The Scouts: Companies do battle for workers

The stories, perhaps apocryphal, have nonetheless become Silicon Valley's equivalent of urban legend:

Microsoft sending personal employment invitations to each Apple worker who got a pink slip on the day their layoffs were announced; Oracle recruiters standing outside Ingres offices the day it was bought by Computer Associates; limousine lunches, country houses, and million-dollar signing bonuses in other fabled tales.

But as in many courtships, someone often gets hurt in these expensive mating dances. And companies that lose their workers to rivals are behaving like spurned suitors with deep pockets and lots of lawyers.

"What is really happening here is a combination of a couple of trends. You have a large number of companies for a limited pool of employees," said attorney Bill Anderson of Brobeck, Phleger, & Harrison. "Intellectual resources have become more and more important, and people are jealously guarding those resources."

Traditionally, computer companies have been reluctant to sue each other, for reasons of professional culture and the prospect of arguing highly technical cases before relatively Luddite judges. Now, companies have not only become far more litigious, but they have also raised the stakes by taking such cases from civil courts to the criminal realm, invoking laws that carry prison sentences of up to ten years for corporate espionage.

Moreover, companies are increasingly targeting individuals instead of corporations as a whole, charging former employees with everything from stealing trade secrets to illegally luring other workers with predatory hiring practices. Paranoia over losing valuable workers has led employers to do some spying even within their own firms to see if employees are considering other jobs or obtaining material beyond their immediate purview.

"Companies are monitoring email and checking computer load times to see if anyone is transferring lots of information," said one executive at a software firm who did not want to be identified.

1.6M "helvetica"="" size="-1" color="#666666">Bill Gates on the global workforce

Given the economic risks involved, the fear is understandable. Theft of intellectual property and corporate espionage cost companies $24 billion a year, according to conservative estimates in a report by the American Society for Industrial Security.

As if that weren't enough, the light-year pace of the Internet has provided even more incentive to steal talent from competitors. Companies that perceive themselves as behind in any particular area of development are now trying to buy those technologies whole by hiring the people who invented them.

That, at least, is what's being charged in a spate of lawsuits filed in recent months. Among the more notable are a lawsuit by Borland against Microsoft over the hiring of 34 employees in three years; a suit filed by Informix over the defection of 11 workers to Oracle; and a Novell suit against a group of engineers--which includes Darren Major, the brother of Novell technology guru Drew Major--who left to start up the Timpanogas Research Group.

So common is employee movement among competitors that some expatriates have even formed clubs at their new companies: According to the Borland lawsuit, a "Dead Borlanders Society" has been created at Microsoft. Years earlier, former employees of Shockley Semiconductor Laboratories became known as "Shockley's Traitorous Eight" after founding Fairchild Semiconductor.

Companies are trying to buy technologies whole by hiring the people who invented them.

The driving force behind this seller's market is a simple matter of supply and demand. Last month, the International Technology Association of America reported 190,000 vacant jobs at large and midsized U.S. companies nationwide. The number of college students graduating with degrees in computer science fell by 43 percent between 1986 and 1994, from 42,195 to 24,200.

Motorola CEO Christopher Galvin said in a recent speech that his company begins grooming future employees at the age of 14 through summer technology camps and weekend programs.

"The cost of recruiting has gone through the roof," said Les Fenyves, San Francisco director of recruiting firm James Moore & Associates. "A company will invest $30,000--recruiting fees, relocation, signing bonuses--before a candidate even walks in the door."

Other companies are beginning to take a different route, trying to keep employees from leaving, rather than fighting their departure in court or elsewhere after the fact.

"The focus has to be on retaining your key employees," said Vici Wayne, principal with the recruiting firm Korn Ferry International. "Give every employee ownership in the company, especially pre-IPO--some kind of ownership, some kind of reason to be there.

"They need to be more connected with the heart and soul of the company."

Jane Black contributed to this report.