Talent makes or breaks company growth

Oct. 1, 2000

Next-generation recruitment and retention strategies to keep a business growing.

By JOANNE HYDE, Equipe Communications Corp.


Alan Greenspan's "irrational exuberance" aside, the last few years have seen the explosion of technology and the technology business far outstripping the available labor pool. The quality of a company's staff-otherwise known as "talent"-can make or break a business plan. During the coming decade, lack of staff may become the most significant factor inhibiting your company's growth. Today's labor shortage is a competitive business situation and talented high-tech employees not working for your company are working for your competitors.

According to many economic indicators from both public and private sources, one of every two available high-tech jobs in America this year will go begging. In addition, America's population between the ages of 25 and 40 will decline significantly as the aging "baby boomers" begin to retire, removing still more qualified employees from the work force.

In short, companies need to realize they are now selling on two fronts: the sales staff sells the product and the rest of the company sells the organization. A shrinking labor pool of qualified high-tech workers, combined with an urgent need for qualified staff, creates a great environment for workers (bigger salaries, expanded benefits, stock options) and a need for companies to develop more active, adventurous recruitment and retention programs.

Perhaps the biggest indicator of how rampant the recruiting and retention problem is in the business world is the comic strip "Dilbert," which ran a series of strips on this issue last summer. As a perk for hardworking employees who didn't have time to make their own family travel plans, reservations at restaurants, etc., Dilbert's office hired Ratbert, as an "Employee Concierge." The comic strip takes things to the extreme for the sake of a good laugh, but many large companies today are asking more from their employees than ever before and simultaneously working harder than ever to retain them.

Companies like America Online, Marriott, Texas Instrument, and Charles Schwab provide a variety of concierge and referral services, including walking the dog, sending Mom flowers and vacation planning. The goal of offering these perks is to hire and retain employees. With the average cost of losing a high-tech employee at $123,000, according to the Corporate Leadership Council, a few perks is a small price to pay.

At Equipe Communications Corp., we have hired over 100 employees in 10 months along with raising $60 million in financing. We are on target with our business plan to hire 140 people by year-end. Yet, to date, we have kept pace with this goal by hiring only one employee through a recruiting agency, or "headhunter." In fact, our recruitment and retention efforts saved the company more than $2 million in recruitment fees in less than a year.

Most of the rules below are common sense observations, but I urge you to think about what you are reading and try to imagine how you could apply these rules to your own company.

Rule #1: "A" players attract "A" players; "B" players hire "C" players. Set the bar high on new hires, especially in the beginning, and stick to it. The more quality employees you bring into your company early, the easier it is to hire other "A" players as the company grows. "A" players want to know that they are joining a winning team. Low or lax work standards, even if only perceived, are a negative signal to those key people you want to attract, hire, and retain. One good, motivated, happy employee is worth three average employees. Concentrate on quality.

The other important reason to hire "A" players in the beginning is that as the company grows, they are the people you promote into management positions. This business strategy is more successful than constantly searching outside the organization as you grow the company to find management talent.

Targeting and hiring recent college graduates, or "freshouts," is another strategy some companies are implementing. My opinion is that you need to be careful and not hire college graduates too early in the life of a startup. They can pull an "A" employee's focus from the job to mentoring. Wait until you begin shipping product before scouring the college ranks for talent.

Rule #2: It takes a company to hire a good employee. Some say it takes a village to raise a child. I say it takes a company to hire a good employee. Everyone in your company should act like a recruiter. It is important that all employees know the company story and are aware of the need to find and keep quality candidates. Good candidates recognize, and are attracted to, companies with focus.

People join organizations for many reasons. It isn't always the money and, many times, it's not even the stock options. It's a combination of many different factors, including the opportunity to take responsibility for working on cutting-edge technology and still be able to make it home for dinner with the family a few nights a week.

In short, the entire company environment is upper-most in a potential employee's mind in today's hot labor market. As a manager responsible for hiring, you as well as other employees must present a complete picture of the company's culture to prospective employees.

Once you've convinced a potential employee to return for a second interview, make sure everyone the potential employee will work with interviews him/her. If even one person says "no" to hiring the potential employee, the deal is off. The company's culture is what makes the organization tick. Don't mess with it.

Rule #3: The 7th degree of separation. When it comes to finding and hiring quality workers, you need to go the extra mile. In today's market, I believe there are seven degrees of separation-not the usual six. You need to get referrals "to get a referral to get a referral" to finally find a possible job candidate. Even when you interview that job candidate, ask him/her for more referrals.

Do not discount anyone as a source. After employee referrals, friends and family are some of your best sources for leads.

Rule #4: Strong hint-do whatever it takes. The HR Connection is a group of 12 high-tech startup companies in Massachusetts that meet once a month to swap ideas, compare notes, and develop creative recruitment and retention ideas. One key point continually raised in discussion is that recruitment efforts should be creative, not desperate. In other words, recruitment goals and efforts must mesh tightly with a company's overall corporate objectives to be successful. A survey of HR Connection members revealed other common approaches.

For example, many have an employee referral program with bonuses of $1,000 or more per hired employee. At an average cost of $10,057 to hire a salaried worker, as reported by the Employment Management Association, employee referral programs are a good investment.

Job advertising in magazines and newspapers is still important but more for branding purposes rather than employee prospecting. A weekly or monthly company-wide meeting to share information among departments is very common at startups. Having a regular get-together for all employees for a few hours every week after work is increasingly popular. Food and beverages are provided.

Company open houses have proven successful and many lead to referrals. Potential employees have the opportunity to experience the atmosphere and culture of a company before going through a formal interview process. Large job fairs have, on average, been very disappointing.

Pinball machines, air hockey, ping-pong, pool, and "foosball" are standard equipment at many startups. Company outings are family-oriented. The employee's family makes sacrifices, too, so whenever possible, startups are trying to include families in events and activities.

Finding and hiring good talent is not enough. You need to ensure they fit the culture, and more importantly, you need to work hard to retain your talent. Today, staffing at high-tech companies is mission-critical. Without staff, a company cannot grow its business. The importance of a company's human capital resides at the strategic business core of the organization. In the end, your human capital, or lack of human capital, will determine the success or failure of your business.

Joanne Hyde is director of human resources at Equipe Communications Corp. (Acton, MA). She can be contacted at (978) 635-1999.