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Wednesday, September 23, 2009
Born in the Recession
Execs advise fair compensation over cheap hiring in downturn
By Mass High Tech staff
MHT's Galen Moore: Hiring trends and opportunities
MHT's Galen Moore: New 'hyperlocal' web trend
How is the economic crisis affecting tech companies?
We asked tech company executives and entrepreneurs “Myth or Fact: Tough times are the best time to hire good people cheap.” We were surprised at what we heard back: Hiring on the cheap may be possible, but is it a good growth strategy? Most of those we spoke with were more interested in being fair than in taking advantage of tough times to get ahead.
While it is true that it’s easier to find good people in a down economy, we found that the salaries we paid are equivalent to those paid in an up economy. The benefit of recruiting this summer was that we did have more folks willing to work for a riskier startup than we expected. Another benefit: Recruiting costs were lower than in the past.
Matthew Eagar
President, Thinkflood
I think it is a myth. In tough times, the really good people are either starting their own businesses or hardening their relationships with their current employers. Finding specialists is even harder, because candidates with general knowledge of a certain field are trying to convince potential employers that they have more domain knowledge than they actually have.
Andreas Randow
CEO / Founder, Studioshare.org
Tough times may, in fact, make it easier to find good people. Companies should be doing everything possible to keep the best people highly engaged and motivated. While it’s important not to over-invest, you never want to pay people less than they’re worth. If you invest in great people, they will invest back into your company. So the above statement is a myth, but if you drop the word “cheap,” then it would be a fact.
Craig Palli
CEO and Founder, Torrent Inc.
The law of supply and demand plays a role in attracting and retaining top talent. In today’s financial climate, there are more people available. We have hired 50 people this year with an additional 50 open job reqs. Hiring has been easier this year, although hard-to-fill areas, such as “regulatory,” remain a challenge. Our philosophy is to pay at competitive rates in the market within which we compete. We use external compensation data such as the Radford survey to answer the question “what is fair market pay?” Base pay scales don’t get impacted significantly by short-term market fluctuations. Bonus payouts seem to have dropped in the broader market this year, although not in our company. We hire people who are motivated by our mission to make regenerative medicine standard-of-care. Compensation must be fair to eliminate it as a distraction.
Geoff MacKay
President and CEO, Organogenesis Inc.
It’s a fact. Wolfe Laboratories recently participated in the Massachusetts Life Sciences Center’s (MLSC) Internship Program, which focused on enhancing biopharmaceutical companies’ talent pipelines. Three chemistry interns who had recently graduated from top academic programs joined us to gain hands-on industrial experience. With the extra staff, we continued to develop our IND-enabling research services so that we could better meet our clients’ needs to prepare their compounds for clinical trials. This workforce development program illustrates how challenging economic conditions create opportunities for businesses to capitalize on talent to expand business operations and continue the company’s overall growth.
Janet Wolfe
President and Founder, Wolfe Laboratories Inc.
The present economy allows us to attract really great talent from large companies that cut their staff tremendously. Many of these people wouldn’t have thought about coming to a mid-tier consulting company, but now they like the atmosphere much better. We’ve also been able to work with these people to come in as independent consultants while we work through contracts, and they feel good about working at a services firm. Based on the economy, people have been much more reasonable in their salary and benefits requirements and once they shed the large corporate structure they really respond in a way that they might not have been able to do at a large employer.
Keith Parent
CEO, Court Square Group
Tough times test governments, organizations, underlying value systems and, last but certainly not least, people. We all know that it’s people that make or break an organization — and when times are tough, your organization’s success is critically dependent upon the people that constitute your organization. Good people are always a challenge to find. During tough times, you may be afforded a larger applicant pool than expected. That’s a plus. You then pick the best talent and organizational fit, the same criteria you applied when times were better. You hire for the longer-term view. By establishing a fair salary reward system, you sidestep future issues of discontent and critical employee exits as the economy rebounds. The organizational cost of getting compensation wrong far outweighs the short-term savings of hiring on the cheap.
Al Luderer
CEO, BioTrove Inc.
Do you have a question you would like to ask New England’s entrepreneurs and executives? Someone particular you’d like us to ask? Send it to us at newsroom@masshightech.com, subject line “Executive Voices,” and we’ll ask it.
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