What a difference a year makes!
2022 started much like last year ended with the talent market in overdrive. Cheap money flowed, stock market indices climbed and companies across the board struggled filling vacancies at all levels. Since April however, headlines have turned negative, inflation has soared, investors have become cautious, the housing market has cooled and in the tech sector FAANGS, unicorns and everything in between have issued pink slips in record numbers.
As 2022 draws to a close, economic clouds thicken, stock indices are down from earlier highs and by extension investors are as nervous as ever. This is especially true across the tech sector with small cap public and VC-backed private companies hardest hit as sources of capital have evaporated.
And yet, despite a turn for the worse, predictions of a looming recession and a contraction in many parts of the labour market, completing executive search assignments continues to be difficult. What gives?
In our year end review, we look at issues and trends impacting the talent market this past year while looking to the year ahead.
- VC-backed tech companies have moved from a growth at all cost mindset to capital preservation which has brought about a greater focus on unit economics, customer retention and product improvement/refinement. This has led to an increase in demand for proven product and engineering leadership.
- Across all sectors, ‘A’ players continue to command ever increasing compensation packages and remain difficult to attract. This has led to a heightened need to have a more nuanced understanding of internal pay grades relative to market rates and how to reconcile the two.
- There are a disproportionate number of individuals within the 55-65 year-old cohort retiring or seeking project-oriented assignments compared to pre-pandemic levels. Expect them to be at the front of the line for packages if downsizings accelerate. Companies will be faced with valuable experience walking out the door.
- As companies grapple with talent issues including, attraction, retention, employee health and wellness and the transition to WFH and hybrid work models, there has been a noticeable increase in the demand for proven, strategic human capital leaders. In fact, it is a very good time to be a competent CHRO. In addition, talent acquisition leaders not only remain employed but in demand. The interplay between talent acquisition, employee development, engagement, productivity and retention is getting much more attention. Sophistication at a system level is in demand.
- With the IPO market shutting down and fundraising becoming very difficult there are early indications of a flight of talent to larger, more established and profitable companies as employees seek job stability and security. Smaller resource constrained companies are refining and reframing their value proposition to retain staff they cannot afford to lose.
- While large swaths of the technology sector face challenging days, segments such as sustainability, renewable and alternative energy, and even healthcare are growing rapidly. As a result, the demand for talent remains on balance stable.
- A final observation… beyond high growth, the healthcare, sustainability and renewable/alternative energy sectors are also purpose-driven which is of strong interest to an increasing number of people. As one candidate recently told us, ‘I want to work in a company and industry that feeds my soul, rather than eats it’.
Predictions of a recession abound which suggests that a continued erosion of the labour market is all but a certainty heading into 2023. And yet the past 4-5 weeks we have noted an uptick in the number of calls from clients and prospective clients that want to get a head start with their 2023 hiring plans. Maybe the natural seasonality of January recruiting at play? Or does it reflect a recognition by employers that they have been too cautious the past 6 months and can’t put off critical hiring decisions until sunny skies return? To be clear, we don’t anticipate a return to the torrid pace of hiring we saw in early 2022 but we do believe that 2023 will bring strong demand for talent as we move to the second half of the year.
If you are an employee dust off your CV, employers and recruiters alike will come looking for you. And if you are an employer make sure to have your talent acquisition strategies well defined and get active early because the longer-term trend will be a return to a challenging talent market.
We thank our clients for trusting us with your important recruiting assignments and look forward to working with you and the broader talent community in 2023.
Wishing you all happy holidays and a healthy and prosperous 2023!