This article was originally authored by Built In on November 15, 2022.
Now is the time to hire key leaders and scout the competition for awesome talent.
Companies succeed or fail based on the strength of their employees, so it’s critical to have the right talent in place during a turbulent market. How can your company capitalize on the current state of the market to advance its strategic position and attain the best talent while also being prudent with resources?
5 TOP TIPS FOR RECRUITING IN A SLOW MARKET
- Invest in key leadership hires.
- Recruit from competitors.
- Fortify post-sales talent.
- Use a contract-to-hire model for entry-level employees.
- Track performance to hire and fire with precision.
My company, SPMB Executive Search, has supported technology companies in executive hiring for the last 45 years, through multiple market dips and recessions. We’ve seen how the best companies have thrived during rough economic periods and helped them hire the right leaders to do so. Because we’re entering another economic slowdown in the tech sector, I want to pass along that wisdom to you and your company.
Here are five ways to get smart with hiring in an uncertain economy.
Invest in Critical Leadership Hires
Investing in key leadership hires during a slowing market can give your company the competitive advantage required to weather an economic storm and enjoy long-term strategic success.
I’m advising clients to zero in on business areas requiring the most assistance and then focus on making a key leadership hire to address those issues. Having fewer, higher performing and strategic full-time employees, even if that means hiring a single strong leader, can unlock way more value than bringing in more low-cost employees who, through no fault of their own, won’t be as productive or beneficial to the business.
Hiring an effective leader will also save money and time on additional hiring by attracting key hires from their network to join versus having to drive your own recruiting pipeline. They can additionally assist you with building out and managing an outsourcing/contractor strategy or relationships.
Once you’ve figured out your key hiring needs, consider getting professional help, for instance retaining a search firm, to run a tight process. The sooner you make the hire, the better. Waiting to bring in the right leader can be a costly mistake for a business. Lack of stability, ownership and leadership can cause an organization to miss revenue goals, create turnover and breed overall chaos, all things that could lead a company to fold during a down market.
Recruit From Your Competitors
It’s much more challenging to raise capital today than it was a few months ago. Some of your competitors will be making budget cuts and pursuing layoffs as they need to extend their cash flow. Take advantage of this rare opportunity to recruit your competitors’ top talent for key roles at your company. Non-competes are largely unenforceable in states, including California and Washington, two of the major tech hubs. Once the market swings up, you’ll have the competitive advantage utilizing this new talent.
Fundraising struggles will also present opportunities for acquisitions and acqui-hiring. Some competitors will be tempted to sell the company, even at a price far below expectations. If your company is stable and has the cash, this is the ideal moment to make aggressive acquisitions and acqui-hires that can strengthen your position in the market. Don’t miss an opportunity to attain your competitors’ best tech and talent.
Hire Talent to Help Keep Customers
Acquiring new customers is more difficult than retaining and nurturing current customers. During this time, when your customers have shrinking budgets for technology, they will be appraising vendor value and cutting spend on products that do not have clear utility.
If your customer retention and satisfaction are lower than they should be, bring in a new customer success leader. Because of this focus on customer retention, many of our clients have shifted their strategy from hiring sales reps in expansion areas to focusing on post-sales by hiring a chief customer officer or customer success leader.
These leaders cover all post-sales areas including renewals, retention, delivery and sometimes upsell. During a down market, many companies miss their revenue goals due to a lack of net new account sales and depressed renewals. A strong chief customer officer can enable retention and growth in existing accounts, enabling your company to fare better than your competitors, who are just looking to add new sales.
Every full-time hire for a startup is precious. You want to make the right, long-term hires and even with the best interview/screening process, you can still mis-hire. What if you could increase the likelihood of a successful hire? Increase your hiring success ratio by using a try-before-you-buy contract-to-hire approach.
This temp-to-hire model lets both employee and employer test out the fit before agreeing to a permanent employment arrangement. I suggest that your company use this on entry-level and/or lower-level positions. Hiring leadership talent is more competitive and you want access to the best. For entry-level positions, start employees on a three-month contract. If the trial goes well, the agreement can transition to permanent employment.
Tracking performance is an ideal way to measure different skills and character traits across your star team players and underperforming staff. Use this performance data to compile your hiring criteria and assessments for driving more accurate hiring decisions, essential in an uncertain market environment when every employee needs to add value.
Strong performance tracking can also save your top performers from layoffs if those are required. In a frothy economy, companies will hold on to mediocre employees because they are stretched thin to meet customer and overall market demands.
When the economy settles down, reevaluate the strength and structure of your current company. Is the organization and talent structure optimized for success? Use this time to level up your performance tracking so if your company has to make hard decisions on layoffs, it spares the top performers and lets go of employees who just might not be a perfect fit for the organization. When you are able to rehire, strategically fill in talent gaps and target the A players your company requires.
Hiring during a declining economy can seem daunting. Remember, though, that this is the window to make investments in the business to gain a competitive advantage.