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Changing Incentives and Other Trends in Silicon Valley

"Why is this req still open?" This is a difficult employment market to recruit in. The economy is fast, and there is a lot of competition for strong candidates. Even when Silicon Valley has been in a downturn, management has been shocked at the lack of quality candidates and the number of offers being turned down. It is my observation that candidates are not moving for the same incentives as they were fifteen years ago. chip
Silicon Valley Executives might want to consider the following trends from the candidate's point of view:

1. Layoffs almost always result in a stock price increase today. Downsizing has resulted in longer hours for salaried employees, and a substantial increase in burnout.

2. 20% annual growth in revenues is considered mediocre by Wall Street, but higher growth is often poorly managed and chaotic. Stock performance no longer defines a "good" company to work for. Stress levels climb.

3. Mergers & Acquisitions are the way companies grow, and sudden takeovers of healthy companies are commonplace. Private companies seem more stable that public corporations.

4. Executive and Management turnover is very high. It is not unusual for the hiring executive to leave in the first quarter of a new hire's employment. New hires are demanding more in sign-on bonuses.

5. It is not unusual for a contributor to see his or her work canceled repeatedly due to budget cuts, change of management, stock price fluctuations, or corporate takeover. Low morale from lack of accomplishment is epidemic. Stress levels are higher than ever.

6. The phrase "challenging and dynamic" is code for "high-turnover-sweatshop" .

7. Attractive projects are promised to be "six-to-twelve months away", and the projects never materialize. Fewer candidates are willing to jump ship until projects have been given a full green light and companies can prove through their track records that they will be able to support the project to completion.

Let's take a look at candidate's concerns today. It is understandable that they manage their careers differently than in the 1980s; they need to constantly positioning themselves for the next layoff. Long term potential at a company has very little pull today for most candidates. They have seen too many buyouts, reorganizations, and sudden downturns to count on the long term. Subsequently, many are turning to contracting.

When we started in High-Tech recruiting, we spent a lot of time working with three-, five-, and ten-year plans. We analyzed the long-range career plans of a rising star and attempted to match his or her goals with a complementary corporate environment. To forecast a candidate's potential promotions at a company today is pure speculation. We manage for the realistic short term now, and only hope for the long term.

For the same reasons, stock options do not have the allure they once had. Turnover is such that options vested over four years seem outdated. Once an enticement to hold out to prospective recruits, stock values have proven too volatile to be universally attractive. Even if the stock does well, often corporate environments who are enjoying incredible growth are only "enjoying" it in certain areas. Rapid corporate growth is very difficult to manage and support, especially with today's headcount and budget allocations.

Layoffs still make everyone nervous, but they are so commonplace today that a layoff in itself will not be a motivating factor for a candidate to make a move. Ironically, an employee who recently survived a layoff at his or her current company is often safer staying where he or she is.

And more and more, we are hearing from potential recruits that they are unwilling to jump ship since they have found a comfortable schedule, flextime, or telecommuting option at their current employer. Mature professionals are often members of two-career families; many can no longer work sixty hours per week at the corporate desk. Many want to cut their time spent in rush-hour traffic. Others have family obligations that can be met if some telecommuting can be arranged. Another incentive is PTO(personal time-off), or negotiating more than the standard 2-weeks vacation. Few employees are willing to give up the 3-weeks vacation or sabbatical they may have earned.

Intel advertised "every other Friday off" at a recent job fair. Other employers offer a 9/80 program: 80 hours in 9 days. Even Ernst & Young promised a 40 hour week in a recent San Jose Mercury ad. Is your company competitive?

Also, candidates care about management. A company going through difficult times can keep its people committed and happy. The competitive employer has successfully kept morale high and turnover low.

To wrap up: we see two major incentives for the employed candidate to make a job change today:

1. A lifestyle change is attractive or becomes necessary--the employee can no longer accept a long commute, the low morale, or the workaholism, etc. at his or her current company;

...or...

2. A new opportunity to advance his or her current skill set presents itself and a similar opportunity is not available with his or her current employer in the same time-frame.

Hiring executives need to offer specific career opportunities or provide a more attractive work environment. The following table offers some suggestions:

Traditional Incentives/Motivations:
Incentives That "Sell" Better in 1997:

Candidate's current company has had a layoff. Candidate is fearful that s/he might be next. Your company seems more "stable." Since nearly every company has experienced downsizing, candidates are attracted to companies that have handled layoffs ethically. Ideally, your company has a good history of continuing project funding and not reacting to every stock price fluctuation. When layoffs have occurred, the company has offered good support and severance packages.

The recruiting company or department has future plans for "hot projects." They are planned to start in the next 6-12 months. Since so many plans fall through, the recruiting company should spotlight projects that have been funded and approved. New hires are bringing most of the technology skills required, but will taught/trained in the rest. Training is budgeted and approved.

Long term career growth potential. An opportunity to do something new and marketable immediately.

Stock options vested over four years. Stock grants. Profit sharing. Frequent bonuses. Sign-on bonuses appropriate to riskiness of company.

Highly visible projects within the company. Highly visible projects within Silicon Valley. Should your company be acquired in the near future, the candidate has a reasonable chance at landing another position quickly.

Company environment is "dynamic and high-growth." Smart growth. Stable executive team (less than 30% turnover average the past 3 years).

Offering a "challenging opportunity." Candidate has a good chance to succeed at project. All internal political challenges to project are discussed before offer. Constant executive turnover and reorganizations have not threatened key projects. Also, the candidate is often looking for a chance at having "a life." Flex-time and telecommuting (even just occasssionally) is not discouraged. A progressive vacation policy can invite a stable candidate to look at your opportunity withoput sacrificing the vacation time or sabbatical they have earned.

Work with "winners." Work with "good guys"; good corporate citizenship.

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Traditional Incentives/Motivations:	Incentives That "Sell" Better in 1997:
Candidate's current company has had a layoff. Candidate is fearful that s/he might be next. Your company seems more "stable."	Since nearly every company has experienced downsizing, candidates are attracted to companies that have handled layoffs ethically. Ideally, your company has a good history of continuing project funding and not reacting to every stock price fluctuation. When layoffs have occurred, the company has offered good support and severance packages.
The recruiting company or department has future plans for "hot projects." They are planned to start in the next 6-12 months.	Since so many plans fall through, the recruiting company should spotlight projects that have been funded and approved. New hires are bringing most of the technology skills required, but will taught/trained in the rest. Training is budgeted and approved.
Long term career growth potential.	An opportunity to do something new and marketable immediately.
Stock options vested over four years.	Stock grants. Profit sharing. Frequent bonuses. Sign-on bonuses appropriate to riskiness of company.
Highly visible projects within the company.	Highly visible projects within Silicon Valley. Should your company be acquired in the near future, the candidate has a reasonable chance at landing another position quickly.
Company environment is "dynamic and high-growth."	Smart growth. Stable executive team (less than 30% turnover average the past 3 years).
Offering a "challenging opportunity."	Candidate has a good chance to succeed at project. All internal political challenges to project are discussed before offer. Constant executive turnover and reorganizations have not threatened key projects. Also, the candidate is often looking for a chance at having "a life." Flex-time and telecommuting (even just occasssionally) is not discouraged. A progressive vacation policy can invite a stable candidate to look at your opportunity withoput sacrificing the vacation time or sabbatical they have earned.
Work with "winners."	Work with "good guys"; good corporate citizenship.