After a few weeks, the layoffs began. Tens of millions of Americans lost their jobs, driving unemployment to levels last seen in the Great Depression. Those that retained their jobs hunkered down, intent on waiting out the crisis.
But a year on, the world is virtually unrecognizable.
“It's the hottest and most competitive hiring market I've ever seen in my career,” says Lauren Stempel, Head of Sales West at Betts Recruiting. “The biggest part is competition. Venture-backed companies have aggressive hiring goals and most put recruitment on hold or even went through lay-offs back in 2020.”
Now things are returning to normal, some behind-schedule companies may be discovering that the recruitment landscape has changed. Indeed, attracting, securing, and retaining talent appears tougher now than ever.
During the pandemic, some people experienced periods of enforced reflection. Their lives boiled down to just family and work. Some realized they weren’t doing what they wanted to. When economic conditions stabilized in early-2021, it was like opening the resignation floodgate.
According to the latest Bureau of Labor Statistics report, four million people quit their jobs in April. Betts Recruiting own data supports this. After surveying their network, they discovered 40% of candidates had moved jobs in the past six months.
It’s a perfect storm of an intensely competitive recruitment market and spiking employee attrition. For businesses, fighting back starts with understanding.
“Companies need to understand what their candidates want,” says Leslie Schmidt, Betts Recruiting’s Head of Sales East. After surveying Betts own team, she discovered employees’ demands had changed. They wanted 401k contributions, not fitness stipends, and equity compensation over office snacks.
Leslie Schmidt, said it’s like a new generation has entered the labor market. After facing two once-in-a-lifetime crises, today’s employees have radically different priorities compared to those who came before them. Instead of chasing instant gratification, these employees are thinking about their future. They're looking for financial advice and guidance. They're trying to save money.
Working closely with companies through the COVID-19 crisis, Schmidt and Stempel have identified two impactful changes leaders have made to compensation strategies. The first concerns entry-level employees.
Historically, junior candidates coming into a company may not have seen equity in their offer letters. But as competition ramped up, organizations began looking for ways other than cash to secure top talent. Now, almost every company Betts works with offers equity to entry-level sales positions like Sales and Business Development Reps.
The second trend focuses on existing employees. Schmidt says leaders are thinking about how to incentivize people throughout their tenure, rather than solely at the start. One idea performing well is performance-based equity milestones.
“We just rolled out our Equity Awards Program, which is tied to performance,” she explains. “When our team hits certain performance milestones, they get more equity. The team seems pumped about it.”
In the short to medium-term, Schmidt and Stempel agree that candidates will continue to rule the labor market. If organizations aren’t adapting to employee demands like remote work and equity compensation, it’s tough to see how they’ll secure top talent over competitors who are.
- Why venture-backed companies are feeling the pressure: “Companies with VC-backing have aggressive hiring goals. A majority of them put recruitment on hold or went through layoffs during 2020. As the marketplace continues to shift, competition is high because everyone is trying to hire.”
- Whether employees are staying in traditional startup hubs: “We've seen a mass Exodus. It sounds a little dramatic, but about 26% of the candidates have moved out of the Bay Area. People aren't commuting anymore. They don't want to.”
- Whether the pandemic-induced changes are a long-term trend or short-term blip: “I don't think it's going anywhere anytime soon. If you want to win talent, you have to reconsider your compensation and your equity packages. Get more creative around both.