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How to Court Talent in the IPO Age

May 2, 2000
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How do you attract good employees ... and keep them from leaving -- when you've got one eye on your workforce and the other on Wall Street? In this Q and A, Dudley Brown, managing director of technology-search firm BridgeGate LLC, based in Irvine and Los Angeles, CA, offers advice.


Q: What are some of the biggest mistakes employers make in a business environment where there's a preoccupation with going public?

A: Entirely too many young companies are focusing more on the business of initial public offerings rather than on their core competencies, of bringing exciting new products and services to market.

Although it's tempting to answer infusions of venture capital with hiring binges or to seal off expenses to court investors as an IPO nears, these strategies are at best shortsighted. Organizations need to think and act in such a way that when the filing finally happens, it shouldn't be anything other than another day in the life of a well-run company.

It's critical that energy be devoted to running businesses, not paving paths to glory in the public markets. Fundamentals do still matter, especially if corporate vision and strategic planning are to fuel an enduring organization. The path to a successful post-IPO requires the development of a meaningful corporate culture and people-practices that leverage the value of human capital. What it comes right down to is that recruitment and retention strategies must not be engulfed by the all-consuming IPO -- a caveat that takes on added importance as the labor market continues to tighten.


Q: Considering that a competitive edge starts with human capital, is there a specific type of new hire that should be cultivated, courted and sustained beyond the IPO?

A: While corporate culture, industry, geography and demographics certainly play a role and vary from one company to the next, there's at least one common denominator that unites successful pre-IPO companies: Leadership from high-performance teams that make a strategic difference. Some are nurturers and entrepreneurs; others stars and quiet achievers.

All lead by example and tend to attract like-minded peak performers. All share the ability to be "difference-makers" -- those who have the ability to change the course of business and generally provide their employer with a competitive advantage.


Q: How do you motivate people who want to plant roots versus those who have no intention of helping grow the company?

A: The short answer is that there shouldn't be a distinction. Employers obviously require different kinds of hires throughout their company's evolution. In information technology, for instance, knowledge workers are often eager to join startups but can get restless and seek new professional challenges, over time. Others prefer to climb aboard once the financial foundation has settled. The trick is knowing how to harness these contributions during the life of the company.

Ideally, when an IPO hits, people should want to stick around but not necessarily to reap the benefits of going public; the attraction ought to run much deeper. If the organization invests in its employees in a meaningful way, holding onto top talent won't be a challenge. Compelling retention should be based on seamless organizational practices -- not a defining event in the corporate lifecycle.

People hunger for a sense that they are important to the organization, based on a philosophy that has been propagated from the top down. When this climate of loyalty and trust exists, everyone can contribute to the company's post-IPO success.


Q: Can you give an example of a company that grappled with these issues while preparing to go public?

A: One such client is Stamps.com, which recently was named one of the top 50 players in new media in Southern California by the Digital Coast Reporter. In an economy built on speed, today's dot-com startups are continually revising their business strategies, while old-line employers are playing catch up.

But one critical objective stands still: Recruit and retain the best talent money can buy -- and do it well ahead of an IPO. Stamps.com was deliberate about its recruitment strategy from the outset. Compensation packages were adjusted to reflect the labor market and narrow the potential for pay gaps that could have erected barriers between those who arrived before last June's IPO and those who joined later.

Equally important was the desire to screen out those seeking only impressive-sounding job titles and those who'd prove incapable of checking their egos at the front door. The thinking was that these virtues and attitudes would endure long after an IPO but only if they were put in place from day one. This also would give people a reason to stay and help the company compete for top talent, moving forward.


Q: Are there any caveats to bear in mind along the way to designing an organization that can cope with both going public and retaining its founding principles without being eaten alive by the money culture?

A: People are drawn to great places to work, but problems do arise -- even in an environment where there's tremendous potential to pull down huge money with the help of an IPO. Stock options are a case in point. They can create a culture that's premised on the lure of instant wealth. Options may appear irresistible on both ends of the transaction, but it can be a cheap romance.

Many employers fall into the trap of perceiving options as the be-all-and-end-all of top-talent retention when, in fact, they may tempt rising and restless stars to jump ship in favor of diversifying their investment portfolios with each career move. If stock options are the sole rationale for staying put, loyalty and retention will be an inch deep.

If the aim is to encourage employees to think differently, then the incentives need to be layered into the culture and capable of making a statement about the company's commitment to its people.


Q: What sort of programs should be in place to give people a compelling enough reason to stay with a particular company aside from a chance to share in the success of an IPO?

A: With the competitive stakes continually rising in the age of the IPO, companies need to invest in their people from day one -- whether they've been blessed by massive cash infusions or are strapped for resources. The goal for both the employer and employee is to build meaningful relationships that carry with them the potential for lasting success.

For employees, this translates into things like cross-training and mentor programs, which create and foster a worthwhile workplace. On the employer's side, it's critical not to hire only for the job at hand. Deploying people in multiple roles leverages employee capabilities. This cross-training strategy also carries the potential to create a more diverse workforce. Mentor programs epitomize this mutual bond.

Learning from people who've mastered their work allows less experienced employees to benefit from their wisdom. Work isn't always about being promoted; it's also about learning to mature in a particular job and harnessing the power of that maturity for career development.


Q: Any other approaches or intangibles worth noting?

A: There are a growing number of employers that invest in a range of convenience or "concierge" offerings -- from on-site dry cleaning and car washing to neck-and-shoulder massages. These programs may seem frivolous on the surface, but they're not. They deliver a potentially powerful message that employee welfare and well-being actually deliver strategic value to the business.

The perks mix altruism with fiscal realism: Anything that slows people down is costly to both employees and employers. Intangibles show people that organizations are willing to help manage, even enrich, the lives of their employees around the clock. Such programs also recognize the amount of time and effort that people put into their jobs. By the same token, they should be promoted as ancillary benefits as opposed to a key selling point.

Let's face it: Most people aren't going to accept a position because they get their car washed once a week. Once this kind of post-IPO thinking takes root -- well ahead of the actual initial public offering -- lasting success in a post-IPO environment will no longer be regarded as a gamble.

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