In its second-largest acquisition, Amazon buys the company for $970 million.
Technicians are losing their jobs—but for some operations they’re still hard to find. Some salaries are up, others are down, and who’s getting stay-on bonuses anyway?
By 2001, the dot-com bomb had already blown a hole in most of 2000’s more excessive hiring and compensation practices at e-commerce companies. By and large, the IT sector that supports e-retail said adios to big perqs such as signing bonuses that included BMWs, smaller ones like free lunch, and double-digit pay increases.
But as Yogi Berra said, it ain’t over ‘til it’s over. The events of the past 12 months brought still more changes for the IT employment scene not only in e-retail, but other sectors as well. The economy’s continuing nosedive has more employers tightening purse strings. The turnover rate among IT workers, about 10% to 15% last year, has dropped to less than 7%, according to some industry estimates. Others, based on IT sector turnover rate pegged by some analysts as high as 16% last year, calculate the turnover has dropped even more dramatically, placing it as low as 6% as worried workers decide to hang onto their jobs rather than test the marketplace.
On the one hand, there’s a level of concern this year among some IT workers about finding or keeping jobs; on the other, employers are expressing concern about finding the right workers to fill critical IT jobs in their organizations. The answer to this seeming contradiction is that the IT employment landscape has become almost as volatile as the economy itself.
Demand up, but not pay
Different experts have varying takes on the situation, and different data on recruitment, compensation and turnover rates, depending not only on who’s doing the counting and forecasting but also on the job titles, the experience levels, the industry sector and even the part of the country in question. The turnover rate has dropped, for example, but by different rates, depending on who’s counting. So-called hot skills are in demand-but they’re not commanding the same rate of compensation increases as they were last year.
The tumultuous IT job market has opened a window of opportunity for retail that didn’t exist before, says Marcel Legrand, senior vice president of product for Internet job board Monster.com. Legrand reports that while the volume of traffic from seekers and recruiters for some sectors such as software and manufacturing are down at Monster this year, traffic in other sectors including retail-focused IT jobs is up.
“Despite everything, consumers haven’t stopped spending, so though retailers may be charging lower prices, they still have to keep operations going,” he says. As a result, workers from other IT sectors, facing fewer opportunities there, are considering retail when they may not have done so before. “For example, engineers with analytics experience are adding real value to some of these organizations,” Legrand says. “We are telling employers in categories such as retail and health care that they have the opportunity to source people of better quality than ever.”
But do these conditions amount to a buyers’ market for e-retailers in need of IT staff? Not exactly, says Diane Berry, vice president at IT-focused human capital consulting firm People3, a Gartner Group company. “I still advice my corporate clients not to sit there and get fat and happy because the world will change,” she says. “If you don’t take care of your people, you are going to lose your best and brightest.”
While skilled IT workers squeezed out of other sectors may accept retail jobs, even at lower rates of compensation, they won’t stay without adequate motivation and incentives from the employer. Retailers already know that in the long run it’s less expensive to keep good workers with core skills than to continuously have to recruit new ones. “The last thing you want is someone coming in from another industry and then leaving when things in that industry get better,” Legrand says.
The ups and downs
Mercer Human Resource Consulting’s annual review of average compensation levels for several key job titles in e-commerce showed declines between 2001 and this year. For the most part, salaries either stayed about the same or dropped markedly in the retail sector. The position of e-commerce executive averaged $250,000 for the top jobs in retail and wholesale, for example, which is down from an average $254,000 last year. Average compensation for e-commerce marketing directors dropped to $115,000 from $136,100 last year, while the job of top technical manger for e-commerce dropped from an average $152,400 to an astonishing $108,100. The only job which gained significantly in compensation among those for which data were available both this year and for 2001 was e-commerce customer support manger, which shot up to an average $76,400 in 2002 from $48,000 last year.
Mercer doesn’t speculate on reasons for either upward or downward trends, instead presenting the yearly data as a snapshot of the marketplace. But beyond factors such as shifts in the sample population from year to year, this year’s drop-offs may reflect general economic conditions. Mercer’s pay figures include annual bonuses as well as base compensation. While base pay may not drop from year to year, short-term incentives tied to a company’s overall business performance may be down in a struggling economy.
Though both the precise rate of turnover decrease and the reasons for a seeming decline in e-commerce job compensation remain open for debate, industry watchers are in accord on one point. “While there’s been a reduction in demand for IT workers, there is still a shortage of supply,” says David Van De Voort, leader of information technology workforce effectiveness group at Mercer Human Resource Consulting. “Excellent IT practitioners with in-demand skill sets are as difficult as ever to attract and retain.”
“The number of individuals with the requisite skills continues to lag demand,” agrees Maria Schafer, program director of Meta Group’s Human Capital Management division. “I get contradicted on this by people who tell me they have been looking for a job for months, but if you dig down deep there is usually a reason why the person hasn’t found a job yet. It depends on what skills they have to offer. Through the period of the dot-com boom a lot of people were getting hired for jobs they didn’t really have skills for. That population is part of why the supply side of the labor equation is so large today. It doesn’t necessarily mean there is high quality throughout that supply.”