Weathering The Storm

Employees jumping ship for the stability of a brick-and-mortar? Try these tips for finding-and keeping-the good ones in these trying times.
Magazine Contributor
7 min read

This story appears in the February 2001 issue of Entrepreneur. Subscribe »

Are dotcoms dead? Not entirely, but the sector can certainly be described as battered. Not too long ago, dotcom companies were heralded as visions of doing in the high-growth new , and everyone wanted a piece of the pie. No longer: Newspapers report almost daily on e-business layoffs, closings and restructurings. And businesses once viewed as golden opportunities now have many people convinced they're not worth the .

Unfortunately, many of those questioning the stability of your dotcom are your employees-both current and future. So if your company is not doing as well as it was a year ago-or if your dotcom survived the shakeout-finding and keeping the right talent to ensure continued success has become quite a challenge. The good is that all these layoffs have produced a larger talent pool from which to hire. But the has now become dealing with the fear factor-persuading candidates they'll still have their jobs in a few months if they come work for you.

Some experts believe that finding new employees for your successful dotcom will prove a bigger hurdle than actually keeping them. "If you have a healthy company that's based around individual needs, keeping employees is doable," says Karen Lake, founder and president of, a Portola Hills, , online small-business resource. "Recruiting is the difficult part." It doesn't help that good, qualified candidates aren't quite as interested as they once were in taking a risk-and, in many cases, a pay cut-to work at a dotcom start-up.

Successful Recruiting

Not too long ago, companies that put a "dotcom" moniker at the end of their names went public with much fanfare, offered stock options worth megabucks and had instant access to a large pool of excellent candidates ready and willing to jump on board. It's a lot harder now; you've got to dedicate time and effort just to get top talent to even consider working for you.

Successful dotcoms now more than ever rely on creative measures to pique interest during the recruitment process. For example, Lake suggests that when offering potential employees a job at your firm, you should "come up with a compensation package that can cater to differing contributions," she says. For example, it's important to base compensation on contribution-not solely on a set hourly schedule. "It shouldn't matter when most people work, as long as they get the job done," Lake continues.

But beyond that, you need to realize that the fallout from the recent dotcom bust has left potential and current employees with the expectation that you'll instill confidence once again; that you'll take whatever measures necessary to prove your company has devised a realistic long-term plan for survival. So while it would be nice to be able to offer employees an excessive benefits package and myriad stock options, realistically speaking the climate now calls instead for things like job security, the chance to really "make a difference" at your firm, a contract and educational-matching funds.

Christopher Todd, an analyst at Internet research firm Jupiter Research, points out that smaller dotcom start-ups-those virtually unknown companies that lack brand recognition-must become forthcoming with their balance sheets. "[New] entrepreneurial businesses can't rest on their laurels the way larger, more traditional companies can," he says. "Candidates are going to be somewhat skeptical, and they're going to want information that provides a full spectrum of what they're getting into. Smaller dotcoms should be prepared to provide this information to them."

Richard Smith, the Atlanta-based director in the high-tech practice at Spencer Stuart, an executive search firm, agrees: "You have to present a compelling growth opportunity for the individual." Besides, employees at all levels are doing much more due diligence today than ever before. "You need to stand up to that, and be able to show them why your company will be a successful story at the end of the day," he adds. Expect difficulties in the recruitment process to only intensify, however, if you've just laid off people, if your company has morale issues, or if you've unfortunately cultivated a weak corporate .

It will help somewhat, though, to establish some sort of structure to the interviewing process when recruiting employees. "Prospective employees feel more confident and comfortable with a company if there appears to be some sort of methodical process in place during the interviewing stage," says John Bongiorno, founder and CEO of, a New York City staffing and consulting firm for the Internet industry. "As much as people say they don't want structure and that they want to be independent, they actually do want structure."

It all amounts to a lot of extra work you're going to have to do to find and keep employees in these trying times. For instance, Smith says you should advertise internally to your current employees that you have a profitability plan in place. "Communicate your model pervasively to your employees," he says. "Let them know that you are moving in the right directions and why your company makes sense." However, Smith admits this can be difficult-especially if you're one of those companies having trouble and your CFO or CEO just left, for example. But Smith insists that if you put all the right incentives in place, you'll be in a better position to prevent more key managers from defecting. Says Smith, "If the key players are properly incentivized , then they have the motivation to go to their people and say, 'We do have some momentum and we are going to keep this thing going.' "

How Two Dotcoms Find And Keep Employees

One dotcom that certainly knows how to get-and keep-the best employees is Ltd., a New York City solutions company launched in 1996 by Richard Johnson, 39-year-old president and CEO. These days, boasts a 5 percent turnover rate-and Johnson also reveals that many employees who've left in the past have eventually come back.

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What's the company's secret? "We've really focused on our and the environment, which is a really important investment to make," Johnson says. He explains that the company has successfully nurtured inherent feelings of self-dignity and satisfaction. "We have pride in what we have done, and we are winning," he says. "But also, there is a strong belief in where we are going." In addition, his company holds monthly employee events to keep his young staff happy. "We regularly get together for talks and reinforce the message, which reinforces the community of workers," he says.

Although Johnson insists his dotcom moniker hasn't kept the talent away-"We are finding recruiting easier than ever," he says-that's probably not the case for your dotcom, especially if your is not quite as well-publicized and known as The fact remains, though, that any job at an e-business takes on a certain amount of expected -and it's a given those applying for jobs there already know that. And since there's no real security in working for any dotcom, the key remains in successfully addressing their concerns as best you can and continuing to grow a strong business. After all, that's part of what being an entrepreneur is all about.


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