From...

Tech workers are playing harder to get

Recruiting after
the bad news has hit

By David Essex

(IDG) -- How times change. Bill Clinton had less than a year to go in his presidency when IT companies and departments were still enticing scarce recruits with signing bonuses, sky-high salaries, and stock-option riches.

Today, in the honeymoon days of Bush II, candidates remain scarce, but they expect a bit less -- they're scared by layoff news and the continued Nasdaq doldrums. What's really new in the current climate is the weakened negotiating position of IT recruiters whose companies or industries are beset with layoffs and bad financial news.

If you're one of these recruiters, how can you even hope to entice $90,000-per-year hotshots now? How do you present your company in the best possible light? IT recruiters and consultants have advice on how to cope, and some companies are already taking special steps to stay tapped into the IT talent pool.

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Many companies have had to learn to be unusually frank about their financial situations during job interviews, while aggressively pitching beefed-up relocation packages to skeptical candidates, industry observers say.

"It's a really tough situation for the companies," says Tim McKegney, director of sales at AIRS (Advanced Internet Recruiting Strategies) of Wilder, Vermont, a vendor of recruitment tools and training whose customers are evenly split between in-house and outside recruiters. AIRS is offering nationwide seminars on recruiting in the new economy. "The employee pitch is still on, but getting employees to move is far more difficult."

•   McKegney tells of a customer, a Fortune 1,000 company, that severely overestimated its IT needs, overbuilding capacity by a third, then having to lay off technical staff late last year. Now it's hiring again. "The recruiters needed to explain why," he said.

•   Rita Scroggin, president of recruiting firm Infinite Source LLC in Encinitas, California, says one client, a well-funded Seattle IT startup, flew a candidate and his spouse to Seattle after making an offer, put them up at the best hotel, and arranged a meeting with a realtor. Selling prospects on a company's location -- then generously helping them move -- have become more important during the downturn because workers are less willing to take on the additional risk of moving to a new area, Scroggin says.

A longer hiring process

The recruiters say hiring cycles are much longer, not just because candidates aren't job-hopping as much, but because many employers have reduced their own recruiting staffs and become blasé about filling slots. Some are even setting up "phone screens" to discourage candidates, says Natalie Kelly, principal of Huntley Partners Ltd. and a contract recruiter in Bartlett, Illinois, with eight years' IT experience.

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Such methods, although seemingly logical amid continuing economic uncertainty, are precisely the opposite of what companies should do, Kelly says.

"When you mistreat a candidate ... you erode their confidence in you," she says. "That will harm companies when they want to hire again." Some dot-coms have been singled out for especially harsh criticism in online discussion groups, she says, for extracting 80-hour workweeks from people, then laying them off only days later with little notice or severance.

Not just the recruiting functions, but recruiters themselves, have been hard-hit by the tech turmoil. Kelly says several Chicago-area heavyweights, including 3Com Corp., Accenture, and Motorola Inc., have laid off in-house and contract recruiters. (Kelly herself was just let go from a lucrative four-year contract.) And in a survey, 70 percent of AIRS customers reported hiring freezes, while 60 percent said they've never recruited during a recession.

Don't sugarcoat IT

With IT candidates still in the driver's seat and skeptical about layoff-plagued companies, especially small ones, recruiters should be candid and open about recent troubles while emphasizing future growth and opportunity. "Before, the pitch could consist of, 'We're the next Yahoo!,'" McKegney jokes. Now candidates are likely to ask to see business plans, and recruiters need to have them handy -- or at least be ready with convincing explanations. (Scroggin says her clients report that some candidates -- even relatively low-level engineers -- are asking to talk directly to the companies' venture capitalists.)

"The recruiter really needs to go to the higher levels of the company and get the truth," McKegney says. That means insisting on a candid explanation of layoffs and earnings disappointments, and the plan for recovery, then freely sharing the information with candidates. Scroggin likewise advises total candor -- even about current and future negatives -- believing they only grow into bigger issues when concealed.

McKegney and Scroggin agree that recruiters shouldn't miss the opportunity to point out to candidates that a company investing in new hiring has confidence in its future, and that past layoffs may have improved its financial situation going forward.

In any case, explain how the past challenges and future strategies create opportunity for the candidate. "You just have to be a better salesperson as a recruiter," McKegney says. "It's going to take a little more time to get them to return your calls and get them to take a serious look at the opportunity."

The recruiters offer these additional tips:

•   Ask more questions up front to gauge what it would take to lure each candidate. This allows you to be more proactive earlier in the hiring process, a necessity with impatient candidates who can quickly go elsewhere, says Scroggin.

•   Consider retention bonuses and lower strike prices for stock options for existing employees. It's a way to avoid exacerbating an already difficult hiring challenge. "What happens very often in a layoff situation, the good people want to leave," says Scroggin. "Those are the people you want to keep."

•  Provide access to senior managers.

Paying people not to show up

One of the strangest-sounding strategies adopted by an IT company is the recent program from chip giant Intel Corp. of Santa Clara, California, that pays newly signed college graduates not to show up for work.

Examined more closely, the program seems a clever and innovate hiring tool, and is, in fact, the newest piece of Intel's recruitment and retention strategy following a 5,000-person layoff announced in January, says company spokesman Chuck Mulloy.

Intel tried to soften the blow with a three-pronged strategy. The first part -- redeployment -- allows laid-off workers to collect pay and benefits for three or four months as members of a special labor pool. "They're in the pool, and they show up for work, and they look for jobs in the company," Mulloy says.

The second component is a voluntary separation program that offers several months' severance as an enticement to people who have been thinking of retiring or otherwise leaving -- standard stuff at most companies. These, along with normal attrition, should have helped Intel reduce its head count. "Unfortunately," says Mulloy, "normal turnover laws may not hold during a downturn in the economy."

Enter the "reverse hiring bonus," as the Intel e-mail calls it: two months pay, plus any original signing bonus, for college recruits who would have come onboard in June. The compensation isn't like golden handcuffs meant to keep people around. They can take the money and never return, Mulloy says, or they can turn down the reverse hiring money and take the job, but there are a couple of hitches. "They may not get the job they came in for, or they may go into the redeployment pool," he says.

The goal is to give departmental managers flexibility in reducing staff while recruiting or retaining their best people. With the reverse hiring bonus, managers have more options in how they deploy and compensate their talent. But with the program only launched in late April, it's too early to tell which managers will offer the bonuses or how many recruits will accept them.

Says Mulloy: "We haven't sent any letters yet."