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Tech Industry

IDC hit with analyst, exec departures

The division of media and research powerhouse International Data Group is experiencing a high turnover rate, prompting new retention policies.

As a leading technology market research firm, International Data Corporation (IDC) often writes about the high rate of employee turnover in the industry. Now, it is experiencing departures first-hand.

The Framingham, Mass.-based division of media and research powerhouse International Data Group (IDG) has been hit recently with a spate of executive and analyst departures, prompting the largest privately owned technology market research firm to revamp its hiring and retention policies.

Notable defectors include former vice president Jay Bretzmann and analysts Kevin Hause, Amir Ahari, Sean Kaldor, John Brown, Bill Peterson, Judy Hodges and Diana Hwang.

As usual, the underlying motives appear to be money and opportunity. Many are taking off for higher paying positions in the financial world or at companies they once analyzed.

Stock options also play a role. IDC has contemplated plans to go public for a number of years but never has. As a result, the company can not as effectively use options to recruit or retain employees, as a growing dot-com might. Unlike an investment bank, IDC also can't offer bonuses tied to the performance of the firm's Wall Street business.

Competitors have faced similar turnover. This week, for instance, Michael Gartenberg left his position as a senior analyst at Gartner to launch an Israel-focused venture capital firm, although he will continue to act as a consultant to Gartner.

IDC is among the most prominent market research firms in the technology sector, with an archive of more than 60,000 documents on subjects ranging from e-commerce and Linux to digital cameras and the shortage of IT workers. The company has offices in 43 countries.

Losing employees is especially tough for IDC, where analysts account for 550 of the division's 880 employees. Roughly 13 percent of all IDC employees quit last year, said Vicki Brown, IDC's chief operating officer, and turnover in 2000 is expected to exceed the 1999 rate.

"It's very distressing," Brown said. "Whenever you see people leaving a company in higher numbers, it's discouraging for people who continue working at the company. We're growing at a very fast rate, and we need to replace people and keep growing--it's a difficult task."

Former IDC employees say they found a variety of motivations to quit. Reasons ranged from the lure of dramatically larger paychecks and annual bonuses at other companies to a desire for a full-blown career switch.

New analysts can earn $50,000 to $65,000. Opportunities for significant raises, however, are limited, as are bonuses.

Former server analyst Amir Ahari left IDC's suburban Boston headquarters in October 1999 and is now a securities analyst for Piper Jaffray in Menlo Park, Calif. He now makes three to four times what he did at IDC, thanks in part to bonuses tied to the performance of Piper Jaffray's stock portfolio.

"Senior management wanted us to do more for less and wanted us to be happy with that. That just doesn't fly when you look around and see so much opportunity," Ahari said. "You see your friends doing the exact same thing at other companies and making double what you make--you just say, 'Why should I stick it out?'"

Several former IDC analysts complained that management tried to pare expenses by cutting off-site brainstorming sessions at relatively highbrow resorts in Northern California and New England--eliminating a favorite perk. Some said that compared to fabled Bay Area dot-coms--funky offices replete with office pool tables, free beverages and on-site sushi bars--IDC seemed downright stodgy.

IDC's retention plight is familiar news to high-tech companies. Dataquest, the competing division of Gartner, has experienced high-level turnover as well.

Late last year, Kimball Brown, one of Dataquest's most quoted analysts, took off for ServerWorks, which makes chipsets. Before that, Nathan Brookwood, a celebrity among the processor set, took off to work independently.

Microsoft has also been stung and earlier this year raised salaries for Silicon Valley employees by 15 percent.

The average technology company loses about 25 percent of its work force each year--one of the highest turnover rates for any skilled work force in the United States, according to various estimates. By contrast, white-collar turnover in the automobile industry is typically less than 5 percent per year.

Human resource experts say the problem for technology recruiters has become especially severe in the past year and a half. A soaring stock market for much of 1999 lured many employees from relatively large and stable companies to start-ups promising an initial public offering and the possibility that employees' equity stakes would make them instant millionaires.

But offering employees fatter salaries isn't always the best solution and is often only a stop-gap measure that makes the employee hang on a few more months, said Debbie McGrath, president of Mill Valley, Calif.-based human resources portal

"Sometimes the best hope is that the employee gets to the new company and doesn't like it," McGrath said. "Companies should keep in touch with employees when they leave; many have retention programs for people who have already left. They often find that the grass isn't always greener."

IDC, which has rehired 20 former employees in the past several years, does not plan to ride the wave of defections idly.

The company has already hired two more full-time recruiters. It now has two recruiters on the East Coast and one in the 80-person office in Mountain View, Calif., epicenter of the Silicon Valley and an area notorious for its high employee turnover.

IDC, which hires roughly 15 to 20 new employees per month, also plans to unveil a new recruitment and retention strategy at a company meeting June 16. The plan hinges on improving employees' "work-life balance," Brown said.

"This is beyond the same-old, same-old," said Brown, who refused to discuss details until after the meeting. "We're doing some interesting, almost cutting-edge things. We take it seriously."

Unfortunately, many tech industry employees also take job hunting seriously. IDC analyst Roger Kay said he's happy with his job, which affords him intellectual stimulation and plenty of time with his young children. He's not overly worried about a massive brain drain at IDC.

But, he said, no one is immune to headhunters.

"It's a free market, and you can expect there to be movement of personnel," he said. "As talent is bid away from IDC, IDC will have to bid it back. The market will correct itself, just the way it does in our wonderful capitalist economy."'s Stephanie Miles contributed to this report.