Incentive Clauses: Agencies are hustling to find talent for growing staffs.

When DVC threw a December recruiting party at its funky Muffin Head Productions office, programmers and Web designers didn’t even have to visit the former warehouse space in New York City’s chic SoHo district to join the fun.

DVC set up a “Web cam” that pans the 13,000-square-foot office, sending out live still images updated about every 30 seconds. Job seekers who couldn’t attend were invited to watch the evening’s activities on their computers.

Young professionals who might be interested in a position in the agency’s DVCI Internet division – or for that matter, anyone else – can now drop in any time and check out the office’s bright colors, large industrial windows, and quirky features such as a picket fence and a chicken coop. The images are available through either recruitcam.com at dvci.com or earthcam.com, the site for Hackensack, NJ-based Earthcam, the Web-cam operator whose computers host the service for DVCI.

Web cam gives DVCI a leg up in the furious tussle for top technology talent, says DVC senior vp-marketing services Rich Jachetti. “These folks are sensitive to their environment. They think of themselves as being on the leading edge and they want a work space that reflects that,” says Jachetti, who believes DVC is the first promotion agency to showcase its working space with the technology.

If attracting programmers and designers for an Internet division is insanely challenging, promo agencies are finding that luring talent for all jobs is tougher than ever. Agencies aretrying to counter the perception that promotions work means long, erratic hours and unexceptional compensation. They’re raiding each other as the strong economy, with its miniscule unemployment rate, makes available talent scarce.

Dot-coms are absorbing talent across the board. “The Internet is siphoning off huge numbers of people,” says Robert Lipsky, ceo of QLM Marketing, Princeton, NJ.

Promo agencies can’t match the dot-coms’ pay and benefits packages, which often include equity stakes, says Ericka Weinstein, managing director and co-founder of Stephen Bradford Search, New York City. “Promo agencies are competing against companies that are offering employees a lot of upside.”

A director of promotions at a dot-com might earn $100,000 to $150,000 plus stock options, compared with $65,000 to $85,000 at a promo agency, Weinstein says.

But Internet companies are only exacerbating a larger and, some promo execs say, worsening problem.

Weinstein says that client-side employment retains its allure as being more stable and more lucrative than agency work. “Young people are getting a little fed up with 15-hour days and no money,” she says. The client-side offers “better control over their lives.”

Some agency execs surveyed recently say it’s toughest to find people at the supervisor and senior levels. “It’s become harder in the past two years. Agencies are pilfering people from each other,” says Marketing Drive Worldwide/MGR co-ceo Wes Bray, in Wilton, CT. “It comes down to who keeps the happier environment.”

“Talented people are in demand because the whole branding conversation has become much more powerful,” adds DVC ceo Peter Dugan.

RECORD NUMBERS

Not that staff levels are dropping at promo agencies in particular or in the promo industry overall. Far from it. Clients expect more services than ever from agencies as they consolidate their shop rosters and develop strategic-partner relationships with the winners.

Full-time employment among the promo 100 was 14,197 in 1999. That’s 47-percent higher than 1997, when the top 100 employed 9,683.

“Clients are demanding a lot more service from us – for relatively fewer dollars,” says Lipsky. “Our account staffing is much higher per dollar of account billing.”

DVC, which counts Pillsbury and Perdue Farms among its existing clients and just gained the Labatt’s business, will beef up 20 percent to 25 percent more this year to 310 staffers, says Dugan.

“I am confident we will be able to meet that because we have a reputation as an interesting and dynamic place to work, where the people become part of a community,” he says.

It won’t hurt that the Morristown, NJ-based agency last year granted its employees non-voting stock-appreciation rights, which gives them ownership interest in the company. One of the staff’s first acts was an e-mail vote to scale back the annual Christmas party. Rather than the sit-down dinner with nine-piece orchestra of years past, the ’99 event featured a buffet and a three-man combo.

QLM has hired a recruiter on a rolling retainer to find people at the management supervisor and senior account level, “an admission of our need for outside help,” says Lipsky. Chicago-based recruiter Encore Group finds that promo agencies have become interested in new arrangements such as monthly retainer fees, says president Cyndi Simon.

Some market recruiters have increased their fees from the usual 20 percent of base salary to 30 percent to 35 percent. Responding to those hikes, employers have focused on the other main source of candidates, and are increasing what they pay employees for referrals from the typical $500 to $1,000 to as much as $2,000 to $5,000, reports Simon.

“The agencies have more people than they have ever had, they are looking for more people than they have ever looked for, and they are not getting the people they need,” says Simon.

MGR borrows tactics from Silicon Valley by offering quality-of-life benefits like free health-club memberships and a week off between Christmas and New Year’s, says Bray.

“We are trying to be very creative about how we retain people. There is an effort across [the New York City-Fairfield County, CT] marketplace to keep salaries somewhat stable. We don’t want to grab people by overpaying,” he says.

And, of course, you still have to be careful about who you hire – especially for those important senior manager posts. “We had a hit rate of about 50 percent at MCA,” says Bray, who left that agency to join MGR. “You have to interview very carefully.”

Once considered small fly-by-night companies, promo agencies have matured in the last 10 years to become “real partners now, and clients are looking for fully capable firms,” Bray notes.

That’s a hard order to fill if you’re losing 10 percent of your employees annually and your young hot shots are flocking to the world’s Silicon Alleys.