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March 19, 1999
Web posted at: 7:19 p.m. EST (0019 GMT)

by Emily Leinfuss

(IDG) -- With all the competition for the Silicon moniker - Silicon Alley in New York, Silicon Prairie in the Midwest - it may be hard to recognize the real Silicon Valley in California. Especially because some say it's entering an era of kinder, gentler and a bit slower work practices.

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The first sign of change in Silicon Valley is the dip in the local economy's growth. Overall expansion fell from 5% to 2% in the past two years because of the Asian economy and a slowdown in the semiconductor industry, says Doug Henton, president of Collaborative Economics in Palo Alto, Calif., an economic indicator consulting firm.

That may be a blessing in disguise, because the area is saturated to the development breaking point. Every nook and cranny is already occupied by an office building or a house. Companies searching for IT talent are increasingly looking to import from outside the Valley and are searching for ways to meet the needs of people who are used to a slower pace and lower cost of living.

The third indicator is that job perks are changing. Companies that once gave away rides on the corporate jet and Mercedes Benz are giving workers their lives back.

Increased competition has Valley companies beefing up on perks, benefits and compensation, says David Schutt, senior manager of global workforce strategies at Nortel Networks in Santa Cruz, Calif. "This is causing a new wave of companies to offer more intangible stuff like flexibility and a more balanced work and home life," he says.

Schutt says more and more Silicon Valley IT pros are working from home and exercising their rights to the freedom and flexibility offered as recruiting perks. Nortel offers such perks by being more open to telecommuting and providing a health spa, gift shop, dry cleaners and travel agency at its facility - and, of course, the time to take advantage of them.

Skill sets

IT skills needed in Silicon Valley are broad and include client/server development, Internet and networking expertise and the imagination to envision systems in convergence. "Telecommunications, data communication and multimedia are all coming together," Schutt says.

Schutt suggests that job-hopping is slowing because of a leveling out of compensation across the board. That may be true at IT and vendor firms. But at non-vendor companies that can't necessarily match the financial aggressiveness of their neighbors, managers are finding other ways to prevent the loss of good IT professionals and are changing the dynamics of employment from short-term to long-term stays.

A sense of care

Creating a more stable workforce is driving Menlo Park, Calif.-based SRI International to rethink its incentives. Jim Swartz, CIO at the high-tech firm incubator, is developing a vesting program that would build over several years to help tie employees to the company.

And Randy Gardner, vice president of IT at Viking Freight Inc. in San Jose, Calif., takes extra care to appraise promising newcomers and peak performers. He also strives to maintain the quality of employee work life by paying attention to career growth and giving them the sense that the company is looking after them. "I make sure managers encourage IT employees to ensure they are happy, challenged and well-established," he says.

Recruitment strategies are also changing. For example, Mike McNeal, director of human resources for U.S. operations at Cisco Systems Inc. in San Jose, says managers at his firm don't wait for talent to come to them. Cisco's proactive tack involves targeting talent pools and using aggressive sales and marketing tactics.

In light of that fact, if IT professionals are great at what they do, continually educate themselves, are visible and innovative and take educated risks, "the Valley will find you," McNeal says.

A roll of the dice

It doesn't take a market economist to figure out that Internet, network-based and software companies are booming in Silicon Valley. But information technology professionals at non-vendor firms in the Valley say the trade-off to the stock options and incentives, particularly at high-profile start-ups, is working in chaos with no safety net.

"High growth means there is chaos in the organization, which affects the work environment and attitudes," says Randy Gardner, vice president of IT at Viking Freight. Plus, it's a gamble to work at the EBays and the Excites, says Ken Phillips, director of IT for the city of San Jose. "You are rolling the dice, and the payoff may be big, but it may not," he says.

Gardner says corporate culture conflicts are between larger, more entrenched companies and start-ups. "The key for IT players is to know what you want," he says. "At Viking, we have a well-established, structured environment. People who like that and are working at a more chaotic company may get disenchanted."

As Viking prepares to hire 36 individuals in the next 16 months, Gardner says he's up against a wall. "There is a shortage of skilled workers in all leading technologies: database administration, client/server development, Java and Internet development, and quality assurance," he says.

To mitigate some of the challenges of hiring IT professionals in Silicon Valley, Viking is joining a growing number of firms that are establishing auxiliary development facilities outside the Valley. In Viking's case, it will staff project teams to develop systems in a new center in Phoenix.

David Schutt, senior manager of global workforce strategies at Nortel Networks, identifies that as a trend. But that doesn't change the fact that the Valley "is the only place where you really rub shoulders with the computer industry elite," says Jim Swartz, CIO at SRI.