As bad economic news piles up seemingly on a daily basis, we don’t know what the future holds except that change is on the way. Although we are seeing layoffs and hiring freezes at some companies, it doesn’t necessarily mean the talent crunch will immediately abate.
There will likely be some lag before we start to see the tight job market we’ve experienced for the last couple of years begin to loosen. Even then, there are certain fields like engineering, data science and cybersecurity, where tech companies large and small could still struggle to find talent no matter what the macroeconomic conditions look like.
Over the last month, we have seen an increase in the number of startup layoff announcements at companies like Cameo, On Deck and Robinhood. Meanwhile, big companies like Netflix, Meta and Uber have announced hiring freezes, with the consumer streaming service throwing some layoffs into the mix as well.
Despite this onslaught of bad news, for now, most startup founders, investors and HR pros don’t see the job market magically improving for hiring departments, at least in the near term. That means the folks in charge of hiring are still going to have to shake the bushes for talent.
Matt Hoffman, partner and head of talent at VC firm M13 and a former HR pro, said for a lot of people, the desire to be a part of something and help it grow is in some ways a stronger motivator than perks and pay. That’s good news for startups looking for talent.
“I’ve always believed that people don’t join a company just for the economic benefits. They join for the opportunity to have an impact and to grow. And so in a lot of cases, it may be a more opportune time to take a chance in an early-stage company because you can focus on that long-term horizon, and you can get that opportunity to grow and have an impact,” Hoffman told me.
For employees, he said there will still be opportunities at good companies in any economic conditions, but attracting talent always comes down to creating a good place to work.
“Even in the tightest of economic environments — and we’re not there yet — there’s always going to be high demand for the best talent. Always. So the things that you need to do to attract, engage and retain these employees does not change,” he said.
“You have to create a great environment for people to work in. [ … ] You have to give them opportunities to grow. You have to give them meaningful work that’s going to impact the business and opportunity to do that stuff.”
As Hoffman noted, there are always going to be hot startups. As an example, Neo4j, which has raised over half-a-billion dollars, is still hiring with no plans to cut back, according to Kristin Thornby, chief people officer at the graph database company.
“We are not experiencing a hiring freeze or layoffs, so I really can’t comment on the impact. We are hiring like crazy and show no signs of slowing down,” she said.
It seems to come down to meaningful work. Thornby said that while it’s a challenge to get people in the door, once they do, it becomes an easier sell.
“We have high conversion rates once we get candidates into the process and they learn about the amazing work we’re doing at Neo4j, but we are always looking at new and innovative ways to find the best talent out there,” she said.
But Natalie Breece, senior vice president of people at fashion marketplace thredUP, expects a change that she believes will make it easier to find talent.
“There will likely be more candidates entering the market, which in turn will slow the pace of wage inflation. Employers who continue to hire will have an opportunity to engage more talent for their open roles. We may see a shift from a candidates’ market back to a more balanced dynamic,” she said.
Shweta Vohra, vice president of people at cloud security firm Lacework, said that even if hiring begins to loosen, the issues in the hiring process that developed throughout the pandemic are inescapable for companies.
“Burnout, the Great Resignation, and economic ebbs and flows are real, and they make the hiring climate that much more difficult,” she said. “So it’s important to not only focus on strategic hiring, but also to make sure those employees stay with the company over the long term.”
Hoffman said as things play out, it could require a change in mindset, even if the fundamentals of good hiring remain the same.
“Obviously, in a bull versus bear market, you switch from an abundance mindset to a scarcity mindset. And so people want to make sure your company is offering a stable environment,” he said.
Earlier-stage companies are going to have to convince potential employees that they won’t be out of business in six months. Once they clear that hurdle, he said it’s still about creating an exciting and enriching workplace.
Regardless of whether the economy falls into recession, we’ve seen employees taking control of their work lives during the pandemic. That has resulted in changing priorities in favor of a work-life balance. That’s unlikely to change whatever the economic conditions are.
Hiring may ease some as supply increases, but, as Hoffman noted, if you want to hire and retain talent, you need to run a good company. It’s not complicated.