Internet Companies Vary in Retention, Salary Strategies

March 21, 2001 ( - All Dot Coms are not created equal according to a new study of organizational behavior and employee retention strategies.

The Unifi Network’s eCommerce Professionals Compensation Survey identified three different organizational categories in the Internet economy:

  • The Dot Com – a stand-alone organization that has grown from a start-up, providing New Economy products or services. These firms have begun developing a sustainable revenue stream.
  • The Dot Corp  – an organization that provides New Economy products/services, but brings real assets, relationships and reputation to the equation. They may be a standalone firm, or a sub-unit of a larger entity. They may use the Internet as a principal supply chain medium, typically with an on-going revenue stream in place.
  • The eEnabler – an area or unit within a ” traditional” organization responsible for Internet-related technologies or activities.

“There are some glaring differences between employees who work at Dot Coms and those at Dot Corps.  For instance, even in difficult economic times, a true Dot Com employee still believes that he will eventually hit the jackpot,” according to Carl Weinberg, a principal in Unifi Network’s Compensation Practice.  “However, many Dot Com employee ‘wannabes’ who have shied away from the risks associated with working at Dot Coms are now exploring opportunities to work at what are generally perceived to be safer Dot Corps.”

The survey found that more than half of existing Dot Corps/eEnablers have been in business for less than a year while more than half of existing Dot Coms have been operating for over four years. 

Dot Corps Place to Be

While the vast majority of survey respondents use executive search firms to locate new talent, only 20% found this approach to be “very effective.”  On the other hand, 75% use online recruiting Web sites, with 70% rating this as an effective tool in their recruiting efforts.

The stronger financial base of Dot Corp organizations allows them to offer higher salaries, and create stronger links between pay and performance than their Dot Com brethren.  Dot Corps also look to be the place to be for employees in a traditional firm.  According to the survey Dot Corps have, on average, nearly 6% higher projected salary increase budgets than other divisions at the same parent company.

Not surprisingly Dot Com firms have tended to offer a mix of cash/stock to compensate workers, and typically rely on the market to set salary levels.  However, they are aggressive hirers, with the majority offering an “on-the-spot” job offer, compared with just 50% of Dot Corps.

Unifi Network is a subsidiary of PricewaterhouseCoopers.

In fact, the survey suggests that Dot Corps share many of the hiring and retention characteristics of more traditional firms.