The Silicon Valley Bubble

I have spent the past three months attending the equivalent of 20 hours of HR/ Legal updates. Living in California, it is vital to keep up with the ever-changing landscape of employment laws.Over the next couple of articles, I will highlight the most important legal updates for California employers. Even though I will focus on California law, many of these issues are broader and impact everyone across the United States.Before I dive into the legal considerations in 2012, I want to first cover the topic of our economy and how it impacts hiring as well as compensation.

Silicon Valley is hiring again.Regionally, we added 42,000 jobs,which is 4% higher compared to the national average of 1%. Our current unemployment rate is 8.3%, whereas the rest of the country, it is at 8.5%. Although Silicon Valley is enjoying a surge in growth, California’s unemployment rate, as a whole, has run significantly higher than the overall US overage. The current rate is at 11.1%. We truly live in an economic “bubble” sheltered from some of the issues facing the rest of California as well as the country.

Silicon Valley is very strong! It is partly due to companies in the technology sector such as Apple, Facebook, Twitter and LinkedIn,all of which have their headquarters in Silicon Valley. Therefore, it is not surprising, that the highest growth areas are in cloud computing, mobile devices, mobile apps and social media. Over the next 12 months, as we continue to see strong growth in these sectors, the war for talent will be very competitive. Once again, new hires have competing offers, and companies are using cash incentives (HR lingo for bonuses) to lure employees to their companies.With Facebook on track to go “public”, equity in the form of restricted stocks (RSU) are popular once again.

Retention and Engagement:

What does that mean to you?  As the war for talent becomes more competitive, as a HR professional or employer in Silicon Valley, you should be concentrating on retention and engagement.  Here are a couple of questions you may want to consider:

1) How will you compete for talent? How will you craft the recruiting strategy to attract the best employees for your company?

2) Voluntary turnover is likely to go up. Therefore, how are you retaining your current employees? Are you dusting off your employee surveys and making sure you understand your employee’s motivation?

3) Communication: Is your company aligning employee’s goals to the company mission? Do your employees understand their role in the company’s success?

4) Have you identified your key jobs,as well as your key employees,and created a strategy to develop and retain them?Equally as important, have you developed a succession plan in the event they leave the company?Who is ready to take over? If no one can fill a job, what are you doing to develop your talent?

5) Are you evaluating your incentive offerings, such as your stock plans and bonus structures? Are you crafting these programs in such a way that supports your retention efforts?

Final Thoughts:

For small businesses who might not be able to compete with larger companies on total compensation, it is vital that they find creative ways to engage their employees. A company culture and the people who make it up are key ways to retain employees. Exploring ways to foster a collaborative and mission based environment may be an answer when your salary budget is smaller.

How are you engaging your workforce? If you are working in a company that you love, what motivates you to stay? Please let me know and feel free to leave a comment below.