Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
With the effort it takes to find good employees, e-retailers are working harder to keep them.
When the phone on the desk of an e-commerce professional rings, there's a fair likelihood that the caller is a recruiter intent on feeling him out about another job. E-commerce professionals contacted for this story, all of whom asked to remain anonymous about their job hunting habits, say they typically get recruiter calls at least once a week, if not more.
Recruiting business intelligence firm Wanted Technologies Corp. says demand for workers with e-commerce skills rose 31% year over year in July, a month in which it tracked more than 25,000 active job ads in the United States that sought workers with e-commerce skills and experience.
The near-constant lure of greener pastures is causing e-commerce turnover rates to rise. The median employee turnover rate for corporate e-retail jobs is 18%, up from 10% in 2011, according to a survey of 54 major U.S. retailers from consulting firm Hay Group. That exceeds the median turnover rate for all corporate retail jobs, which stands at 12% this year, down from 14% a year ago.
With the competition for talent red-hot, e-retailers and e-commerce services providers are working hard to create work environments that e-commerce professionals want to be a part of. At the same time, e-retailers and service providers also are implementing professional development programs with the hope that when a recruiter leaves a voice mail, the employee doesn't have a reason to return the call.
When 2-year-old discount e-retailer NoMoreRack.com earlier this year decided it was ready to aggressively grow its sales, it knew that its home base of Vancouver, British Columbia, wasn't the place to do it. In May, it moved its headquarters to New York, in part so it could tap into that city's talent pool. "There's a tech boom happening here," says Melina Ash, NoMoreRack.com's cofounder and chief merchandising officer. "The designers and suppliers we want to work with are here locally, and it is where everything is happening."
The 40-person company is hiring for positions across the organization, with the expectation sales this year will hit $100 million. Ash says the e-retailer's hiring efforts in New York have largely been successful and turnover in the new office so far is low. "We try our best to create a positive work environment, and show there's room to grow [with us]," she says, noting that NoMoreRack.com fosters a flexible work environment that appeals to technology workers. The real draw for talent, however, is the fast-paced, growing business, Ash says. "The talent that we do attract is aggressive and wants to be part of something growing. They want to be part of a successful company."
Eric Best, CEO of e-commerce services firm Mercent Corp., echoes the sentiment. The Seattle-based company with 110 employees—30 of whom came on in the last year—is down the street from Amazon.com Inc.'s 11-building urban campus and within walking distance are offices for Facebook Inc., Microsoft Corp., Google Inc. and eBay Inc.
"Amazon brings in a lot of East Coast M.B.A. graduates who spend two years at Amazon and then start looking around for where they can have a bigger impact on the business," says Best, an ex-Amazon employee himself. Mercent uses its position as a successful start-up to stand out. The company's pitch to prospective employees focuses on how, by joining Mercent, employees can move into positions with more authority and manage teams sooner than they could if they joined the big guns down the street, he says.
And while Google may be the No. 1 employer in Mountain View, Calif., a start-up, high-growth trajectory is what draws software engineers and developers to BloomReach Corp., a 3-year-old web-based marketing platform for e-retailers, in that same city, says Joelle Kaufman, BloomReach chief marketing officer. It has 100 employees and is adding about two engineers a month to its employee rolls.
What keeps them there, she says, is what she calls a no-drama corporate culture along with "cool" problems to work on. For example, the company's main service helps retailers improve their search engine rankings for non-branded search terms. Turnover is 3% annually. "You'll work hard anywhere, but here you'll have great problems to work on and be able to see the results," she says.
A tenet of start-up culture is transparency, and privately held companies are able to more freely share information about how they are doing with employees than are larger, publicly held companies that have to serve investors' needs. For example, Mercent opens its books to all employees quarterly. "It's really predictable, but an important fundamental for us," Best says. The practice enables employees to see the impact of their work. Employees also have stock options, which Best views as a form of insurance should the company be acquired, merge or go public.
Transparency is also a core value at Stroll, a 12-year-old Philadelphia-based e-retailer that sells audio-based language learning systems and has a vision to be a $1 billion company by 2020. It has more than 160 employees, about half of whom were hired in the last 18 months, says Dan Roitman, founder and CEO.
He says he wants to hire professionals who embrace the company's values of personal responsibility and transparency because they contribute to a better overall work environment. The e-retailer's recruiters vigorously screen potential employees who fit these principles. To execute on those values, executives and middle managers meet one to two times per month to go over operating plans. "With these, everybody knows that their direct, everyday actions impact the company and they see exactly how they impact it," Roitman says. "You feel you are responsible for the contributions."
Reporting also extends to the department level, with every employee's contributions tracked against operational goals on a daily and weekly basis. "Accountability and transparency are a process, and ultimately the end output is you are retaining employees," Roitman says.