The Israeli army is fighting a battle it knows it can only partially win: to preserve the best of its talent within its ranks, even as the likes of Google, Apple and Facebook entice them with salaries as much as five times what the army can offer.
With Israel’s startup scene flourishing and multinationals setting up research and development centers, a shortage of engineers is heating up the competition for skilled personnel, with companies offering fatter and fatter salaries to recruit talent.
A reliable pool of skills — and one that has been fueling the so called “startup nation,” has traditionally come from the army. The IDF recruits 18-year-old women and men for a compulsory two-to-three-year service imposed on most citizens and allocates them to combat or other units, including intelligence and tech units.
After intensive training, these soldiers are put in highly sensitive, secret and responsible jobs, developing and using cutting edge technologies. After their service, many stay on to become career soldiers while others venture out into civilian life and are either snapped up by high-tech corporations or set up their own start-up.
“The army has a very real problem” because the salaries it offers cannot compete with those offered by the private sector, said Giora Eiland, a retired major general of the IDF and a former head of the Israeli National Security Council.
A son of a friend, he related, who recently graduated from the elite 8200 technology intelligence unit received a number of offers to work for private companies for around NIS 30,000 a month (around $7,800), which was four times the salary the army was offering him to stay on.
“If you love your job, salary won’t make much of a difference,” Eiland said. “But if the salary they offer is 100 percent higher or, as in this case, 300 percent higher, then for sure you will leave. There is no dilemma whatsoever.”
Demand for army graduates has been fueled by the surge in startups operating in Israel and multinationals that have set up R&D centers in the country — all of which are scouting for talent. The intensity of their need has been compounded by the shortage of skilled engineers the nation is facing.
The number of active high tech companies operating in Israel has jumped from 3,781 in 2006 to 7,400 in mid-2016, according to figures compiled by Tel Aviv-based IVC Research Center, which tracks the industry. In addition, companies from Google to Apple, Deutsche Telecom to Bosch have all set up research and development centers in Israel, with 278 multinational companies operating a total of 327 R&D centers around the country today, compared with about 250 such centers three years ago, IVC data shows.
Meanwhile, Israel’s high-tech industry will suffer a shortfall of more than 10,000 engineers and programmers in the coming decade if the government doesn’t take immediate action to prepare students to enter these fields, the Ministry of Economy and Industry’s chief scientist Avi Hasson warned in a report in June.
So there is more demand for these skilled workers than supply, leading to a salary rise of around 10 percent in the past five years with workers changing jobs on average every 20 months, according to data compiled by Workey, which has developed a job search engine for Israeli startups. Starting monthly salaries in high-tech for soldiers who have completed their army service are around NIS 20,000, Workey data shows.
Data released by the IDF shows that a career officer with the rank of lieutenant in a technological position can earn roughly NIS 5,800-9,100 per month, pre-tax, while a captain could earn roughly NIS 8,600-11,200 per month. Salaries are determined by several factors including training, educational background, location and risk level.
IDF data also shows that in the years 2011-2015, the number of outstanding officers leaving the army rose from under 17 percent in 2011 to a peak of almost 27% in 2014 before dipping to just over 25% in 2015 . The army defines outstanding officers as those who served as officers for at least two years and rank in the top third of officers in their unit, following a peer evaluation over a period of two years or who have shown outstanding abilities.
Fighting back with motivation, perks
So the army decided to fight back. Not with salaries, an area it knows it cannot compete in, but by emphasizing the contribution these soldiers make to the country, by giving them more interesting jobs and greater responsibility at a younger age, and by putting in place a set of perks, scholarships and bonuses that will make them feel more valued.
“We saw a trend in which it was very difficult to maintain our soldiers in service and we checked the reasons why,” said Maj. Meirav Stoler, a spokesperson of the Human Resources Branch in the IDF.
Those who stay in the army, she said, based on a survey the army conducted among 21- to 29-year-olds, stay not for the salary, but for the challenge their role offered and because the soldiers found it important to contribute to the state.
“We know that the army cannot compete on matching terms with the civilian world,” said Stoler. “But we do not work based on material considerations only. The army needs to provide its soldiers with much more than material things and salaries.”
The army’s new plan — which it has been implementing in the past few months — is to make sure that the soldiers who choose to remain “feel they can do more, get more and be more influential,” Stoler said. “Our push to keep the best in the service allows us to give each of them more important and senior jobs, and we see that this is indeed helping people to stay.”
The push to keep its best is part of the IDF’s five-year Gideon plan, announced in July 2015 and implemented since the start of this year, designed to make the army more efficient and more cost effective, Stoler said. The overall plan will see a reduction in personnel across the board, specifically among career army soldiers, whose numbers will be cut to 40,000 by January 2017. Two years ago career soldiers numbered around 44,000, Stoler said.
The aim of the plan is to lower the average age in the army, to keep the corps alert, innovative, and in continuous development, and to allow younger soldiers to assume senior and central roles more quickly, Stoler said.
“There will be fewer people, but those who remain will be the best,” she said. “Officers in technology who remain will know that they will be among the best there are in the field.”
The smaller numbers will also enable the army to make sure it can give the best conditions to those who stay, she said.
In addition to raising the motivation and responsibility of its soldiers, the army has also started offering perks and relaxing rules. For example, in the past few months it has started allowing officers a chance to start studies toward any degree while still in the army, at any stage, which was once allowed only to a select few.
It has also initiated a bonus system, in which commanders can decide to grant, twice a year, a one-off money bonus as high as NIS 4,000 ($1,000) to young career officers aged 21 to 29 in recognition of a project well done or excellence over a period of time. “This is not a high amount but it shows esteem and it singles them out,” Stoler said.
In the army’s cyberdefense units, for example, 18 young officers who showed excellence throughout their service can be given special benefits, including a vehicle, a cellphone, and some economic assistance, she said. In another program a sum of NIS 20,000-30,000 will be given as a sort of a scholarship to soldiers who agree to stay on for an additional two to seven years. Other soldiers get perks like courses of study, extra professional training, and more vacation.
The army is also enabling ex-soldiers who are now university students to work in day jobs at its tech units while continuing their studies.
“They come and do certain hours within the army as civilians,” Stoler said. “This allows them to contribute and gain from the experience they get from their studies and also allows us access to quality human resources that come to us for a certain period of time to certain jobs.”
“We are constantly working on plans; it is still a process,” she said.
The efforts seem to be paying off. Stoler said that as yet unpublished 2016 data shows that the outflow has been stemmed.
“We are happy to see that in the past year there has been a drop in the number of officers — including those in tech — who want to leave our service because of our new model,” she said.
The army, she said, has taken upon itself to sit with every soldier “one on one to understand what is important to them,” and builds a plan specifically aimed to meet their needs “to see how we can allow them to stay in the army and get a little bit more [from the army].”
It is still clear, however, that the army cannot compete with the perks given by the high tech industry, she said. On the other hand, Stoler added, that sector “cannot compete with us in many fields — mainly the contribution the soldiers feel they give the state, the set of values they gain and the professional challenge.”