Tech CEOs find hiring tougher

Virtually all fast growth technology CEOs are planning to increase headcount within the next 12 months, but they say that finding and hiring the right people is getting tougher, according to Deloitte’s 2006 CEO Survey of the fastest growing technology companies in North America as ranked on Deloitte’s Technology Fast 500.

The survey was conducted during the first quarter of 2006 by Deloitte’s Technology, Media & Telecommunications (TMT) Group. Deloitte’s Technology Fast 500 is an annual ranking of the fastest growing technology companies in North America based on percentage revenue growth over five years.

"The majority of Fast 500 CEOs foresee their growth being organic rather than the result of acquisitions, so finding and hiring the right employees to support that growth is paramount," said Tony Kern, deputy national managing principal of Deloitte’s U.S. TMT industry practice. “Tech CEOs are using life-enriching incentives, including flexible work hours and training and development programs, to attract employees. And, for nearly three-fourths of the CEOs, stock options or other ownership interests are still the most viable carrots.”

CEOs increasingly value employees; employee issues are biggest operational challenge
High-quality employees are the greatest contributors to success, according to 66 percent of respondents, up from 25 percent last year and 19 percent the year before. Similar to last year, virtually all of the CEOs (97 percent) have plans to grow their workforce within 12 months. Almost half (47 percent, compared to 42 percent last year) said growth will exceed 25 percent, while 17 percent (compared to 19 percent last year) expect growth to exceed 50 percent.

The biggest operational challenge is still finding, hiring and retaining qualified employees, according to 41 percent of CEOs, an increase from 27 percent for the past two years. To attract employees, 71 percent of CEOs are offering stock options or some form of ownership interest. Others are offering lifestyle benefits: 49 percent offer flexible work hours and 23 percent offer additional vacation days. Career track benefits are also important —35 percent offer training and development programs, and 28 percent provide a career growth plan.

CEOs remain confident about future growth
Seventy-nine percent of CEOs are extremely confident (43 percent, up from 36 percent last year) or very confident (36 percent, compared with 38 percent last year) that their companies will sustain high levels of growth.

To put this confidence in perspective, the Fast 500 winners demonstrated average revenue growth of 2,409 percent over five years.

Internet/IP critical to operations; wireless expected to be fastest growing segment
CEOs report that Internet and IP technologies are increasingly critical to their operations–both internally and externally. Sixty-two percent use IP to connect geographically dispersed employees; other internal uses include research collaboration, voice communications, and reporting and regulatory compliance. Externally, 65 percent use IP as a data communication channel with clients; 56 percent use IP to deliver customer support and maximize CRM; and 50 percent use it as a sales and distribution channel.

Interestingly, however, CEOs no longer see Internet/IP as the technology segment offering the greatest potential for growth over the next 12 months. The wireless communications services segment, which was cited last year by only 11 percent of CEOs, leaped to 21 percent, while Internet/IP dropped from 30 percent to 19 percent.

Excessive government regulation worries CEOs, access to capital doesn’t
Twenty-eight percent of CEOs say excessive government regulation is the biggest threat to growth in the tech sector over the next 12 months, even though only 4 percent report that dealing with regulatory issues is their biggest operational challenge.

This year, far fewer CEOs are concerned about limited access to capital (13 percent, down from 21 percent last year) or terrorism (9 percent, down from 15 percent last year).

CEOs credit their own decision-making abilities, entrepreneurial spirit
On a personal note, those surveyed said that decision-making ability is the most important skill for a CEO of a fast-growing technology company (31 percent). However, they attribute their success to qualities such as entrepreneurial spirit (72 percent) and sheer determination to succeed (66 percent). Much smaller percentages credit factors such as technical knowledge, upbringing, luck, personal relationships, and education as leading to their success.

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