FEEDING THE EAGLES

Ask direct marketers to name their frustrations, and they’ll say that keeping good employees is a nightmare. The best people are distracted – beckoned by what some would call a siren song to e-commerce, flashy benefits and big bucks. How do managers keep these employees from being seduced by the competition?

It’s not easy. First of all, there are the things managers can’t control, like a national unemployment rate that hovers around 4.2%, the lowest in 30 years, according to the federal Bureau of Labor Statistics.

Employees are scarce, and the demand has never been greater. Some 60% of executives queried in a hiring survey by Management Recruiters International Inc. said they planned to increase their marketing staffs during the second half of 1999.

In this employee-favorable market, all DMers have greater flexibility than ever, but a DM professional known to be of star quality need only answer the phone to routinely hear headhunters’ litany of job opportunities.

“Direct marketing is so hot it’s unbelievable,” says Barbara Talabisco, owner, president and CEO of the executive search firm Wakefield Talabisco International, New York. “Everybody wants someone who knows direct marketing, acquisition, retention, list management. It’s the hottest segment ever. Big companies really want to understand their customers. Even if you’re at Coca-Cola, it’s about segmentation. Television ain’t bringing in the customers anymore.”

It’s not surprising that professionals skilled at delivering customers are in highest demand, namely those who are expert at customer relationship management, database architecture and driving the future of e-commerce within traditional organizations, say DM recruiters.

These are precisely the people companies are most likely to lose. And they’re the ones for whom the lure of the Internet often is irresistible. “Unless a company has a good e-commerce program and is driving that, good people won’t stay,” cautions Dennis Troyanos, principal in the direct marketing search practice Gunderson Partners LLC, New York.

Traditional DM recruiters are spending more time seeking e-commerce-savvy executives. “In the last 14 months, a third of our placements have been in an e-commerce channel, and that includes traditional DM companies that have started an e-commerce side,” remarks Bradford Hoyda, a principal at Thorndike Deland, New York.

The top 10% of DM professionals are looking for e-commerce as the next piece in their learning curve. “It’s a piece that good DM people can’t afford [to be without],” Hoyda observes.

And of course, there’s big money.

“Everybody wants to go to a big Internet company because they think it is going to do an IPO, and they are going to make a million,” Talabisco says.

Take Todd Love, for example. Now vice president of Network Development at the Stamford, CT office of e-mail marketing company Yesmail.com, Love was wooed from his job as head of an e-mail list-management office for Princeton, NJ-based American List Counsel Inc. after only 10 months of work. His entire staff (a group of four that had all previously worked with Love at Direct Media Inc.) followed him.

ALC closed the Stamford office he headed, parceling out what work was left to other divisions in the company.

Although Love says the “intellectual capital” at Yesmail, rather than money, was the primary reason for his move, he admits the Net is a heady environment. “In interviewing Web-experienced candidates to work at Yesmail, I’ve never talked to so many millionaires in my life,” he says. Yesmail was poised to file an initial public offering at press time.

ALC Interactive president Eric Zilling, who was Love’s boss, admits disappointment over the departure. He says that although he and Love, who are friends, worked well together, “the overall fit wasn’t that great, and we both recognized it and moved on.” Non-compete contracts, usually standard at ALC, were mistakenly not presented to Love’s group.

Besides having a business plan tuned to e-commerce, Love says intangibles – vision, teaming, good communication up the corporate ladder, recognition – are so important for keeping stars from straying from a company that “I’d pay part of my salary for these.”

When the headhunter comes calling, it is stars with Love’s ambition, knowledge and risk-taking ability that will be courted for a job on the Web – or at a direct marketer’s strongest competitor.

“Every organization has a bottom 5% that you would give to your competition if you could,” Troyanos points out. “I’m looking for the top 10% to 15%. I want the top producers. They are the most valuable. They are also the most vulnerable.”

Foster & Gallagher understands this. The horticultural cataloger has a reputation as a great place to work. It has a performance-based compensation scheme and an employee stock-ownership plan. It also has a retention strategy that centers on investing in top achievers.

“Turnover in and of itself is not a good thing or a bad thing,” notes Terry Cole, senior vice president of human resources at the Peoria, IL headquarters. “It’s more important to try to maintain that talent base to get done what you’re trying to do. Some people refer to it as `feeding the eagles.'”

The company offers an elite training course – the direct marketing professional program – for midlevel executives who show the most promise as future leaders. The classes, held for three or four days a few times a year, describe in depth how each area of the business operates and train participants how to be business managers.

To qualify, students are handpicked by an upper-level executive and seconded by another. Taught primarily by in-house managers, the program “is analogous to a graduate degree in direct marketing,” Cole says. Some 70 employees have taken the course.The program is a huge investment of time and mo ney – and a gamble. “We knew at the outset that what we’re doing is making these folks pretty valuable and that it could cause a lot of them to leave us,” Cole acknowledges. “They would get capable enough to take over a senior VP-level job, and if we didn’t have a job they would look elsewhere.”

The gamble is worth it, though. Most of the eagles who leave the nest do so because a desired slot is not available, Cole reports.

“If you really care about your people, then you help them learn and grow,” Cole says. “If you don’t have a job for them when they’re ready, you’re happy to see them find another job.” Besides, he adds, departing graduates carry positive PR for Foster & Gallagher throughout the industry – which is great for recruitment.

If professional growth and learning are valuable retention tools, the source of the training is just as important. “The No. 1 reason a person is vulnerable to switching jobs is the relationship they have with their manager or senior manager,” Troyanos says. “People ask, `Do I like the person I’m working for? Am I benefiting financially, intellectually, emotionally and every other way?'”

Deborah Felton of AGA Catalog Marketing & Design in New York can answer yes to those questions. Felton started as an executive assistant to president and CEO John Mathewson five years ago. When Mathewson recognized that she “had tremendous skills working with people, he began to expose me to working with teams,” Felton recalls. After a couple of years, he suggested she put a master’s degree in developmental psychology to work and become “dedicated to developing people in the organization” – overseeing training and employee motivation and contentment.

She dubbed herself director of people development and has led the 160-employee advertising agency to the semifinals in the Malcolm Baldridge business excellence award competition.

The experience of another direct marketer shows that recognition and mentoring may even inspire old-fashioned loyalty.

Michelle Plaatsman, now an account executive at Uni-Mail List Corp., New York, demonstrated an aptitude for list brokerage as an entry-level employee seven years ago. She has benefited from an informal mentoring program in which Uni-Mail’s senior staffers agree – as a team – to nurture rising stars. She spent her first two years doing such grunt work as order taking and billing to understand the business from the bottom up. But she was also invited to client meetings to learn marketers’ businesses, given as much responsibility as she wanted and encouraged to bring her problems and questions to senior brokers.

“The culture is: As much as you want to learn, we’ll help you learn,” maintains senior vice president Carolyn Woodruff. “My door is always open.”

What would entice Plaatsman to leave after seven years? “Probably an entire career change,” she says. “I wouldn’t do list brokerage anywhere else.”

Expanding employees’ minds is fine, but what they really care about is fattening their wallets, right? Not entirely. Money will get you great people, but it’s rarely enough to keep them, say recruiters and managers.

The salary and bonus structure must be competitive for the industry and location, “because there’s always someone out there who can pay more for certain kinds of jobs, especially for Internet and database people,” says Pat Wheelless, president of The Wheelless Group. “They may be getting paid more than they were worth when you hired them, but it’s a matter of supply and demand,” adds the Chicago DM recruiter.

Compensation is a vital component of a retention strategy, but “energy, communication, challenge, promotion, honor” are all more important components, says Christopher Geiger, vice president of sales and marketing at Tessera Enterprise Systems. He should know. A founder of the Wakefield, MA customer relationship marketing systems company, Geiger battles a turnover of just under 20% a year. Customer relationship marketing and technical marketing jobs are at a negative unemployment level in Massachusetts.

“Anybody in this industry who tells you their turnover is less than 10% is simply not being realistic. All of our 120 professionals get an average of two job offers a week,” he says.

Plus, Tessera is growing. Geiger expects to hire 50 people this year, paying $100,000 for recruitment and training per employee. He’ll dish out half a million dollars in headhunters’ fees alone.

No wonder the 4-year-old firm was designed around attracting and keeping top-performing employees. The clients, too, are world-class – all No. 1 or No. 2 in their category, Geiger boasts. “Top employees will only work for top clients,” he adds.

In addition to high salaries (routinely adjusted to stay on par with regional competition) and annual stock grants, employees get three weeks’ vacation, biannual salary reviews and a host of Silicon Valley-like treats.

Tessera’s California-style glass structure is built on a nature sanctuary. Inside, it’s comfy and casual. Pool tables and couches are scattered about. Refrigerators are stocked with soda. Fresh fruit is delivered daily. The company throws pizza parties every Friday. Flex time is available. Dogs are welcome. Workstations are mobile.

Geiger is particularly proud of a time line mounted on a wall – an idea borrowed from Disney Corp. – that plots Tessera’s history. All employees sign it when they come on board. It names the first two employees to hit 100,000 miles of travel and shows every client won, among other benchmarks.

In Tessera’s open corporate culture, nobody is looking over employees’ shoulders or playing politics, but meeting the expectations of the heavyweight clients means Tessera’s professionals work 50- to 60-hour weeks. They cope with intense client interaction and travel between 20% and 40% of their time.

“When you’re going to require this kind of stuff from your employees, you have to give them lots of freedom, lots of trust and a great environment to work in,” Geiger insists.

Though he still expects to lose one-fifth of his staff, Geiger considers his strategy successful. “Success for me is the number of senior people who stay with us – and that’s very, very high,” Geiger says. “Our losses of senior people are less than 5%. That’s the core of the engine of the company, the future leaders.”

Many direct marketers say the only way to keep the eagles, and other solid performers, is to create a company culture of freedom and trust.

To get the most from his 60 call center “travel-gear specialists,” John McManus, founder and CEO of travel-gear catalog Magellan’s, Santa Barbara, CA, gives them plenty of leeway to improve customer relations as they see fit.

“We don’t force them to get supervisor’s approval to upgrade a product or to waive shipping and handling,” McManus says. “A few extra minutes talking about how much they enjoyed that country when they went – or any other way of establishing a long-term bond with the customer – is encouraged.”

Mistakes are treated more as a training issue than a disciplinary matter, he adds.

The Magellan’s telemarketers must pass a quiz on world geography to get a job, but their starting rate of $8 to $9 an hour is higher than competitors’. Employees stick around for years, and they even return after quitting to have children or attend school.

“We’ve been counseled by consultants that we are doing everything wrong,” McManus chuckles. But the proof is in company growth of 30% to 40% a year and “more new customers who come to us through word of mouth than through prospect mailings.”