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It is better
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John Sumser

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Valley Layoffs

(June 23, 2000) There's a silent story that appears to be going untold. You can see the symptoms and effects in a variety of places. But, the story is quietly being held back.

There are lots of layoffs in the once breathy "dot-com" industry. Acute readers will have noticed this as the subtext of our F***edCompany story earlier this week. We wonder if Silicon Valley isn't heading into one of its historical downturns.

It's important, we think, to understand the historical role the Valley plays in the national economy. We see it this way:

Silicon Valley is a large Training and Development laboratory for the rest of the economy. One of the greatest benefits of the Venture Capital structure that drives the Valley is that it creates lots of new talent for the rest of the country to absorb. In the Valley's periodic downturns, the talent the rest of the country needs is freed to relocate. So it will be with the veterans of the first wave of the Internet economy.

Layoffs in the Valley do not mean that the fuss about a talent shortage is offbase. If 20% of the IT/Web professionals in the SF Bay Area were laid off tomorrow morning and used to fill some of the massive IT openings in the economy, there would still be more than 1 million unfilled slots. It's best to understand that the labor shortage doesn't change business cycles. It may, in fact, amplify some of them. A labor shortage is more likely to produce higher attrition rates than slow them. So, company success and failure may well be on a tighter calendar than in earlier days.

Meanwhile, the tempers flare and dreams are lost. Anyone picking up players from this crop in the Valley will do well to be aware of the height and intensity of the aspirations involved in joining a dot com shop. These soon to be useful veterans are a bit shell shocked when you first meet them. The adjustment and retention processes will have to be fine tuned to keep them.

We'll see more satire like kfarce as the transition moves along. The degree to which grudges are developed and sustained is higher in an economic shift. Recruiting gets tougher when F***edCompany is reporting your woes and employees have the time to generate complex assaults with the freedom and ability to publish them widely.

- John Sumser © TwoColorHat. All Rights Reserved.

Monstrous Brilliance

(June 22, 2000) Out of the flurry of announcements, we find two very interesting pieces. Last week, Monster purchased Sympatix, a small applicant tracking company. The move, which we've long predicted, was met by a variety of responses in the market. Here's a characteristic example from our email with an old-school pundit:

So did you know about this deal in advance or were you just so prescient as to declare "applicant tracking software will be given away"?
Sure it will: the lite stuff that doesn't really do the job. Who the hell is Simpatix anyway? Never heard of 'em. Therefore, they can't be any good. QED.

We, however, think that the Monster move was well timed and insightful. Old school commentators tend to see the online HR industry from a "big iron" perspective. Monster may well not receive adequate recognition for this particular acquisition. What they've done, however, is to raise the competitive bar significantly. In the old days, the market for HR automation was seriously limited to large account players. Today, as Monster is demonstrating, even the smallest company can utilize effective applicant tracking tools.

It's brilliant.

Forevermore, if you want to serve job board functionality to small to medium sized customers, it will have to include applicant tracking functionality. It is not important that the Simpatix product does not compete head on with Restrac or Resumix. In fact, the greatest strength of the Monster acquisition is that they chose a tool with constrained functionality. Those old school thinkers who championed the Restracumix Marketplace always led customers astray by insisting that the battle was about the depth in functionality. As a result, many customers have profoundly under utilized high investment systems that they are looking to get out of.

Simpatix creates frightening problems for old school thinkers. The smartest acquisitions in the space are not even on their radar! Because they've always assumed that bigness equals strength, they let the "small-fry" squeak out of sight. What they are missing is an extraordinary fact:

Monster is, almost single-handedly, growing the size and reach of the market.

It's very important to understand that the Monster customer base is totally unlike any in the history of Staffing or HR. With 75,000 paying customers, the Monster client list is double that of the closest competitor in any HR environment. In order to maintain their growth rates, they will have to continuously expand the low end of the market. This is how technology flows historically.

At the small customer end of our industry (where 95% of the customers are) requirements are different. Monster's real insight is the value of the small individual customer. That's where TMP's roots as a yellow pages company really pay off. They get the space that the web opens up.

- John Sumser © TwoColorHat. All Rights Reserved.

F***ed Company

(June 21, 2000) How is the use of the famous "F" word treated in your company? We've been known to use the term as a sort of audible punctuation. Occasionally our patterned swearing backfires. We've been set back in important arguments by an opponent who chastises with "that sort of language offends me." Not for long, however. We're known for being a touch bombastic and prefer being straight up to most of the alternatives.

This is a necessary introduction to today's topic.

As we've heard the buzz swirl around about next week's SHRM show (which, we think includes a blimp skiing race between the Monster and Virgin CEOs), we've been reminded about the inherent weaknesses in the HR community. Lacking a credible intellectual center, the professionals of our universe miss the rigor and standardization of other parts of the business world. To underline the point in conversation, we need only ask "Have you ever actually read the SHRM Magazine?" or "Describe the benefit you receive from your annual SHRM dues."

In the tidy narrow vendor driven universe of the industry's largest professional society, people don't swear, HR is misunderstood and undervalued, new programs solve new problems, things would be better if we were nicer and and the irony of an HR trade show in Las Vegas is lost in the translation. In the end, virginal attitudes pass for professionalism.

Then, there's the web, the 21st Century and the real world of work where people swear, screw each other (literally and figuratively), problems are solved by distributed solutions, the words 'nice' and 'deadline' rarely occur in the same sentence and Las Vegas is the world capitol of sleaze.

Interestingly (and the point of all this screed) we find a new website (called Fucked Company) to be a refreshing pointer to the humor and honesty that ought to be a part of worklife. The site, a modest parody of FastCompany on the surface, covers the extreme comings and goings in the "dot com" universe. A sort of inverse WetFeet or Vault, the site's central feature is a "deadpool":

FuckedCompany.com is a game based on the classic deadpool, but instead of betting for (or against) people, you're betting on companies. The lines are a little blurred when dealing with companies because there is rarely a clean-cut death. To make up for this, FuckedCompany.com rates different levels of a company's demise and awards points based on the level of severity. See official rules for more information on scoring.
FuckedCompany.com has also pretty much turned into the source for news about dot-com companies. Bad news, that is.

A contemporary chronicle of the dark side of the NASDAQ explosion, the site covers (each day) news of layoffs and changes that disrupt morale in web companies while allowing the audience to participate in the deadpool. A tremendous source of target-specific recruiting information, the operation is fairly low profile and used by a small group of insiders. It's worth checking out, though many brilliant company filtering systems won't allow you to get there (the site's name is pornographic).

Comparing SHRM and Fucked Company leads to the following question, we think: which is the pornography and which is the utility?

- John Sumser © TwoColorHat. All Rights Reserved.

Ouch!

(June 20, 2000) We recently experienced one of those waves of attrition that always happen before a vacation. (Next week's columns will be written on the beaches of Kauai) Somehow, the gods always conspire to bring business crises to the surface on Friday afternoons, Monday mornings and the weeks leading up to a well deserved rest. The information economy changes lots of things. Fridays, Mondays and the week before a vacation don't seem to get better, however.

As we mentioned yesterday, the difference in perspective between Managers and employees is vast and growing. At interbiznet, we don't speculate about the things we discuss (unless it's clearly labeled). We run a laboratory in which we try to duplicate the experiences and possibilities of our customers. Sometimes, getting the dirt under your fingernails is a painful process. We know that building a business (as an entrepreneur or as the recruiting group responsible for the supply of people that builds the business) involves the full range of emotion from joy to depression, from agony to ecstasy.

Wouldn't it be grand if everyone was happy and whole at the end of an employment relationship? Although that's what we strive for (knowing that it's important to be a great place to be from), we are continually disappointed by our ability to control the perceptions of others. At the end of the employment relationship, the gaps in perception between management and workers is exaggerated. People leave relationships based on history and role models. They behave in ways that are often beyond the control of retention programs and software.

That said, we're convinced that we operate in a very large exciting marketplace that has room for all sorts of competitors and approaches. When our former employees move out as our new competitors, we celebrate. Once they gain traction, they will be enlarging the market alongside of us. Long term readers will remember the emergence of any number of consulting firms and seminar companies as we pioneered those markets and moved on.

At interbiznet, we see our job as creating, enlarging and perfecting the labor market during the beginnings of a permanent labor shortage. We are convinced that the change has implications that extend far beyond the technology we normally cover and into the lives of workers and managers throughout the economy. The very shape of those relationships, the definition of a company, the behavior of management and the meaning of work are all under extraordinary stress these days. They are changing faster than the language that describes them.

It's a wonderful time to have an open mind. It's the underlying assumptions that make for bad decision making. Since the underlying structure is changing quickly, it's best to trust your senses and observable data and let the old ideas slip away. It means that it's important to acknowledge the hurt associated with attrition while moving forward to solve the business issues.

In a Chief Talent Office, we imagine that development, retention, recruitment and attrition would all be the responsibility of a single unified entity. That makes it ever more likely that recruiting wouldn't be as insulated from the harsh realities of the loss associated with attrition. It would be a good, organic improvement.

(June 19, 2000) "People don't quit their jobs, they quit their friends." We heard this simple and powerful insight last week at the CTO conference. It crystallized our thinking. Retention is about the support and celebration of a social network. Attrition is rooted in bad communications or bad social fit.

If life were only so simple. The desire to have problems stated in ways that will respond to broad programs appears to be embedded in the minds and hearts of corporate America. The countervailing force appears to be the desire to have problems defined in ways that clearly blame management for being too unwilling to change.

Let's look a little closer.

Attrition is a big word that covers up the fact that it's painful when people quit. Retention is three syllables that mean "sometimes you can get them to stay longer". Marriage and divorce are more understandable terms....and closer to the reality.

From a manager or owner's perspective, an employment relationship is a series of investments. It goes beyond paychecks and covers learning curves, emotional involvement, facilities, the provision of work to do and the concern for keeping the work plate full. Taking on a new employment relationship is a high risk proposition that seems (to many managers) like the downside is not shared. Often, a manager (having once been an employee) is more able to see the employee's perspective than the reverse. We find that even the grumpiest managers have a wellspring of compassion (however badly expressed) for the circumstances of the employee. Generally, the manager is charged with seeing and managing company risk.

On the employee side of the equation, the issues are different. In search of challenge, security and a social network, workers often look for more than a company can provide. At best, with onsite pizza parlors, espresso stands and a Mercedes in every garage, the company is still fundamentally a profit producing machine. The best "corporate families" are teams that exist for a moment in time. Market factors, much more than individual managerial behavior, drive the company environment.

Given these two conflicting perspectives, it's a surprise that any work relationship lasts. As the labor surplus gets exaggerated over the next decade, we're going to see an astonishing array of bandaid approaches to the retention and attrition issues.

The vendor community will hype the things that can be sold (our espresso stand has an ROI of 40% when measured in human capital) while ignoring the rawer components of the question. Economic circumstances are evolving so that shorter term relationships are viable. Meanwhile the constraints under which managers operate are tightening. This is creating an environment in which bizarre, irresponsible behavior is sanctioned and celebrated.

We anticipate an increasingly polarized workplace. A 30% retention rate (normal in some corners) means that managers across the company are numb from the personal loss (and hardening their hearts). As workers experience an increasing depersonalization of their relationships with managers, a spiral will begin.

This is the fundamental dynamic of a free agent marketplace.

- John Sumser

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