It is May 28th, in the year 2000. The world is five months into surviving Y2K. While companies in Silicon Valley are struggling to retain its talented engineers, one company stands out. Fresh off a stock meltdown, every sign would point towards the same thing happening at software provider Calico Commerce. But here’s the thing: it didn’t.
Loyalty in Silicon Valley?
As long as Silicon Valley has existed, job hopping has very much been a way of life. But when the New York Times ran a feature article on that day in 2000, it came paired with a remarkable tale of retention. As employees of tech companies job hopped their way to rival companies for 15 to 20% better pay, Calico only saw 15 of 330 workers leave. That comes down to an annual turnover rate of 4.55% the company — more than half of the Silicon Valley standard at the time.
The glaring question, which the Times article aims to answer, is simple: how? The answer, as it almost always is when it comes to enabling a sense of loyalty, isn’t money. “While many Silicon Valley companies depend largely on the promise of riches to attract and retain workers, Calico has gone a different route”, journalist Alex Berenson wrote. “The company tries to combine the openness and workplace perks common in Silicon Valley companies with the very uncommon understanding that employees sometimes have lives outside the office.”
It became a simple equation where a level of disclose and communication became vital to building loyalty
As part of it, CEO Alan Naumann reportedly shared ‘lots of information’ with employees, holding monthly company-wide meetings to discuss where Calico stood relative to its competitors and internal goals. He also hosted monthly group breakfasts for employees whose birthdays had fallen that month and solicited feedback from the group. It became a simple equation where a level of disclose and communication became vital to building loyalty
‘Loyalty is for chumps’
Calico’s fate was less fortunate. After posting a net loss of $141.3 million, the company was acquired by PeopleSoft in 2001 for a sum of $5 million in cash. As part of the deal, the San Jose-based company filed for bankruptcy. It was an unfortunate turn of events for employees who held stocks in the company they felt they ‘belonged at’. Fred Reichheld, renowned author on loyalty and cultures of successful companies, did see the silver-lining of Calico’s strategy.
“The average point of view is that loyalty is for chumps, that the longer you stay on the job, the stupider you are.”
“Being honest with employees and giving them a chance to grow at their jobs builds loyalty in a way that money cannot”, he told NYT. Reichheld, however, seemed aware of how loyalty was viewed in San Francisco’s most-famous bay. “The average point of view is that loyalty is for chumps, that the longer you stay on the job, the stupider you are. Most business leaders cannot tell you why their people should be loyal. They get it confused with obedience, or just staying there, or fear.”
‘80% of US tech workers are considering looking for another job’
21 years later, and Silicon Valley is still renowned for the incredible technology it develops on a daily basis — and for the notion that employee loyalty rarely exists. According to an anonymous survey from professional social network Blind, 80% of tech workers are considering looking for another job. And more than half have actually applied for one in the past month. Moreover, 74% of tech professionals have communicated with a recruiter and nearly half (49%) have already interviewed with another company in the past month.
According to their widespread survey of developers working in the Netherlands, 30% are looking to move companies. Compared to 80% of tech workers in the US.
While Europe fears a similar fate, the initial numbers to come out of the OfferZen State of the Software Developer Nation survey don’t sound anywhere near as bad as their American counterparts. According to their widespread survey of developers working in the Netherlands, 30% are looking to move companies. Developers cite poor management as the primary reason (52.4%) for wanting to leave their current role. Narrowly followed by a desire for better salary (50.4%) and a ‘poor work-life balance’ (40%).
Silicon Valley’s golden hello’s
For decades, Silicon Valley’s position as the birthplace of high-growth technology companies was unassailable. But with new tech hubs popping up in various locations across the world, ranging from Bengaluru to Tel Aviv, its position on the tech map may look vastly different in years to come. Add on top the notion that the pandemic has driven workers to migrate from America’s superstar cities, for either happiness or money-related reasons.
“Ethical tech non-profit Software Freedom Conservancy, which has six people on staff, pays interview finalists $500 each.”
Wired recently reported on golden hello’s steadily becoming the norm for tech companies. “Ethical tech non-profit Software Freedom Conservancy, which has six people on staff, pays interview finalists $500 each. Cactus Communications, a technology company for the scientific community, offers 5% of a role’s annual compensation as a welcome bonus. At Showhere, it’s a month’s salary upon signing an employment contract.”
When more money still results in the highest turnover rate (13.2%) out of every single business sector, then perhaps something else ought to be done.
As Silicon Valley-based companies will likely keep throwing money at candidates, it’s tough to see where loyalty may come from. While Calico’s retention mission in the early 00s proved hugely successful, their business results may end up defining them for all the wrong reasons. But when more money still results in the highest turnover rate (13.2%) out of every single business sector, then perhaps something else ought to be done.
Read more:
- Could Europe become a hunting ground for thriving Indian tech companies?
- How the Finns are hiring away your tech talent with a groundbreaking scheme
- Dr. John Sullivan: ‘We don’t call it poaching, we call it hiring to hurt’
