During the -dot com" boom many IT start up companies lured the gung ho IT graduates and Gen Xes to work for them through the appeal of instant riches. By offering them stock options in lieu of the competitive salaries that they could earn at the big end of town, the young turks confidently expected to be instant millionaires as soon as the company listed and its share price inexorably rose.
Then of course, the bubble inevitably burst and their stock was virtually worthless. Having worked for peanuts, they had little to show for their efforts. Despite this, Australian technology companies are increasingly offering employees shares or options to attract and retain skilled staff and stem the exodus of IT professionals to the US and Europe. That is, at least, according to the recent Deloitte Technology Industry Review.
The survey was conducted among 400 chief executives of Australian technology companies and confirmed that recruiting skilled staff remained their greatest challenge, ahead of raising of capital, increased competition and new product development.
-One of the most successful retention strategies being adopted by growing technology companies is the use of employee share and option plans," says Joe Galea, a tax partner with Deloitte Technology and Telecommunications Group. -Even in the post-tech wreck environment, start ups have a huge opportunity to create value very quickly and given the recent turbulence in the technology industry, now more than ever it is critical to employ such strategies to ensure key employees have the motivation to succeed."
In addition, most multinational IT companies now offer all of their employees share purchase and stock option programs as part of their compensation package. Consequently, it is becoming a necessity for other employers of IT professionals, both listed and unlisted, to do likewise as, says Galea, share options do count a lot in attracting and retaining hard-to-find skills.
Indeed, Cable & Wireless Optus has a very high rate of share ownership among all of its employees, according to its CIO, Julia Bowen. And while its share plan initially fostered a culture of belief in the company by creating wealth for the staff through the company's wealth, it has now become a defensive mechanism, a spokesperson admits; everyone the company competes also offers similar rewards.
-Share ownership definitely impacts employee enthusiasm and we hope our share plan does promote staff retention. But flexibility and choice in the forms in which people take their remuneration or parts of it are also important as everyone's portfolio differs," she says.
