Return of the dot-goners

Next to glamorous dot-coms, which offered IT professionals the chance to change the world and become millionaires while wearing bluejeans to work, some corporate IT organizations seemed like mousy country kin, especially as the companies competed for the same limited pool of IT talent.

"The dot-coms gave us a sense of possibility, of the tremendous impact technology can have on a business," says Cynthia Hilliard. As executive director of IT at The Longaberger Co., a manufacturer of handmade baskets and high-end home accessories, she says, she saw dot-coms lure away several of her employees.

Now, with dot-coms deflated and technology résumés flooding the market, questions are arising about whether corporate IT organizations have learned any lessons from the dot-coms, and what IT professionals and job-seekers can expect from corporate employers.

CIOs and IT human resources consultants say it's still too early to gauge the true, lasting impact of dot-coms on the IT workplace. Even a widespread practice like casual dress codes could be a casualty, with some businesses opting to return to a more button-down look.

But sources do cite two apparent long-term legacies of the dot-com boom: First, IT professionals will still ask for and receive high salaries. Second, corporate employers will lure the best IT talent by emphasizing key ways in which their companies differ from dot-coms, and their competitors.

Hilliard suggests one key differentiator: "You still need to offer a product or service people want," she says. "Technology becomes the enabler for that, not the focus."

As the dot-com dust settles, dot-com-style dollars are still in the air. The demand for talent during the dot-com era pushed IT salaries to new heights in the first place. But the decline of those companies doesn't signal the end of highly competitive compensation, say consultants and CIOs.

"Salaries were driven by dot-coms," says Gene Trudell, general manager of computer services at U.S. Steel LLC in Pittsburgh. In his view, he says, the Y2k crisis, an explosion of new technology, and the Internet came together in a "perfect storm" effect, escalating salaries precipitously.

"I'm not sure that was an objective stampede," Trudell notes. Still, he says, he has no plans to reduce salaries and points out that U.S. Steel did make some IT salary adjustments to "get us in line with the IT world."

Further, as his CIO counterparts in the Pittsburgh area were paying signing bonuses of US$5,000 to $10,000, Trudell relied on a 17-year-old internship program to insulate his department from an overheated IT talent market. Instead of advertising open positions, Trudell filled them by hiring as many as half of each group of interns to provide experienced talent for U.S. Steel's offices around the country.

Other corporate CIOs are ensuring that their companies are competitive with the new IT salary scale. Longaberger is completing a job analysis survey, comparing its IT salaries to those in the marketplace, even though the company's turnover rate is less than 5 percent this year, says Hilliard.

Consultants note that while their clients aren't scaling back IT salaries, they will be offering lower raises. But even then, the drop will hardly be cataclysmic. "No one is thinking of double-digit increases, but the percentages aren't dropping to the 4 percent raises seen by the non-IT population," says Georgine Young, a senior consultant at Lincolnshire, Ill.-based Hewitt Associates LLC.

Further, consultants say many corporate IT organizations have adopted the dot-com practice of project- and performance-based bonuses, sometimes called "variable pay," and are likely to continue this approach.

"Ten years ago, it was very unusual for nonmanagement IT professionals to receive this kind of compensation," says Dave Van De Voort, leader of the global IT workforce effectiveness group in the Chicago office of William M. Mercer Inc., an international human resources consulting firm. "That's a very positive legacy."

Similarly, Van De Voort and other consultants say making stock options available to IT employees is another permanent dot-com influence. Mercer surveyed 500 IT professionals last fall, and even though many had seen their stocks lose value, most said they wanted stock as part of their compensation.

A New Attitude

All the dollars tossed around to woo IT talent may have forever altered how IT professionals view their jobs a trend corporate IT needs to anticipate because it could affect retention and productivity, say several consultants.

For example, Van De Voort says he believes the money frenzy has severed the once-strong link between the intrinsic gratification IT professionals get from solving technological puzzles and their job satisfaction.

"We've made traditional IT more coin-operated" in that more IT professionals may now rank money ahead of challenges, Van De Voort says. "That's a real loss."

Job loyalty may also be gone, as IT professionals have grown to appreciate their worth, at least within savvy corporations.

"IT professionals now understand you don't work somewhere forever," says Linda Pittenger, president and CEO of People3 Inc., a Gartner Inc. human resources consultancy in Bridgewater, N.J.

"Conditions are perfect for IT professionals to be free agents," says Bruce Tulgan, author of Winning the Talent Wars (W.W. Norton & Co., 2001) and founder of RainmakerThinking Inc. in New Haven, Conn. "They'll just find they're free agents in a more competitive market."

Some consultants say corporations may wind up relying on money to motivate talent because too few corporate IT departments can match the atmosphere of excitement and purpose that drove so many dot-com firms and corporate dot-com initiatives.

However, many CIOs say more than a few IT employees who left for dot-coms wound up missing some aspects of their old jobs.

"They'd call and say they were working like dogs, or that the IPO wasn't going to happen," Hilliard recounts. She notes that Longaberger, a family-owned company, has long offered a casual-dress atmosphere, a wide variety of projects to work on and an emphasis on work/life balance. When dot-com defectors called her to ask for their old jobs back, most said they especially missed that balance, according to Hilliard.

But prodigal IT talent shouldn't count on their former CIOs fattening calves for them. CIOs say they consider rehiring only the very best of these former employees. And no CIO would admit to making any environmental changes based on a former dot-com employee's advice.

In fact, many corporate CIOs say that rather than changing their cultures, the dot-com boom has led them to emphasize their organizations' differences as selling points to potential IT talent. For example, Trudell says U.S. Steel can't permit its IT employees complete scheduling freedom, but he does offer flextime within limits and he emphasizes that unlike the dot-com world, his IT professionals generally work reasonable, not round-the-clock, hours.

Another "brand benefit" that corporate IT departments could emphasize is the fact that, like many dot-coms, they enable IT professionals to follow career paths that encompass technical and business positions, but in a more stable environment than most dot-coms offered.

For example, Suzanne Yoder is e-business manager at arts-and-crafts company Plaid Enterprises Inc. in Norcross, Ga. She says she came to that position from the company's marketing and branding organization, so she knew that providing product information, project ideas and consumer instructions were vital to effectively selling arts-and-crafts materials. Yoder then learned the technology to ensure that those critical cross-references were mirrored in the database driving the company's Web site.

It's that kind of flexibility that more IT professionals are enjoying today, says Van De Voort. "IT skills are very transportable," he says.

The downside of that is a dilution of what it means to be an IT professional, because so many people can claim that title. The upside, however, is that as IT permeates all aspects of the business world, it becomes a tool for creating new business, thus enhancing the value of IT employees and the role of the CIO, says Van De Voort.

Learning to Forgive and Forget

If you're a CIO or IT executive, don't be too sure that the dot-com bust has left you sitting in the catbird seat when it comes to hiring IT talent or retaining existing professionals. The consensus is that talent is still scarce for some key positions and your best IT professionals will always be in demand by someone.

Strategies to Consider:

Keep salaries competitive. "If you try to get cheap with your IT workforce, you'll be talking to me this time next year about your turnover problem," says Dave Van De Voort, leader of the global IT workforce effectiveness group at William M. Mercer.

It's unlikely you'll have the leeway with your IT hiring budget that you may have enjoyed in recent years, say human resources consultants; however, higher IT salaries are here to stay, so expect to pay market rates for proven professionals. Annual bonuses for IT are likely to drop across all industries, though.

Make nice with your hard-to-replace professionals. IT talent with hard-to-find skills can still negotiate on their own terms. According to the "People3 2001 IT Market Compensation Study," released in July, the hot titles in demand are network architect, which takes an average of 4.2 months to fill; database administrator (3.7 months); network engineer (3.6 months); and manager of client technology (3.3 months).

Be selective when you can. With more professionals on the market, for many positions, you don't have to hire the first warm body that comes along. Human resources consultants warn IT departments to check references and ask tough questions to ensure that candidates truly have the skills they're claiming.

Try a new approach. Now is a prime time to test new thinking about how to staff your department. "Get much better at flexible staffing," urges Bruce Tulgan, author of Winning the Talent Wars and founder of RainmakerThinking. He recommends taking a page from the dot-coms and hiring teams of independent specialists on an as-needed basis to tackle specific projects, basing pay strictly on performance, such as deadlines met and results delivered.

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