Why hiring is so hard right now — and how to fix it
It’s a whole new world out there. Hiring experts from GV, ServiceNow and Lacework told us how they’re navigating it.
This story is part of our special report, "The Great Resignation." Read more here.
The pandemic sent shockwaves through the market for tech talent. Desirable candidates have so many options now that the entire industry is rethinking how to hire them — and how to get them to stay.
“The days of ‘I’m so lucky to have a job’ are now a case of ‘We are so lucky to have these employees,’” said Rhys Hughes, executive talent partner at GV. “Organizations are going to have to be incredibly careful — even those that have experienced unrivaled levels of success in the last four to five years — that they really, truly do understand that this is a candidate’s market.”
Not everyone agrees that hiring is so much harder than it used to be. Jay Parikh, the co-CEO of the cybersecurity company Lacework, said that hiring great people in tech has always been tough. It’s now “just a different ‘difficult,’” thanks to the competitive market and how geographically distributed the talent market has become. Recruiting over Zoom brings its own set of challenges.
Hiring has continued steadily at startups and big tech companies alike. And while remote work has opened up new local talent markets to employers, it also means the best candidates now have more options than ever. Most critically, this pandemic-tested generation of tech talent now prizes flexibility, work-life balance and a sense of mission at work.
“Employees are realizing and reevaluating what they want from their jobs,” said Meagan Gregorczyk, senior director of Performance and Talent Management at ServiceNow. “They certainly don’t want to chase a performance rating. That’s not what ‘meaning’ means anymore. They want to become the next incredible version of themselves.”
Money vs. mission vs. flexibility
Professionals are reevaluating how work fits into their life. Having time to walk the kids to the bus stop in the morning is a far more attractive perk than a ping pong table or a kombucha station at the office, Gregorczyk said.
In this environment, compensation is only one of several important recruiting levers. Many companies are throwing money at candidates in the hopes of outdoing other offers, but smart leaders will take a more holistic approach. (Some companies are also rethinking the way they give out bonuses to avoid losing employees who waited until bonus season to jump ship.)
“Compensation is always an arms race,” said Chris French, executive vice president of Customer Strategy at Workhuman. “There will be winners and losers in that. But for a lot of companies, that can’t be your only strategy. You can compete on flexibility, but most tech companies are going to be flexible.”
Executive candidates in particular aren’t necessarily looking to be wooed by more money upfront, Hughes said.
“A lot of the executives I speak to want to do things that are way more mission-driven,” said Hughes, who’s seeing that some are now more willing to take a pay cut to join a promising startup. “They’re prepared to take cash or equity that may not be as significant as where they’re at today, but may have way more upside in the future.”
To retain your people, help them grow
For leaders feeling worried about attrition, think twice before simply throwing raises and equity increases at the problem. Some founders make this mistake as their companies grow and naturally see more turnover, but there are other ways to retain at this stage, Hughes said.
High-growth companies will naturally see higher attrition at 100 employees than they did as a scrappy 10-person startup. It’s around that 100-employee mark that “the critical pace of learning is so retentive,” Hughes said. First-line managers, engineers and salespeople are all hungry for learning and development opportunities.
That doesn’t just apply to startups: As large tech companies grow, they need to find ways to support employees’ learning and development, especially when it comes to training new managers. ServiceNow’s solution has been to offer six months of external coaching to its new people managers, and to offer “extra sets of training wheels” to new managers whose direct reports are also new to the company.
Standing out from the beginning
Most companies’ recruiting processes have room for improvement. In a candidate’s market, making a great first impression is crucial.
“Irrespective of the outcome, you almost want that individual to go home and tell their friends and family what a great experience it was,” Hughes said.
Some of GV’s portfolio companies put their own unique spin on the process to stand out, like mailing swag or sending the candidate a video from the hiring manager. But Hughes recommends doing the basics exceptionally well. It’s best to engage candidates by “leading with general curiosity about their background, excitement about the opportunity and even more excitement about the company trajectory,” he said.
Communicating the importance of the company mission is a favorite recruiting strategy of Parikh. If done effectively, all kinds of candidates — not just security geeks — can see themselves in Lacework’s mission, he said.
And hiring leaders need to own the process rather than relying on HR or talent acquisition teams, Hughes said.
But Parikh cautioned leaders from solely relying on hiring managers to make the final call.
“There are a bunch of biases that aren’t protected [against] well if you leave the hiring decision to just be done by the hiring manager,” Parikh said. That’s a “very normal” way to hire in tech, Parikh said, but it can allow biases to creep in and hurt companies that are trying to hire the best.
Realistically, the recruiting process starts long before the job is available, so leaders should spend 10% to 15% of their time networking in order to build a candidate pipeline, Hughes said.
“There’s that saying, the moment you open a job description, you’re already late,” Hughes said. “Utopia is: You don’t have to open a job description because you’ve committed to a cohort of talent 18 months before you need them.”
The road ahead
What goes up must come down, and it won’t be a candidate’s market forever. But there’s no obvious way to know when that shift will happen, so companies need to evaluate how they’re differentiating themselves from the competition. And those conversations need to start at the top of the company.
“The experience of hiring is no longer an HR function. It’s now becoming the C-suite function,” Hughes said.