** Labor Shortage in High Tech ** : Yep, if HR can't find them, they can't hire them and non-farm payrolls don't grow.
edtn.com
Tech sector grapples with costs of
labor shortage
By Bolaji Ojo
Electronic Buyers' News
(09/07/99, 12:09 p.m. EDT)
Heavily traveled and maddeningly clogged up with rush- hour
traffic, California's Interstate 85 is one of the main arteries
connecting south San Jose to the heart of Silicon Valley.
It is also home to Xilinx Inc.'s latest recruitment tool, a huge
billboard with advice for commuters stuck in nail-biting traffic:
"While you're waiting, think about your future." The telephone
number printed boldly on the billboard knocks off any pretensions
to altruism in the message.
Welcome to the tough world of human-resource management in
the United States, where a low 4.2% unemployment rate has
turned the simple task of filling job vacancies at electronics
companies into a full-fledged lobbying effort.
It's a world Chris Taylor, top recruiter and human-resources boss
at Xilinx, knows very well. The billboard on I-85 helps remind
departmental heads who badger her for assistance filling dozens of
vacancies at the San Jose company that she and her team are
doing their best.
In the past six months, Taylor has doubled the number of
employees in Xilinx's human-resources unit and jacked up the
company's employee-referral bonus as high as $5,000 for
specialized or urgent openings. Despite these steps, Xilinx still has
about 100 vacancies, although the dedicated phone line written on
the billboard has been ringing ceaselessly since the advertisement
was introduced a few months ago.
"We're experiencing difficulty hiring skilled employees, especially
those with software, IC-design, and information- management
skills," Taylor said. "We even have problems getting temporary
staff."
Xilinx is not alone. The labor pool in the United States is fast
drying up, and the growing scarcity is a major threat to continued
expansion of the economy, according to economists who
described the shortage as a potential source of wage inflation.
According to data from the U.S. Bureau of Labor Statistics
(BLS), employers in high-tech sectors should expect a tighter
labor market.
"Projections for the 1996--2006 period show high-tech and
related employment growing more than twice as fast as
employment in the economy as a whole-32% compared with
15%," said Daniel Hecker, an economist with the BLS. "For the
same period, high-tech employment is expected to account for
29% of all projected growth."
Nowhere is the problem more keenly felt than in Silicon Valley,
where approximately 6% of positions are currently unfilled,
according to a research report by Silicon Valley Network. The
report indicates that openings in the area can go unfilled for up to
six months.
As a result of the tight market and raiding by competing
employers, the turnover rate in Silicon Valley is between 20% and
30%-well above the national average of 13% to 18%. What's the
cost of this to Silicon Valley companies? Between $3 billion and
$4 billion in lost productivity, postponed expansion, and hiring
costs, according to Silicon Valley Network. The costs nationwide
could be in the multiple of billions.
And OEMs are not faring any better in the job market than
smaller, less-prosperous upstarts. In fact, the reverse is often the
case. Employees are apparently no longer eager to work for a
company simply because it's big or better-known-or even just for
good pay.
Other issues are upstaging these factors in the minds of employees,
who now rate such factors as growth opportunity, increased
responsibilities, stock options, and the chance to prove their mettle
above the stability offered by bigger companies.
"Typical hardware vendors now have to compete with
e-commerce companies, and they don't understand why what
worked last year is no longer working," said Brenda Rhodes,
founder and chief executive of Hall Kinion & Associates Inc., a
San Francisco recruiting firm. "They suffer from not being seen as
glamorous, and in addition, the Internet makes it possible for
people to migrate and live wherever they want and where they can
buy homes."
The result is that even big PC OEMs are losing middle-level
managers to small start-ups in the Internet sector, said Ken Reed,
president of TKO International, San Jose.
Some have fared better than others. Cisco Systems Inc., for
instance, employs more than 20,000 people worldwide and
according to spokesman Steve Langdon, has been fairly successful
at recruiting and keeping employees. Cisco's success was due to a
decision by the company to shed the unglamorous image of "just a
router company," Rhodes said. The new image is that of a nimble,
technologically advanced, 21st century Internet company.
"Why else would Cisco advertise on television to a mass audience
that doesn't necessarily buy routers?" Rhodes said. "Over half of
the traditional hardware and software companies are reshaping
their image."
In addition, mergers and acquisitions now have a predatory nature,
according to Xilinx's Taylor. When Xilinx acquired Philips
Semiconductors' CPLDs and XPLA design unit recently, it also
gained 45 new employees-among them engineers and designers.
Xilinx concedes that the employees made the deal even more
attractive. "We continue to look for acquisitions that make
business sense and offer needed employees," Taylor said.
With the labor market tight, wages are beginning to inch higher,
and although this has not been reflected in the latest U.S.
government statistics, recruiters said anecdotal experience
indicates high-tech wages are up.
"Every study that I read says wage inflation is not happening,"
Rhodes said. "But it's not uncommon for us to see a 15% to 20%
rise in pay when people change jobs."
Meanwhile, U.S. companies are beginning to draw some
competition for top- level employees from the Asia-Pacific region,
particularly from Taiwanese semiconductor companies that are
aggressively raiding U.S. companies for consultants in a bid to
raise their productivity level.
"All the big Taiwanese companies are doing it and pulling people
from AMD, Hewlett-Packard, Intel, and other big U.S.
companies," Reed said. "When a foreign electronics company
needs a consultant with as much as 15 years experience, where do
they go to find people like that? The U.S." |
