TOP

COMPENSATION TRENDS -- CHURN AND THE SECOND WAVE OF DOT COM HIRES

Two trends are pushing salaries and total compensation higher. One is the normal pressure to move ranges incrementally upward as jobs turn over. The more jobs churn, the more pressure on hiring managers to raise the figures. The year began with ranges jumping by roughly 20% over 1999. We are finishing that first wave of hires. Round two will be even more difficult and, as hiring organizations become pressed (even desperate), they will simply have to meet the demands of the marketplace. By the end of the summer, I predict there will be another range adjustment in the same order of magnitude. Those numbers will then remain stable until the end of the year. The exception will be, as I explain below, in wooing communications professionals out of faltering dot com companies.

Why money has become less significant to hiring organizations as the talent pool shrinks:

Finding good people has become increasingly difficult across the board, whether the job has been at an agency or a company. With all the start-ups hiring in ’99, traditional sources for talent have vanished. Sitting in pre-IPO companies, PR, IR and Marcom professionals are not prone to jump anytime soon. The talent pool has shrunk and it’s too soon for the first wave of dot com hires to know if they have chosen the next Amazon.com or if it’s time to move on to the next great experiment. If these professionals were in agencies or mature corporate settings, they would be "open to listening" after a year on the job. My guess is we will start seeing fallout and consolidations by late summer.

The second trend, pushing compensation to new levels, is the acquisition of talent recruited from the first wave of dot com startups. With venture funding at record levels, the assets are available for strategic hires. In those companies, where communications and IR professionals are seen as critical, formulas will be found to make a move attractive. For those excellent performers who are already at start-ups with substantial options (and a several-year vesting program) there is only one way it makes sense to consider a move.

Starting from an accumulating wealth position (which is a wonderful place to be in) can be a springboard to an even more attractive vesting schedule. The offer would naturally include a larger number of options and a sign-on bonus that compensates for the loss of value of the first stock/option program. If the initial arrangement called for a four-year vesting timetable, the new program might cut that down to a one-year waiting period and a monthly vesting schedule thereafter.

These offers potentially can be worth several million dollars (with minimum guarantees in the high six figures tied to retention formulas) for staying with a start-up over a short period of time. For the outstanding and relatively few professionals in our field with the right mix of talent at the right place, a job change takes on a whole new meaning. Negotiations involve complex financial arrangements that should be spelled out in contract form with the help of attorneys and accountants, versed in both employment agreements and start-up business models.

Packages at start-ups are so different from mainstream offers, that new career strategies/paths are opening up for communications professionals. Once on this trail, I doubt there will be any interest in returning to traditional career choices for the relatively small number of dot com "players."