New-Media Firm Plays Every Angle to Hire Talent in Competitive Arena
William Jeffries, 33, founded a computer systems integration company in 1989 after graduating with a business degree from USC. Over the last decade, the firm has evolved from a specialized consultancy to a computer equipment reseller to a new-media company that takes start-up and established companies into business on the Internet. In expanding his company, now called Digital Boardwalk, Jeffries’ biggest challenge is attracting and retaining qualified employees. He talked with freelance writer Karen E. Klein about how he created a recruiting company and used stock options to achieve his goals.
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In 1996, we started the New Media Solutions Group, building e-commerce Web sites for our clients, but we found there were pretty deep barriers to Internet entry for a lot of the companies.
So we formed a business to provide solutions for those companies, taking them through every facet--from developing their business concept to the design and programming of their Web site and into technical integration, hosting, site management and marketing services through the digital hosting network that we established in 1997.
We had a fee-based business model initially, but about 10 months ago we made the decision to start operating on a fee-and-equity model. That’s been the impetus for our recent expansion and growth. We identify interesting companies in a variety of industry segments that have good potential to be successful, and we work with them for a combination of monetary compensation and equity.
The most important issue for us is that we’re trying to grow fairly rapidly. We have 35 employees now and we want to have 75 or 100 in the next year, so we’re hiring between four and eight people a month.
With the Internet economy booming, there’s a high demand for talented individuals, especially software engineers, Web designers and producers who have implementation and execution expertise.
As a small company, we would never be able to attract the quality or quantity of people we need if we used only traditional methods such as advertising and posting on job boards.
Because the talented people are probably already working for other companies, we have to look for people who are interested in making a change. We used to use outside recruiting firms, but we found they are incredibly expensive--it costs 20% to 30% of a year-one salary for a placement--and not that effective. It could cost us in excess of $50,000 a month even if a recruiting firm found only 50% of our hires.
The solution we found was creating a subsidiary that focuses on recruiting for us and eventually will be available to our partner companies too. We had a relationship with an outside recruiter, and we brought him on board to create the subsidiary, which we call SDR Recruiting. This way, we get 100% of his focus, he works in our offices and we don’t have to worry about who he’s really serving--us, or another client who might pay more.
We also hire through other methods. For instance, we use a bounty system to compensate our employees if they refer someone who we wind up hiring. Depending on how hard it is to fill the position, we would pay between $1,000 and $2,500 for a successful hire.
And we spend significant dollars on premier subscription services for online job sites, such as Monster.com, that give us access to the good resumes. A few years ago, I probably would have balked at the expense, but our recruiter relies on the service on a daily basis, so we pay for it.
In addition to finding candidates, we have to offer a competitive compensation package, great projects, opportunities for furthering education, flex time and a unique stock option plan to attract new hires and keep the employees we have.
One thing we’ve done is establish an employee stock ownership program and give our employees the option of ownership in the companies that we are partnering with, so when our partner companies go public or get sold, they get securities, physical stock or cash payouts. We have had two distributions, and we are optimistic that our other partner companies will be successful.
This program is popular with employees interested in the Internet economy who think stock options are exciting, and by giving them a diversified portfolio of companies, all their eggs are not in one basket.
Even though these are start-up companies at different stages of development, the employee also is reaping the value of equity in Digital Boardwalk, getting a competitive salary and getting other benefits such as health and dental insurance, a 401(k) pension plan and high-bandwidth DSL access we provide for free for their home computers.
Our employees have different wish-list items that we try to provide when we hire them, whether it’s flex time, working from a home office or going to a particular industry conference. And we provide a dynamic company culture with professional management, monthly beer bashes on our balcony and internal brainstorming and educational sessions that allow employees to give presentations on topics they’re interested in.
There also is the fact that we’re a block away from the Third Street Promenade and a few blocks from the beach.
The key to hiring these days is that you have to be doing everything, from posting job listings on your Web site to looking at job boards, going to trade shows, and creating a compelling job environment and compensation package. We have to get an A in every category, which is costly, but our human capital is the most important part of our company, and we have to invest in it.
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If your business can provide a lesson to other entrepreneurs, contact Karen E. Klein at the Los Angeles Times, 1333 S. Mayflower Ave., Suite 100, Monrovia, CA 91016 or at kklein6349@aol.com. Include your name, address and telephone number.
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AT A GLANCE
* Company: Digital Boardwalk Inc.
* Owners: William Jeffries, Joshua Grode, JNet Technologies, employee owners, outside investors
* Nature of business: Development of e-commerce companies
* Location: 1207 4th St., third floor, Santa Monica, CA 90402
* Year founded: 1997
* Employees: 35
* Web site: https://www .digitalboardwalk.com
* E-mail: info@digitalboardwalk.com
* Annual revenue: $2 million
