Communications of the ACM
Techdom's Talent Poaching Epidemic
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As the economy rebounds, tech companies are battling over the engineers, designers, computer scientists, and executives who can propel market share growth within their respective industries. The competition for IT talent is especially fierce among social media and other Internet companies as well as computer systems manufacturers. Anecdotal evidence suggests that some companies are even staging repeated raids on rivals' stars. In response, companies are stepping up their willingness to make lucrative counteroffers, broadening their employee retention measures and ratcheting up compensation packages.
All this is pushing up pay at technology companies for employees with skills deemed in short supply. In some cases, companies are using sophisticated software to match prospective hires with current employees who have worked with the candidates previously, attended the same college, or share a similar interest. It then asks the employees to place an initial call to the target and talk about job opportunities. Executives at larger tech companies who jump to startups typically take a 20% to 40% cut in their base salary in the hope of securing a big payday later. If they land at a startup in a VP-level job, they'll likely receive shares of the company equivalent to 1% of its value when there is an acquisition or public offering.
Several factors are driving the war for talent. The rapid growth of social media, mobile technology, and e-commerce has fueled a run on employees with expertise in those fields. The recent increase in the number of startups is also fueling hiring. And established tech companies such as Oracle, Hewlett-Packard, and Cisco are diversifying into one another's businesses—and poaching talent to speed the transition. Median voluntary turnover at 616 U.S. technology companies rose 27% from the first quarter of 2010 to the fourth quarter, with no sign of slowing. In 4Q 2010, 16.3% of 520 technology companies surveyed planned to hire aggressively, vs. 9.1% at the start of the year.
From Bloomberg Businessweek
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