The dreaded ‘R’ word is coming, and we don’t mean another Robocop remake. Talk of ‘recession’ is on everyone’s lips, so in this blog, we take a look at the state of play in the tech sector, and what the slowdown might mean for your hiring plans.
It’s no secret that we’re in belt-tightening times, and now that we’ve passed the mid-point of 2022, we have some hard data to inform the way we hire.
The pace of redundancies continues to gallop, and a quick look at this layoffs tracker tells you that more than 1,000 startups have let go of staff since COVID-19 started, and more than 450 in 2022 alone.
The wider economic picture suggests we’re in choppy waters. In fact, the Atlanta Fed GDPNow model forecast real GDP growth to decline by 2.1% the second quarter of 2022.
And worryingly, it appears the worst could be yet to come. Some speculate that we’re on the cusp of a bloodbath for layoffs, as redundancies become ‘normalised’.
Smart companies have begun to wake up and smell the coffee. Facebook (Meta) have reduced their hiring targets, and CEO Mark Zuckerberg told employees, “this might be one of the worst downturns that we’ve seen in recent history”.
The comments, which were reported in Reuters from an employee Q&A, were accompanied by remarks in a Workplace memo from Chief Product Officer Chris Cox, who said Facebook must “prioritise more ruthlessly” and “operate leaner, meaner, better executing teams”.
He added: “I have to underscore that we are in serious times here and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets.”
In the below visual from Carta’s latest compensation report, you can see a tally of median salaries by specialism, which may indicate (in cold, hard cash) what getting leaner might mean for companies.
The ramifications have been felt in boardrooms too. If you’re signed up to The Information, there’s a good piece by Mark Di Stefano on the prospect of a recession and its impact on the tech industry and beyond. He notes that a string of CEOs have quit in recent months, including the top dogs at Warner Music Group, Mars and SoftBank, as well as Sheryl Sandberg at Meta and Dave Clark at Amazon.
‘For that roster of people, who’ve dealt with the daily pressures of the job for years, you can imagine the prospect of dealing with a potential recession was not appealing. The upside of equity gains has gone for the moment, so why stick around?’
We previously covered some of these themes in our blog, ‘the equity earthquake’, on how early-stage startups can entice the best talent from late-stage companies.
We’ve offered a gloomy picture of the economy at large, but given there are so many execs on the market, could now be a great time to steal a march on your competitors and bag a founder?
Even if your headcount shrinks, it’s worth remembering that quality often trumps quantity, and according to research, the top performing employees deliver up to 400% more productivity than average employees.
Arguably, a reduced headcount is the perfect opportunity to redouble your efforts on hiring the best candidates. There’s never a good time to make a bad hire, but a time of recession is pretty much the worst time. So, talent advisers and hiring managers should sit down and ask themselves the following:
To lure the brightest and best, we’ve long been arguing (and blogging) that working on your Employee Value Proposition (EVP) is the ideal way to attract in-demand candidates. While compensation is of course a pull, there are other factors that can turn the heads of in-demand candidates – from the type of working environment to non-monetary benefits like remote work and health insurance.
For more tips on riding out the storm, keep your eyes peeled for more Intrro blogs – like how to hire during a recession.
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