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.
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 Garry Foster, National Director of Deloitte’s Canadian 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.”
High-quality employees are the greatest contributors to success, according to 66 per cent of respondents, up from 25 per cent last year and 19 per cent in 2004. Similar to last year, virtually all of the CEOs (97 per cent) have plans to grow their workforce within 12 months. Almost half (47 per cent, compared to 42 per cent last year) said growth will exceed 25 per cent, while 17 per cent (compared to 19 per cent last year) expect growth to exceed 50 per cent.
Finding, hiring and retaining qualified employees is still the biggest operational challenge, according to 41 per cent of CEOs, an increase from 27 per cent for the past two years. To attract employees, 71 per cent of CEOs are offering stock options or some form of ownership interest. Others are offering lifestyle benefits: 49 per cent offer flexible work hours and 23 per cent offer additional vacation days. Career track benefits are also important – 35 per cent offer training and development programs, and 28 per cent provide a career growth plan.
Seventy-nine per cent of CEOs are extremely confident (43 per cent, up from 36 per cent last year) or very confident (36 per cent, compared with 38 per cent last year) that their companies will sustain high levels of growth.
CEOs report that Internet and IP technologies are increasingly critical to their operations – both internally and externally. Sixty-two per cent use IP to connect geographically dispersed employees; other internal uses include research collaboration, voice communications, and reporting and regulatory compliance. Externally, 65 per cent use IP as a data communication channel with clients; 56 per cent use IP to deliver customer support and maximize CRM; and 50 per cent 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 per cent of CEOs, leaped to 21 per cent, while Internet/IP dropped from 30 per cent to 19 per cent.
Twenty-eight per cent of CEOs say excessive government regulation is the biggest threat to growth in the tech sector over the next 12 months, even though only four per cent report that dealing with regulatory issues is their biggest operational challenge. This year, far fewer CEOs are concerned about limited access to capital (13 per cent, down from 21 per cent last year) or terrorism (nine per cent, down from 15 per cent last year).
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 per cent). However, they attribute their success to qualities such as entrepreneurial spirit (72 per cent) and sheer determination to succeed (66 per cent). Thirty-three per cent find developing leaders and delegating responsibility to be their biggest personal challenge as CEO, while 17 per cent find achieving and sustaining profitability to be their main challenge.