By Shannon Henry
TechCapital Editor
March/April 1998 -- Vol. 2. No. 1

In the cutthroat battle to attract and keep technology workers, a new form of currency has come into play - company culture. There are so many openings that the interviewee has the upper hand. The dynamics of the job interview have changed, since it is now the tech worker's choice: Is this where he or she wants to spend the working day?

So the smartest (and sometimes most scared) CEOs are developing the collection of tangibles and intangibles loosely called company culture into a complex recruiting tool to offer flexibility, creativity, career advancement, money and even fun. It's rooted in business sense, but plays off the old axiom "do what you love, the money will follow."

It's not easy. Building a culture involves much more than one-time rewards and perks; it requires a long-term vision that many fast-track CEOs of high-tech companies say will slow them down.

Some start with simpler though still significant ingredients such as dressing down, company picnics, stock options and just plain old bonuses. And then they move on to the heavier lifting of developing attractive career paths and top-notch training, and creating the atmosphere of trust and loyalty that keeps employer and employees in a state of satisfaction - and high productivity.

Not only does it work, it's increasingly necessary. From sending candy to workers' sweethearts on Valentine's Day to retraining a secretary as a Local Area Network administrator, management is creating the workplace of tomorrow because workers are demanding it today. The workers of the knowledge economy want a piece of the business action, control over their jobs and to be individuals. They don't want to feel part of an assembly line.

"The technology industry is going to break down a lot of the workplace norms," says Doug Koelemay, government affairs manager of the Northern Virginia Technology Council. "If you enjoy your job you get it done."

In the meantime corporate executives find they are building better companies.

"Money isn't always the best reward for employees," says Julie Holdren, CEO of Olympus Group Inc., an Internet company in Alexandria, Va. Holdren stocks the office refrigerator with the favorite beverage of each of her 30 employees, plans group camping trips, built an on-site work-out room and recently came up with the Valentine idea. Additionally, everyone at Olympus gets stock options and has lunch together on Fridays to discuss a hot technology issue. "We didn't used to do this but we're having more fun now," Holdren says. "The investment is minimal for the return and you need to do it to keep people."

And keeping an employee can be just as important as hiring the right new one. The dearth of tech workers across the country - exacerbated by growing Internet use and the Year 2000 computer-glitch dilemma - is the grim reaper of an otherwise healthy industry. There are 190,000 unfilled information technology jobs across the United States, according to the Information Technology Association of America. And, the group says, 82 percent of large and mid-sized infotech companies are trying to increase their staff.

Their sense of urgency shows in the paycheck. At a time of low inflation when average salary increases are running 4.1 percent, infotech leaders expect salaries to grow 8 to 10 percent over the next year in general. People with certain skills will demand twice that, according to Ferris, Baker Watts in Baltimore.

The Clinton administration showed unprecedented concern for the shortage in January of this year when it announced the government would invest $28 million to encourage training of new computer programmers.

This is not only a technology industry problem - joblessness among professionals, salespeople and other white-collar workers was at 2.7 percent in November, the lowest since the early 1970s, according to the Bureau of Labor Statistics.

"In 1980 the key to success was to acquire new business. Now the key is to find the right people," says Nancy Friedman, senior vice president of Litton Enterprise Solutions, McLean, Va.

And surroundings matter for success. Just ask the companies.

We did. Two very different ones, in fact, beyond both being in technology: Electronic Data Systems and MicroStrategy.

EDS's government group, based in Herndon, Va., with 4,500 workers, accounts for 15 percent of the entire company's $14 billion annual revenues. The government division caters to clients such as the Justice Department and the Internal Revenue Service, where it engineers complex computer integration projects.

MicroStrategy, a data-warehousing company in Vienna, Va., with 605 workers, posted $50 million in revenues in 1997, counts the decidedly nonfederal Victoria's Secret among its customers and offers "Query Tone," a way for the average Internet user or a big business to query online databases with questions such as who's the best surgeon in Reno.

Both, like all their tech brethren, are having a hard time finding workers. And though the two companies are different in many ways, Michael Saylor, CEO of MicroStrategy, and George Newstrom, president of the government services group at EDS, have in common a keen sense that people have a lot of choices these days and they better have something different to offer.

Culture Types

EDS is not anyone's idea of a hip tech start-up. Everything about the Herndon office screams corporation - the guards, the suits, the oil portraits on the walls. But that's OK, says Newstrom. EDS has changed in its own way and it doesn't want to be Microsoft.

The company has made some major transformations. It is no longer the EDS Ross Perot founded in 1962. The company considers culture to be one of its most important attributes, and people who work at EDS spend a lot of time creating a distinct atmosphere.

"At one point we tried to clone everyone into the original culture," says Newstrom, 50. "It didn't work."

EDS, which is headquartered in Plano, Texas, went through a transformation in 1984 when General Motors bought it, and again in 1996 when GM spun it off. In between, the world became hooked on technology and companies such as EDS started competing with law firms and car dealerships - not to mention Internet start-ups - for technically skilled people. "This is not a technology problem," says Newstrom. "A janitor at a university touches a computer seven times a day. These are skill sets for the workplace."

So the company set out to develop a more attractive corporate culture, one in which every person at EDS was not expected to be the same. Now there's a "Mother's Room" for women who need to breast-feed, a growing population of telecommuters and an ATM on-site. "Employee issues tend to involve proximity and access," says Newstrom.

Kathy Torrence, a 12-year veteran of EDS and the company's director of diversity, remembers when women were not just expected, but required, to dress in conservative suits with a scarf or pin at their necks. "It was the women's version of men's attire," she laughs. Now, she says, "I can be myself when I come to work."

Men, of course, only wore white shirts and dark suits. "I couldn't have worn this 10 years ago," says Newstrom of his blue-checked shirt. On Fridays, you'll see EDS people in casual dress. But it's still "professional" casual dress, he says. "I'm not going to allow blue jeans until after my watch."

These are symbols, but other things have changed, too. EDS used to hire people and then tell them where in the United States they would be sent. Workers simply won't put up with that now. At one time EDS also made employees who went through a training process and then left the company repay the training costs. The requirement became a major negative in the hiring process and was scrapped.

"It's creating that culture that will keep employees," says Newstrom. "People talk about leaving for more money but that's not why they stay."

Even at such a large company, communicating new policies and subtle changes that make people feel better about their work has been made easier through technology, thanks to intranets and electronic newsletters.

Creativity Counts

Smaller and lesser-known companies, such as MicroStrategy, have to be more creative. They must appeal to the entrepreneurial spirit.

To Saylor, 33, who started his company in 1989, Silicon Valley doesn't offer many role models. "They say let's go really fast and get rich quick. Real life doesn't work that way," says Saylor.

Still, Saylor's about to get really rich, with an initial public offering expected to be filed in the first quarter of 1998. He owns 100 percent of the company. In preparation for the IPO, Saylor read 250 prospectuses, learning lessons especially from Oracle, telecom start-up Teligent, Estee Lauder and Ralph Lauren. He plans to remain the majority shareholder after the IPO, and claims being public will not change the company.

"The essence of creating a great company is creating a great institution," he says.

Every quarter, the company has an event designed to promote teamwork, encourage understanding and in general make people like their jobs better. It's part altruism and part business.

In the first quarter, the whole company - now 600 people around the world - gathers on a cruise ship for a weeklong cruise of the Caribbean. Three months later, the company holds its "university" week in which employees teach each other how to do a better job. During the third quarter every employee gets $800 to fly friends and family to MicroStrategy headquarters for an introduction to what their loved one does every day. The last event of the year brings customers, partners and employees together for a big celebratory bash.

It's expensive, Saylor admits, but oh, the return on investment - a mere 7 percent turnover rate. Losing one salesperson one year before he expects the person to leave costs MicroStrategy $1 million in revenues, he says.

"Growing a business is about acquiring human capital," says Saylor. "We ask people to uproot their lifestyles for us. In return we will protect, nurture and make them successful. To the extent people believe that, they come."

While Saylor and Newstrom both admit they need more workers, they also say their companies are not for everybody. They both talk about ethics as the cornerstone of what they do.

At EDS, everyone is tested for drug use. Officers, including Newstrom, get surprise visits twice a year. During training, anyone found collaborating on answers to test questions is immediately fired. "This goes back to Perot's ethical values," says Newstrom. "We want to be the largest corporation in the world with family values."

Saylor, too, speaks reverently of company ethics. He opens William Bennett's "The Book of Virtues" and points to a list of how a life should be lived. "I ought to take this book and give it to every employee who walks in the door," he says. "If I don't believe I can trust you with a million dollars I don't want you in the company."

Loyalty is a vital part of the ethics agenda. Saylor's impressed with Microsoft's No. 2, Steve Ballmer, as opposed to other executives who casually move from company to company when a better offer appears. The people who sign on early and stay devoted to building a company are Saylor's ideal. "Ballmer says they're going to bury him under the Microsoft headquarters, that he's going to make [Microsoft] the best company on the planet."

Saylor says that unless he's retired, look for him at the helm of MicroStrategy. And, he maintains, if the people at the top aren't willing to go down with the ship, the whole company's in trouble. "A subordinate whose time horizon is longer than his boss's is doomed," Saylor says.

Turning English Majors Into Techies

"EDS has a long record of building our own," says Newstrom. "We bring in top talent and train them ourselves and we promote from within."

MicroStrategy, too, focuses on building people's skills. "That commitment to nurturing makes people feel they are a qualified professional," Saylor says. "Too many people suck their employees dry."

Saylor's director of sales was a literature major in college. Saylor likes to hire smart people, especially liberal arts graduates. Each employee gets 10 weeks of training his first year, then five weeks in the second, and at least one week every year after that. "If you're going to create a great company, you're going to create some superior careers," he says.

Both executives say they find the smartest people and then teach them what to do. It's a longer process than hiring the most experienced person, but it helps build company culture and loyalty from the beginning.

And it's increasingly the only way to find new blood. "In the new knowledge economy you have to draft the best athlete available," no matter what their sport, says Doug Koelemay of the Northern Virginia Technology Council.

But that's not every CEO's attitude. "There's a lack of resolve to invest in the workforce," says Saylor.

Other CEOs are noticing the way MicroStrategy is run and some are emulating the investment in culture. "What MicroStrategy is doing matches the way humans really work," says Koelemay. He adds that it's good for business too because it's driven by competitiveness. And Holdren says she has based her creative workplace on what Saylor is doing. It makes a company look good and adds to the bottom line.

Still, in Washington, the conservative, $29 billion-a-year world of federal high-tech contracting is slow to transformation. "We can't change the behavior of all companies," says Koelemay. "For every MicroStrategy there's a defense contractor who won't change the way they work."

For now.