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Article: Experts Sound Off on Internet Hiring and Retention

Article Group List / Entrepreneurship / Experts Sound Off on Internet Hiring and Retention

Experts Sound Off on Internet Hiring and Retention

For recruiters, finding the right executives to lead an Internet company is no small feat.  There are simply not enough to go around, and those that are available must fit the company's complex culture and long-term vision.  Even if the right people can be found, adopting the proper strategies to keep them on board remains an ongoing issue.  So how best to take on these seemingly herculean tasks?  That was the question at hand at the MIT Enterprise Forum of New York City's discussion, "Enticements, Inducements and Threats ? How to Attract, Keep and Compensate Executives in the Dot.Com Environment."

Seats for the event, held on April 12th at Chase Manhattan Bank, were as scarce as programmers ? in his opening remarks, MIT Enterprise Forum chair Bryan Finkel proudly reported that the event had been sold out for some time.  He also suggested a somewhat cryptic alternate title for the evening: "Machiavelli Goes to Disney World."

The bemused audience then turned its attention to the evening's moderator, Shelly Palmer, founder of teenybopper site Sweet16.com.  Palmer estimated that he spends about 60 percent of his time recruiting, underscoring its importance by adding that "my sales pitch to [potential] staff is as dramatic and draining as my pitch to VCs." Clearly understanding the value of showmanship, he ended with a joke: "If you know words like 'gigabit' and 'DSL,' you can convince any HR person you're worth any amount of money."

The first of the presenters was David Schaefer, a partner at Loeb & Loeb, the law firm sponsoring the event.  Schaefer focused on the role of a lawyer in compensation negotiations, likening it to that of a choreographer who "finds the balance between the competing interests." But despite the presence of a lawyer, such negotiations should remain friendly, he advised.  "I say 'choreographer' because the employer-employee relationship from the outset should not be adversarial." He then concluded his time abruptly, apparently believing that a panel discussion would follow during which he would have time to elaborate.  However, that would be the last the audience would hear from him.

Next up was Bruce Strzelczyk, chairman of New Media Group.  Strzelzczyk opened with a telling statistic: among his company's Internet clients, a full 40 percent had lost at least one-third of their top executives within one year of joining the company.  To remedy the situation, he decided to research the retention methods of 20 representative companies.  The study, about which he seemed rather unnecessarily guarded ("the report is locked in a safe in my office," he declared glowingly), yielded some interesting results. 

~ "We have found that the No. 1 determinant of attracting quality people ? the top people ? is the public image of the firm," said Strzelczyk.  On the flip side, he also revealed that "uncertainty of the job function" is the greatest single cause of employee attrition.  Based on this information, he suggested that Internet employers create a culture in which company policies are clearly delineated and compensation issues are dealt with as discreetly as possible. 

More speakers followed, including Grand Central Holdings partner Gregory Belmont, who had his own ideas about employee retention.  "The No. 1 factor is recognition," he asserted.  "Management should be aware that a little recognition goes a long way." Another important piece of advice came from Stephen Hall, the managing director of venture capital firm Axalon Internet Group.  A veteran of the world of Internet startups, Hall urged startups to "try to get someone on board as soon as possible who does nothing but recruit."

But the night clearly belonged to the evening's last speaker, Randy Schoenfeld.  The managing partner of executive search firm Redwood Partners came prepared, creating an impressive PowerPoint slideshow to accompany his presentation. 

Schoenfeld outlined several "critical factors" for attracting coveted employees.  These include starting with the "right" board of directors, assembling a management team with a solid track record, creating a culture that accommodates people's lifestyle concerns, and providing the opportunity to work with the company's decision makers.

As complicated as it might be to accomplish all these objectives, said Schoenfeld, "keeping [employees] is a whole lot harder than attracting them.  The honeymoon ends very quickly in the dot com space." Fortunately he had some suggestions about what Internet companies can offer to retain people, broken down into four basic categories: compensation, performance-based incentives, creative incentives like distance learning programs, and benefits.  "Basic things you think are silly go a long way with employees, like extending health care to pets," he said, receiving some appreciative laughter.

He then showed some statistics on Internet executive compensation, making apparent that price tags are constantly increasing.  In conclusion, he encapsulated the reason why discussions like tonight's are necessary in first place: simply put, in the dot com world, "it's a buyer's market."