Start-up life less attractive now, study finds

Working at a fledgling company could pay off nicely if it gets bought out, but tech employees these days prefer a less profitable but more stable job

Start-up workers at a Herzliya accelerator (Photo credit: Courtesy)
Start-up workers at a Herzliya accelerator (Photo credit: Courtesy)

A start-up nation needs start-up workers, but if they had their druthers, many employees of young Israeli companies would put the start-up life behind them and “retire” into a position in a large, stable tech company — Intel, Google, HP, or any of the other tech giants that are doing well in the world markets.

A new study by Israeli business intelligence group BDI-CoFace shows that the vagaries of the economy have given talented workers a scare. Instead of seeing themselves as part of a start-up with a cool technology that could make it big and net them a million dollars at the inevitable buyout (a la Waze), workers would, if they could, opt for a safer, if stodgier, stint at one of the established technology companies.

This was the sixth annual such study by the group, in which some 10,000 hi-tech workers told researchers about how they felt about their jobs and careers. Workers were questioned about salary levels, their perception of their chances for advancement, how they felt their employers were treating them, job security, commuting distance and more. The workers represented a cross-section of hi-tech employees, from small start-ups to big companies.

Based on these parameters, the study determined what companies were the “best” ones to work at.

“From the results of the study we can see that there is a heavy preference for working at large companies, even if the conditions in a start-up might be better,” said a spokesperson for BDI-CoFace who requested anonymity because of the sensitivity of the subject. “We saw that even companies where the salaries and working conditions are not considered optimal were highly rated by workers, and appeared on the list right next to companies that do have good reputations. The only advantage the poor reputation companies have is size, while companies that tech workers have rated very highly in polls on quality of work conditions were rated far lower, because they were not as financially stable or as large as those at the top of the list.”

The spokesperson declined to name which companies had the good reputations in the hi-tech worker community and which ones didn’t, but said that the working conditions at large tech companies were well-known. “We would have expected to see some of the financially stable but smaller companies with reputations for good working conditions rate higher on the list,” he said. “That they didn’t shows just how nervous workers are.”

The weak economy is a major motivator in this escape to the corporate life, said Tehila Yania, co-director of BDI-CoFace. Workers were afraid that they could find themselves in a start-up that ran out of money, meaning that they would be out of a job. But beyond that, she said, there was the fear that they could find that their skills were outdated, said Yanai — and that their best chances for building new skills was to get a job in a big company that offered the opportunity for retraining and advancement.

“Many experienced engineers are concerned that their skills will become outmoded, and this is an important motivation for them to ally themselves with a big company,” Yanai said. It was a concern not only for engineers and other tech workers who have been around for awhile, she added, but even for younger workers who have been scared off of the start-up life because of the high rate of failure among many small companies. Seeing their older start-up colleagues struggling to stay relevant, even younger workers are seeking to minimize risk.

The top five companies in order, are Intel, Google, HP, Amdocs, and Microsoft. The poll reflects data gathered during 2012 (with the most recent information from January of this year), so if employees are truly nervous about working for financially shaky companies, it’s likely that Microsoft would fall a few levels, given the negative news about profits at the company.

In sixth place is a company with a definite “old-tech” reputation – the Israel Electric Corporation, which was rated the most desirable non-hi-tech company to work at by those polled. But that doesn’t necessarily reflect on the conditions of Israeli hi-tech; the IEC generally comes in very high in studies like these, because its workers are among the highest paid in Israel. Other companies not strictly in the hi-tech industry that ranked highly were Teva, Bank Hapoalim, and Bank Leumi.

Among the biggest movers on the survey, both up and down, were companies that made the news for positive or negative reasons respectively. Moving up the list by 10 spots (last year rated the 40th best place to work, this year the 30th) was Conduit, one of the few companies in the top 50 that could be properly considered a start-up. Conduit is clearly a company on the move, with the company recently confirming that it was conducting a stock split. Also advancing nicely were Qualcomm (22 this year, 48 last year), Mellanox (23 this year, 49 last year), and Broadcom (29 and 51) all of which came out with important new products or made significant acquisitions last year. Not faring as well were Motorola (35 this year vs. 21 last year) and Freescale (41 now, 31 last year), both of which suffered a great deal of negative PR because of their product lines (non-smart phones and semiconductors).

Commenting on the study, Yanai said that “given the economic conditions in the world and in the industry, it is not surprising that hi-tech workers want to work in tech careers, but at the same time yearn for job stability and employment at a large company with good prospects.”

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