Guide to Retaining Employees What Are Their Choices in Today's Labor Market? P&G vs. Career Alternative (Dot.Com) Conclusions derived from Focus Groups of P&G employees interested in potential P&G dot- com work: Attraction of P&G Career Attraction of Dot-Com Career; P&G has the world's best training ground. Want to get experience in this space - good resume fodder (even multi-dot-com experience is considered a good thing on resumes). Exciting leading edge work with consumers - P&G examples are the case studies in marketing class for brand management. Changes the world - get in on the leading edge of the new economy Long term career development - high investment in developing individuals. Be an entrepreneur - would take a 50% cut in pay to get away from the P&G bureaucracy. Looking for a fundamental difference in the way work gets done. Balanced life style - work-life integration; time with family/friends; reasonable work hours. Location - exciting places to work: Boston, Seattle, San Francisco, New York (vs. Cincinnati). Career Choices MBA's Perceptions of Career Tradeoffs Consulting Consumer Products PRO'S CON'S PRO'S CON'S • High pay • Great perks • Intellectual challenge • Young environment • Do important work • Just like B-school • On the road 4 days/wk • 60-hour weeks • Never get to drive "up or out" • Decent pay • Decent perks • Great training • Run your own business • Good lifestyle • Decent hours • Lifetime employement • Dull location • No "get rich" oppty • May not like brands • Bureaucratic • Career growth slow Entrepreneurship pre-95 Entrepreneurship post-2000 PRO'S CON'S PRO'S CON'S • No bosses • Great challenge • High payout potential • Drive right now • 70-hr weeks • No training • High risk • High pressure • Under-market pay • High barriers to entry • Unsexy businesses • No bosses • Market pay • "Anybody can do it" • Huge upside potential • Gobs of financing • Sexiest of businesses • Ton of responsibility • Just like B-school • 70-hr weeks • No training • High pressure MBA View of a Dot.com Career The calculus of pursuing an entrepreneurial path has changed. • Risk: In today’s environment, there is very little professional risk, salary risk, or opportunity cost. • Reward: Everybody knows several people who have made HUGE fortunes even people who weren’t founders, and the day rate ain’t bad. • Responsibility: People can come straight out of school and be the boss of a public company, or at least be in charge of multi-million-dollar budgets. • Reputation: No question it’s cool to be in the Internet these days, and it’s even more powerful on the resume than P&G. The Dot.com Proposition MBAs have strong reasons to consider Dot.com employers • Title: MBAs may come in at the director or VP level, depending on the size of the organization. • Salary: $75,000 to $125,000 or more, plus possible bonus. • Options: From 10,000 on up, with VPs commanding from 0.5% to 3% of the company. • Resume: One dot com on the resume means an immediate bump in salary of 15%+, almost regardless of performance. • Responsibility: Marketing budgets are (or are planned to be) from $1-$20+ million per year. • Footnote: VPs of marketing are the single hardest position to recruit, and the most valued. Excerpts on Dot.com Industry 1. Booz-Allen says "10% of the dot.com start-ups will succeed and there will be significant fallout in the next 2-3 years. There is a lot of spending going into "share of mind" advertising to gain awareness, but not very many profitable businesses exist among the increasing clutter of dot.coms." 2. Internet Weekly magazine reports: o "Only 220 of the tens of thousand of internet companies currently in existence are publicly traded." o "70% of start-ups don’t make it to the Initial Public Offering stage - therefore the potential windfall from stock options isn’t necessarily a reality in the end". (NOTE: Dirk Jager recently cited that only 6% of start-ups make it to the IPO stage; however, the original source of this information is not known.) o "Less than 50% of Silicon Valley companies show profit." 3. Wall Street Journal article "Ex-NBC Executive Fumbles His Options. . ." (Jan. 4 th edition) cites a case study of Steven Carter an executive VP at NBC who earned >$400,000 per year and left to become chief of sales and marketing for iVillage Inc.for a promise of lucrative stock options and $175,000 plus $50,000 signing bonus. His stake at iVillage would be1% - 280,000 options at $1.60/share which vest over 4 four years. That was in July of 1997. By April of 1998, he was fired. His first year of options ($70,000) hadn’t yet vested. Eventually, he was told he could stay 3 months until the options vested. . . and then needed to pay $100,000 to purchase the options. Back on the job market, he found his prospects dimmed. Instead of an NBC executive making $400,000 per year, Mr. Carter was now a middle aged, $175,000 sales executive fired from a hot internet start-up. Recruiters steered him to ad-sales jobs paying $150,000. Click here to read entire article (must subscribe to Wall Street Journal to retrieve). . of spending going into "share of mind" advertising to gain awareness, but not very many profitable businesses exist among the increasing clutter. Guide to Retaining Employees What Are Their Choices in Today's Labor Market? P&G vs. Career Alternative (Dot.Com)