With all the news of layoffs, especially in the tech sector, you might expect to see a 180-degree turnaround in attitudes with respect to staffing. But while it’s true that the hiring frenzy that characterized most of last year has come to an abrupt end, the priority that companies place on keeping their best and brightest continues virtually unabated. Despite the layoffs and outright closures in the tech sector, local companies say that highly skilled, specialized employees are still hard to find, and keeping them remains a front burner issue. “A senior person who can do the job of 10 people is always hard to keep,” said Larry A. Boose, president and CEO of Venturetech Inc., a North Hollywood based software developer. “To get that person you’re going to pay higher dollar and they’re higher maintenance as far as keeping them interested in the projects you’re working on and meeting their needs as far as career goals.” According to a survey of mid-level entrepreneurial companies conducted by accounting and management consulting firm Grant Thornton LLP, most companies, 68 percent, still regard attracting and retaining talented employees among their top concerns, although the percentage was considerably lower among internet companies, 47 percent. The survey, conducted in February, when the tech wreck was in high gear, polled 417 companies representing a variety of businesses including the technology, banking, consumer products and manufacturing sectors. The vast majority of these companies, 85 percent, believe that the leadership skills of owners and managers plays a key role in fostering employee loyalty. Another 73 percent of the survey respondents believe that regular communications from the owner or chief executive of the company is central to keeping employees satisfied. By comparison, 61 percent of the respondents tied compensation packages, including benefits, bonuses and stock options to employee loyalty. Among all the survey respondents, only 42 percent thought that stock option plans had a significant impact on retaining employees. Among those who have stock option plans however, a full 80 percent believe they are effective inducements for retaining employees. “We’re finding that offering stock options is no better incentive than offering cash as a bonus plan,” said Bob Pearlman, a partner at Grant Thornton and leader of the company’s etech practice. Pearlman, whose work is focused in the San Fernando Valley, Conejo Valley, Ventura and Santa Barbara Counties, said he is seeing greater interest, among private companies in those areas, in other kinds of remuneration, including bonus plans pegged to results and goals, and phantom stock plans, where the employee doesn’t actually hold an ownership stake in the company, but rather is given shares that become more valuable as the company value increases. That way, Pearlman says, companies can remain competitive without giving away ownership. Tech companies, however, have traditionally used stock options more than other industry sectors. According to the Grant Thornton survey, 73 percent of internet companies and 61 percent of technology companies offer stock options compared with 41 percent of community banks, 36 percent of consumer and industrial products companies, and 30 percent of all other companies. While tech companies still regard options as an essential component of their human resources strategy, it is not the only one. At Spirent Communications, which employs 384 mostly technical personnel in its Calabasas offices, the president holds breakfast meetings with the staff and workers get regular briefings on the financial performance of the company. But those programs don’t substitute for stock options and competitive pay practices, officials say. “When you say (face time with management) even more than stock options, I don’t buy that,” said Dwight Olson, vice president of operations at Spirent. “We spend a lot of time making sure that we create a culture that is open and conducive to communications upward, downward and sideways. I don’t know that it’s most important, but it’s certainly an important factor.” In general companies have found that the labor shortage of a year ago has eased considerably. Software and internet-related firms like Venturetech report that they are deluged with unsolicited applications daily. “It’s no longer a seller’s market. It’s a buyers market as far as manpower goes,” said Boose. And even those outside of the technology sector are finding it easier to recruit. “We are starting to see a fair amount of candidates for the jobs we hire for, and we’re starting to see a better cut,” said Bob Shaub, director of human resources at Precision Dynamics Corp. But while the layoffs and closures have driven a number of workers out into the labor market they have not guaranteed that employers will find candidates that closely match job requirements, especially where highly technical skills are needed. For one thing, the tech sector layoffs have largely come from the manufacturing side, offering little advantage to those seeking engineering talent. “Truth be told, we haven’t seen much of an easing in the supply of labor,” said Chris Hoogenboom, president and CEO of Internet Machines, a semiconductor company in Agoura Hills. “Companies like Vitesse (Semiconductor Corp.) are laying off manufacturing (workers) because the volume has decreased. So it doesn’t mean that they’ve discontinued research and development.” Even when employers find workers with needed skills, they still must invest considerable time and resources training these workers. As a result, the tech sector downslide has reduced some of the urgency of human resources programs, but not much, these companies say. “For a period of time, we were asking “are we doing enough? What else can we do?” said Olson at Spirent. “We haven’t asked that what else question. But at the same time, we’re still very concerned about it. We have a high degree of engineering resource that has specialized skills, and you can’t retrain people overnight. Once you make an investment in people, you want to keep them.”
