Softening Economy Forces Firms To Rescind Job Offers to Students
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By Dan Goodin
Staff Reporter of The Wall Street Journal
May 4, 2001
<<After commanding unprecedented starting packages over the past few years, some graduating students looking for work are finding a new perk they could do without: bonuses if they'll agree to walk away from their job offers.
Employers from coast to coast, particularly those in the battered technology sector, are paying college and M.B.A. students to stay away, as the slowing economy forces them to rethink job offers they made months earlier. Nearly two dozen companies, from tiny start-ups like Pixo Inc. to behemoths like Intel Corp., are offering "apology" or "reverse hiring" bonuses to students who accepted offers for jobs after graduation.
While companies are declining to discuss the particulars, many of the recisions are mandatory, though some employers, such as Intel, are giving students a choice. Compensation ranges from two weeks to three months worth of salary, and sometimes also includes previously offered signing bonuses, job-placement help and tuition reimbursement.
"For the situation they put us all in, I don't believe it was enough," says Arif Hajee, a graduating senior at the University of Texas, Austin, who recently learned that Web consultant Sapient Corp. was paying him two weeks of salary after backing out of its commitment to give him a job. Mr. Hajee says he accepted the job at the Cambridge, Mass., company in the winter, when on-campus recruiting was in full swing and job offers were plentiful.
"I know a bunch of people on campus in this situation," Mr. Hajee says, adding that the companies' reversals have "backed us into a hole." Sapient didn't return calls seeking comment.
The reversal of fortunes, also taking place at Dell Computer Corp., Cisco Systems Inc. and Nortel Networks Corp., among others, is yet another consequence of the rise and then sudden downturn in the economy. "A year and a half ago, many of these companies would hire people first and then find something for them to do," says Bill Coleman, vice president of Salary.com, an online human-resources service.
Dell, which earlier this year cut 1,700 full-time employees and reduced its use of contract workers, said yesterday that it has started revoking job and summer-internship offers to M.B.A. candidates and graduates. A Dell spokesman declined to elaborate on the number of students involved but said not all intern offers were rescinded. The Austin, Texas, computer maker is paying as much as one month's salary or, in the case of prospective interns, expenses they may have incurred.
Cisco, which recently announced plans to cut 8,500 jobs, is making mandatory recisions. But the San Jose, Calif., networking giant is giving students 90 days of pay, plus outplacement and resume services if they agree to release the company from all legal claims. "We obviously thought enough of these individuals in the first place to want to hire them, and we hope in the future we may still be able to," says Steve Langdon, a Cisco spokesman.
Intel is allowing students to pocket generous signing bonuses and receive two months' salary. An Intel spokesman said the company is "not in a normal economic climate," and that the incentives are necessary to help reach its previously stated goal of reducing 5,000 positions.
The moves stand in stark contrast to past years, when demand for talent far outstripped supply. In past years, companies wined and dined prospective employees and offered them generous signing bonuses and other perks if they'd agree to join. Students frequently weighed multiple offers.
"The tables have definitely turned," says Jorge Panduro, a Massachusetts Institute of Technology student who in December was offered a position as an equities research analyst at an investment-banking firm that he declined to name. "Throughout the spring, I was living in the present, rowing crew, enjoying being a student and four months later, I get a call and they tell me they're rescinding their offer."
The banking firm said it had to back out of the deal and offered him two months of salary. With MIT's recruiting program already shut down for the summer, "I'm out on my own right now contacting people," says Mr. Panduro, who will graduate with a degree in mechanical engineering.
Intel and other companies say they've never before offered "apology bonuses" during economic downturns, but they are ever-mindful of maintaining a good reputation.
"Companies know how difficult it is to recruit and how hard it is to clear up an image once it's been soiled," says Lance Choy, assistant director at Stanford University's career-development center. Mr. Choy has seen four student offers rescinded with what companies are calling "bonuses." He says one international student whose employment plans fell through was offered the service of an immigration attorney.
Ray Easterlin, a career-services director at the University of Texas in Austin, says he is scrutinizing companies that have backed out of commitments with no compensation. He says he will "look at that very closely to see if we should let them back on campus next year."
In an informal survey of career counselors nationwide, Mr. Easterlin found that at least 23 companies, including technology, investment banking and civil-engineering firms, have rescinded jobs. He declined to name names.
Smaller companies appear to be offering far less compensation or nothing at all. Sapient, which recently cut 720 jobs, or 20% of its work force, is offering two weeks of pay, while Pixo, a San Jose, Calif., start-up developing networking technology, is offering nothing at all, according to students who say they were cut. Pixo acknowledged the move but had no further comment.
Ed Lazowska, chair of the computer-science department at the University of Washington, said many of his students are still scrambling to find jobs.
"In previous years it wasn't necessary to be proactive in helping students get jobs. This year, I'm absolutely back to being proactive," he says. "If you expected to sit on your keister and find a great job, you're going to be disappointed.">>
-- Gary McWilliams contributed to this article.
Write to Dan Goodin at dan.goodin@wsj.com |
