). "People realize that you cannot just throw money at the problem and expect results. Success requires a ‘Ready, Aim, Hire’ approach instead of a ‘Ready, Hire, Aim’ methodology."

    Merle Greene, president of Jonathan Roberts Associates Inc., a New York City recruiting firm specializing in the high-tech sector, believes that a bit of up-front strategy can go a long way toward achieving positive results. By building a talent pool up front and understanding an organization’s unique employment dynamics--including pay, incentives and the overall environment--it is possible to optimize the recruiting process and avoid a brain drain. In other words, it’s just as important to hire the right people and do what it takes to keep them as it is to fill jobs.

    Indeed, industry statistics show that nearly 75 percent of employees would consider changing jobs once the economy recovers. "People who were afraid to make a move over the last few years are suddenly gaining confidence," Greene says. "Employers are going to have to find solid candidates but also keep their workforce stimulated and engaged. Retention and training policies are going to play a significant role in determining an organization’s success."

Playing up its 75 percent 401(k) match
    At Autodesk, McKee has seen the company go full circle. At the peak of the dot-com boom, the company positioned itself "as a fun environment and a good place to work." Since Autodesk didn’t offer stock options to employees, selling the company on other factors became essential, she says. At one point, the company hung a banner on its building in San Rafael intended for commuters heading into San Francisco: If you worked here you would already be at work.

    Autodesk also sent out postcards to employees who had left the company for dot-coms. It read: The Grass Is Always Greener. "It was effective in getting some people to come back," McKee says. Finally, desperate to attract new talent, the firm held a beer bash in its parking lot--inviting just about anyone remotely qualified to stop by for the fun and suds.

Today, the situation isn’t so frothy. "We’re attempting to position Autodesk as an employer of choice," McKee says. "Name cachet and prestige are big factors in attracting talent." Not surprisingly, she attempts to sell candidates on the company’s strengths: it is an industry leader; it offers employees a week off during the winter holidays and a six-week sabbatical after four years; it provides ample training opportunities; it heavily emphasizes work/life balance; and it features a 401(k) plan with matching as high as 75 percent.

Don’t over-rely on money
One thing that Autodesk and other companies learned during the dot-com era was to tailor policies and programs to match the needs of the organization but also the realities of the marketplace. For example, during the high-tech heyday, many firms resorted to ramping up referral fees to $3,000, even $5,000. Other companies began giving programmers a small percentage of the company, Spitz notes. "The problem is that poorly designed strategies lead to the wrong behavior."

    A high referral fee can cause employees to become overly zealous about recommending friends and associates, and it can increase overall recruiting expenses for an organization. Dussert notes that some studies have shown that a $5,000 referral doesn’t improve the odds of finding a quality candidate over a $500 fee. However, a key consideration is treating those coming in from a referral with extra TLC. For one thing, there’s a good chance that they’re good candidates if a valuable employee recommended them. In addition, that valuable employee will eventually hear back about the process, and he or she should get a good report that encourages future referrals.

    Meanwhile, handing out an equity stake in the firm has all but disappeared. "All you wound up with were people who worked at a company for a year, until they were vested, and then moved on to exploit the next situation," Spitz says. He believes that smaller technology companies that want to compete with the likes of Cisco, Microsoft and IBM must find ways to make the work experience exciting, compelling and rewarding. "Talented young people are looking for an environment that provides greater responsibility and an opportunity to participate in something meaningful," he adds.

    In the end, a well-crafted strategy can pay dividends for everyone involved. From the boardroom to the stockroom, many companies are realizing that old-fashioned phone calls, networking, job fairs and advertisements can go a long way toward attracting the talent that is needed to drive today’s digital economy. "When it comes to recruiting, there’s no substitute for hard work and an excellent focus," Dussert explains.

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