Navigating the Recruiting Landscape of a Down Economy

Tech Hiring Tides Have Turned

The last few years have undeniably been kind to the tech industry, with stock prices, valuations, salaries, and growth soaring. The industry’s aggressive growth left recruiters and talent advisors flush with work as the competition to attract talent reached unprecedented levels.

However, a shifting economic climate has finally caught up with the industry, as fears of a recession have led to layoffs, hiring freezes, and a focus on efficient vs. hyper growth.

And as the recruiting industry is fundamentally intertwined with the industries it supports, this downturn has led to recruiters across the tech industry confronting their own drastic change of fortune.

However, is it all really as hopeless as the news seems to want us to believe?

I don’t think so.

One of the biggest reasons this is happening is that the hiring landscape had reached an untenable position. Though undeniably painful, at its core what we’re seeing is a natural correction to an imbalance in the marketplace.

A period of correction that recruiters can best weather by focusing on growth-oriented companies and the nuanced and unique values their candidates can offer them.

The Balance of Value in the Hiring Process

I think it can be really helpful in navigating what’s happening to start with a focus on the central tenet of the hiring process, which is the balance of value between what an employee provides to a company relative to what working for that company provides the employee.

When you’re hired, you agree to a certain rate for the value you are bringing a company. Ideally, as you keep working for the company, if you continue bringing additional value (learning new things, increasing skills, growing your scope, building new capabilities) you will be recognized for it. Sometimes that means a promotion, other times it will be a compensation increase. In any case, it is a value exchange that ideally remains in balance. The value you bring to the organization should match the remuneration and opportunities the company offered to match any additional value you bring to the company.

It’s about value and value creation. As your capabilities increase, your value should be matched by your compensation.

Surprisingly, many people don’t actually understand this. Often, people think that time spent at a company inherently increases the value they bring to that company and that they should be promoted based on time accrued. But just being somewhere for an extended length of time does not actually mean additional value has been created. 

A Necessary and Inevitable Rebalancing

Different and changing economic factors continually shift and affect this balance. The COVID pandemic, for example, led to economic shifts that tilted the balance of value in favor of employers and companies. Widespread insecurity led to many people taking jobs below their value, for the security of being employed and receiving healthcare and benefits. And companies were more than willing to hire people for cheap.

But the nature of markets is changing. And when the market inevitably shifts back toward the employee, companies either have to start paying those people what they’re worth or undervalued employees are going to leave for someplace with the right value exchange.

And starting this past spring and into summer, this is exactly what occurred, as candidates were able to start asking for more, causing increased competition for talent and driving up compensation. Candidates were able to command higher compensation than their experience and capabilities really warranted, more than what they could deliver. And once the market began shifting again, it became increasingly difficult to earn their value.

The layoffs that are happening right now are responses to the market, responses to the above inequality, and in some cases, poor leadership – people who made bets they now can’t live up to. Something that I often tell my candidates is that you don’t actually ever want to be the most expensive anything. You never want to be the most expensive hire. There is serious pressure that comes with it, especially in sales where there is less tolerance for missed targets, and even less tolerance if your guaranteed compensation is high. 

At the moment, you see many C-level executives looking for their next thing. Many businesses, faced with bloated payrolls and slower growth than projected, have made the choice to collapse layers of their companies as they reduce staff. If a company got too far ahead of itself, those are the organizations retrenching and laying off, while the ones that didn’t are good.

Pockets of Strength Around Growth-Focused Companies

Something that I’ve found is whether there’s a slowdown or not, a lot of early-stage tech companies, whose products either speed something up, make something smarter, make something more efficient, or make something more effective, tend to maintain really strong value. In many ways, their services are needed more than ever in a tight or down market. 

Right now, the opportunities are with the growth companies, the series A, series B, and early-stage companies. These are companies that have funding and are looking to scale and build. They have money to spend and have made promises about growth. Their executives actually can’t show up to their board meetings without making the right hires. They have committed to making hires to build and grow their companies and to do that they need to find the right talent.

And in down economies, those are the kinds of companies that will go and flourish, while big companies pull back. Companies that have received money to grow are still spending it. If you are a candidate with what it takes for an early-stage environment you’re prime.

Advice for Novice Recruiters Facing a Down Economy or Recruiters Facing a Slow Down

Look, obviously, the challenges facing someone starting a recruiting career right now are going to be more significant than they were even a year ago.

But, as I mentioned, the market had shifted to an unhealthy place and a correction to restore the balance in value between employees and employers is not a bad thing. We are seeing a living, breathing, equalization of that dynamic. It’s still a swinging pendulum between extremes right now. We’re seeing mass reductions in force within the established companies in BigTech - Meta, Twitter, Salesforce, Lyft, Stripe, Coinbase, and Snap - while hiring freezes are prevalent. But hiring freezes are actually common this time of year as companies enter Q4 and budgets are pulled back during the following year planning cycle. 

And while a lot of businesses are collapsing layers, cutting jobs, and hiring less, it’s leading to a lot of talent in the market. There are a lot of senior people looking for roles without a lot of senior roles available. However, there are still plenty of companies that need to hire, build, and grow despite challenging market conditions. 

In a down economy, for talented people who find themselves out of work, there is a very real opportunity to have a significant turn-around story. There is clearly value there, but it’s actually about finding the right value to fit a particular company’s need and creating that balanced value transaction.

That’s why, for someone just getting into this business, I strongly recommend taking the time to figure out exactly where your expertise is and where your relationships are. Identify the relationships you already have and activate them. And if that’s a struggle or you find yourself lacking, focus on where you can create organic relationships.

Because if you have to ask for business, it’s going to be so much harder. And you’re starting from zero. If you already have a trusted rapport, it's much more likely the relationship will blossom organically and for the long term. 

And I’ve done this, and it’s what’s made People Obsessed such a success. I’ve worked on the other side, inside the types of organizations I work with today. I know people. I understand their challenges firsthand. And the companies and people People Obsessed does business with trust me because so many of my relationships in this space have longevity and a blend of professional and personal, built on a foundation of trust, expertise, and proven track record.

Find the area where you can be authentically yourself, where your experience directly translates to an ability to understand the companies you’re hiring for and what the candidates for those positions are doing and seeking. Where you have relationships and where you have the history and context that sets you apart. This is the recipe for success that has worked for me and hopefully, it can work for you as well.

- Rose