STAFFING: Cataloger labor crisis

Mailers face worker shortages at all levels

For San Jose, CA-based telephony products cataloger Hello Direct, being located in Silicon Valley has its advantages. For one, it’s the center of the Internet universe; it’s also a desirable place to live.

But the $80 million cataloger must also compete for top engineering talent with Internet behemoths such as hardware provider Cisco Systems and computer software/ manufacturers Apple Computer and Hewlett-Packard. Since half of Hello Direct’s products are proprietary and highly technical, recruiting the best and brightest engineers is crucial to the company’s long-term success. “In the old days, candidates were lined up outside your door,” says director of marketing Denny Waldera. “Those days are over.”

The remarkable boom in e-commerce has created more employment opportunities for people with marketing, technical, and operations skills. And catalogers nationwide – not just in Silicon Valley – are struggling to recruit and retain employees. The competition for direct marketing talent now includes Web pure-plays and retailers adding Websites, as well as other catalogers.

Worse yet, few catalogers can offer what the Web pure-plays can: outrageous sign-on bonuses, stock options, huge salaries, and the dream of becoming a dot.com millionaire.

“Highly skilled positions, such as database management analysis and information technology, now apply to the Internet as well as to cataloging,” says Nancy Tait, executive vice president at Medford, OR-based multititle food and gifts mailer Bear Creek Corp. “The dot-coms are picking from the same labor pool as those in the catalog industry, and those companies have the ability to offer stock options, sign-on bonuses and equity positions,” she says.

As a result, catalogers such as Bear Creek and Hello Direct have upped the ante for attracting top candidates. “There’s no question we have to do more to ensure that we are competitive. The value of our compensation packages has gone up,” Tait says, although she would not provide specific figures.

At Hello Direct, “we’ve raised our salaries more than 10% over the past two years, to bring our employee salaries in line with market salaries in the Bay Area,” says Ruth Grouell, vice president of organizational development. “Our inbound and corporate account executives, for example, are heavily incentivized. We do not place a cap on their earnings.”

A few big differences

Terre Simpson, president/founder of New York-based direct marketing recruiter Simpson & Associates says that catalogers generally offer more money up front. The dot-coms, ironically, promise more on the back-end in the way of stock options and bonuses. “Suppose a candidate has offers from both a catalog company and a dot-com,” he says. “The cataloger offers $200,000 for a senior level marketing position. The dot-com offers $150,000, but includes `silent shares,’ so that if the company goes public, the shares push the compensation well past $200,000. It’s a risk that many candidates are willing to take.”

And the recruiting problem is compounded by the fact that most catalog companies aren’t located in cosmopolitan areas, but rather in remote places, such as Freeport, ME, or Dodgeville, WI. Small towns and rural locations may be ideal places to raise families, but they’re not a destination site for newly minted marketing MBAs or Website whiz kids.

Such problems have made some catalogers rethink their hiring strategies. Venus Swimwear, for example, has hired a recruiting manager to “get a better handle over who we hire,” says Daryle Scott, president of the Jacksonville, FL-based swimsuit cataloger. Hello Direct has done the same thing. The b-to-b cataloger has also altered its hiring practices to move faster to hire qualified candidates.

“We are now extremely responsive to candidates and move on them quickly,” Waldera says. “And we’ve knocked down all physical walls to create a more open atmosphere for our employees.” Hello Direct has managed to hire about 50 employees since January, he says, because potential candidates are attracted to the cataloger’s track record of profitability and growth in the Internet and business-to-business marketing segments. And some catalogers, such as Portland, OR-based gifts mailer Good Catalog Co. and Peoria, IL-based horticultural marketer Foster & Gallagher, are employee stock-owned, which gives all employees a stake in the business.

But money isn’t the sole factor in either recruiting or retaining employees. “In Silicon Valley, you could walk across the street and earn $10,000 more,” says Hello Direct’s Grouell. “We realize we can’t compete just on money, so we are working to create an environment where we bring out the best in our employees.”

Also, the volatility of the Internet world – further evidenced by the May bankruptcies of dot-coms Boo.com and Toysmart.com – may help lure some of the marketing talent back to catalogs. Already, says Bear Creek’s Tait, “we are starting to hear from some employees who miss the cultural aspects and profitability that we can offer.”

The hiring climate for operations employees – call center operators, pickers, packers – is just as competitive as, if not more so than, hiring at the executive level. And with national unemployment figures at 30-year lows – less than 3% in many areas of the country – some catalogers have developed innovative strategies to attract and keep operations workers.

Dodgeville, WI-based apparel cataloger Lands’ End, for one, now offers free Green Bay Packers football tickets to employees who recruit friends to work there. And Marshfield, WI-based food cataloger Figi’s offers its distribution center employees free busing and breakfasts at Burger King.

Aside from such perks, some catalogers are hoping to lure lower-level employees with generous benefits packages. Jacksonville, FL-based cataloger Venus Swimwear competes with several area call centers for labor, “so recruiting has been a major challenge for us,” says president Daryle Scott. Venus hopes to hire about 45 full-time employees this fall, using benefits such as 401K programs, flexible scheduling, and relaxed working conditions.

But not all catalogers have been successful in attracting quality labor on the back-end. Duluth, MN-based woodworking cataloger Duluth Trading Co. was so handcuffed by the dearth of available labor that it recently decided to outsource its entire call center operation, says director of marketing Mike Vanderscheuren. “We’ve had trouble competing with McDonald’s.”

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