E-TALENT: A TANGLED SEARCH PROCESS
A GOOD CYBER-MERCHANT IS HARD TO FIND, AND HARDER STILL TO KEEP.
Byline: David Moin / Rusty Williamson
NEW YORK — As if finding a good merchant weren’t tough enough. Try finding a chief technology officer.
That’s the person who structures the Internet operation, creates the models for building the Internet team and keeps an eye on the mission. Qualified programmers and “Web masters” aren’t much easier to recruit.
There are just too many e-job openings and too little talent.
As traditional retailers evolve into brick-and-click retailers, they’re shifting their search engines into high gear to deal with severe recruiting challenges. The challenge is largely a scarcity of talent, according to head hunters and retail consultants, who are having a field day.
“Over the last year, 30 percent of our retail search practice has been e-commerce,” said Robert Kerson of Korn Ferry. That’s plus business, he added.
Kerson and other search professionals say staffing an Internet retail operation is more complicated than recruiting for traditional retail posts, especially for stores making their first foray into cyberspace. The issues range from determining salaries and benefits to deciding what career backgrounds, educational backgrounds and personalities are best suited for leading the online store. And hires pulled from Silicon Valley must adapt to a different pace, since retailing is generally slower.
Wannabe Internet merchants face formidable challenges. There’s mounting competition, and new sites continue to proliferate, despite Nasdaq’s gyrations this year. Investments in building and marketing new sites continue to pour in, and job slots abound.
“An existing retailer that goes into e-tailing is challenged by its own successful history or set way of doing and thinking,” said Karyl Innis, president of The Innis Co., a Dallas consulting firm. “Retail recruiting for the Internet is a new frontier. The hiring and sourcing strategies are unwritten.”
Innis and other recruiting experts assembled a model for the ideal candidate to lead the e-business: part pragmatic merchant and part cyberspace visionary. Too much of one without the other won’t cut it.
“Don’t become enamored and hire someone who can perform miracles with software, but not with business strategies,” Innis cautioned. “Hire someone with leadership abilities, a forward vision and a proven track record at executing and monitoring business plans. They don’t have to be from another dot-com company, or a 28-year-old wunderkind. But they do need to be able to embrace technology.”
According to Hal Reiter, chief executive of Herbert Mines Associates, the most notable example of a traditional retailer breaking the mold is Wal-Mart in recruiting Jeanne Jackson, former ceo of Banana Republic, to become ceo of Wal-Mart.com.
“It’s an acknowledgement of the new requirements and the marketplace,” Reiter said. “The job is not in Bentonville, Ark. It’s in Silicon Valley. Traditional notions of what is going to be paid and where you live are out the window.”
Jackson’s jump to Wal-Mart.com was a major coup for the giant discounter. Many analysts feel that this kind of senior-level hiring is the biggest single recruiting challenge, but once a top executive is in place, it makes additional hiring easier.
Because e-tail base salaries typically aren’t competitive with those in the general market — due to startup costs and funding issues — new e-tailers will have to learn to dangle stock options or some sort of equity to get the best employees, said Lee J. Colan, president of The L Group, a consulting firm that specializes in human resources.
“Base salaries generally are going to be 10 percent to 30 percent less, so you have to balance it out with options and the pricing of those options. But attracting and keeping good employees has to be more than just huge wealth accumulation opportunities. Don’t bank everything on the IPO.” Colan said employers also must build a positive work environment that offers ownership, creative avenues and decision-making opportunities.
Allan Ellinger, senior managing partner at MMG, a marketing and management company, said people who leave traditional jobs to join e-tailers want long-term financial security. “Offer them a guaranteed salary for a specific length of time, lots of stock options and a compelling work culture,” recommended Ellinger. “These employees want to work in a culture that’s aggressive and has quick turn time. They want to work in an environment that will utilize their entrepreneurial skills. Autonomy and a less-corporate mind-set are also important factors.”
Arnold Aronson, managing partner and director of retail strategies at Kurt Salmon Associates, said retailers recruiting for the Web should require strong merchandising skills. “One thing that gets lost in Internet hysteria is that a product is still a product, regardless of where it’s sold.”
Aronson said ideal brick-and-click recruits would have a dual background in merchandising and the Internet. He added that the human resource department should keep an open mind. “One size does not fit all in this equation. You’ve got to look at the person and what they’ve got to offer, including their education.”
According to Jannice Koors, principal of SCA management consulting, which is involved in formulating compensation programs for retailers, compensation in Internet space varies greatly. While chief technology officers are generally affordable in cash, they place high demands on the equity package. But there’s another, more basic problem, she noted. “Cto’s are very hard to find.”
“Chief technology people are the equivalent of free agents,” noted Kerson. “They’re very much in demand and going for extraordinary compensation packages, with lots of equity.”
The recruiting challenge continues down the ladder. Both pure plays and retail dot-coms are still “ramping up,” Koors said. “And all have unbelievably aggressive hiring models. There are many more positions available than people who have the right skill sets. Part of the solution is outsourcing where you can. Otherwise, you have to be aggressive and you have to be willing to go outside the normal pay structure.”
What’s also required to set up an Internet team? Merchandisers, customer service personnel, distribution staff and facilities. Retailers already have that. What they lack is the staff to create a Web site — the programmers, and “Web masters,” who are responsible for monitoring the site and keeping it up on such things as time-sensitive merchandise and sales. That’s where outsourcing often comes in.
According to Koors, salaries for junior programmers typically range from $30,000 to $40,000; senior programmers, $100,000 to $150,000. Senior programmers might get a small amount of equity, possibly 1/10 of 1 percent.
Kerson pointed out another issue for retailers creating a dot-com business and aligning that with the core business. “The compensation model for e-commerce is much different. Keeping the two businesses operating under one roof without dissension is a challenge. “We’re seeing more and more companies give the core team equity participation in the e-commerce business, whether they are involved or not, to keep parity in the compensation schemes.”
The good news for bricks-and-clicks is that they are in vogue. Kirk Palmer, of the search firm bearing his name, said, “The pure play is very much out of favor today. These guys are having a more difficult time attracting people; stock valuations are going way down. If you look at Eddie Bauer, Gap and Limited divisions, they all have a better shot at e-com as a viable channel of distribution. When it comes to recruitment, a lot of companies are moving personnel internally, from brick-and-mortar or from mail-order operations, over to run e-commerce businesses.
“The bad news is that their best merchants on staff are also prime candidates for the competition, so hold on tightly.
“Having a merchant lead the business by and large has been a successful strategy. You are going to see more companies doing exactly that, taking a senior merchant to head up their dot-com brand strategy.”
“It’s a natural segue — taking merchants from retail and catalog businesses, or taking operations people from catalog companies, and putting them into the Internet operation,” said executive search consultant Terre Simpson. “Internet companies have more difficulties [than traditional retailers] staffing their back offices.”