There is a market for talent. And like any market, the talent market obeys basic economic principles, namely the laws of supply and demand. Over the last decade, executive recruiting has been challenging because the supply of top talent has held steady while the demand for that talent has dramatically increased as private company funding has soared and more and more companies have been created.
This has made talent acquisition of top executives extremely competitive, and in some instances, an all-out war in booming sectors like technology. As a Partner at SPMB, the top-ranked retained executive search firm in Silicon Valley, I have seen first-hand how the volume of companies looking to hire executives has increased dramatically in recent years. This trend has driven up competition for candidates, as well as executive compensation — in fact, it has become commonplace and expected for finalist candidates to weigh offers from multiple companies and use them to negotiate better compensation packages.
In short, it’s been a candidate’s market for a long time and very challenging for hiring companies. However, the impact of COVID-19 has changed that dynamic almost overnight. In the last two months, we’ve seen a tremendous number of companies such as Lyft, Airbnb, Boeing, Eventbrite, Groupon, Classpass, Yelp, and many others make the difficult decisions to reduce expenditures, lay off employees, and in some cases shut down altogether. The impact this has had on the talent market has been transformative — suddenly, the supply of talent has surged as many top performers are out of a job and now looking for new opportunities. At the same time, because so many companies have shut down or are no longer in a financial position to acquire new people, demand for talent is the lowest it’s been in a very long time.
Now basic economics tells us that when supply exceeds demand it means it’s a great time to be a buyer. In other words, COVID-19’s impact on businesses and the economy has completely flipped the talent market upside down and in favor of companies that are hiring. As a result, the current environment presents the best opportunity in over a decade for companies to attract and secure key hires.
While many companies are not in a position to hire new execs right now, those that are should take advantage of this opportunity by evaluating long term organizational needs and capitalizing on the unique circumstances of today’s talent market. Much like the uncertainty that surrounds the future impact of COVID-19, it’s uncertain how long the talent market will remain this strong. While it’s understandable that some companies with the financial means to invest in talent right now are holding off due to the unpredictability of the times, it puts them at risk of missing out on a great opportunity. Because as soon as there’s more clarity on what the future holds, there will be an onslaught of companies rushing back to market to hire critical execs, thereby making the competition for talent fiercer than ever.
In many ways, the talent market is analogous to the stock market — the worst thing you can do after a crash is to sell all your holdings at the low out of fear, only to wait until the market rebounds to buy back in. That’s how many investors miss out on big gains while the savvy investors ride out the storms and reap the rewards. If you’re fortunate enough to have capital reserves, you should invest more when stocks are cheap!
Right now talent is like a stock that’s trading at a discount. You can access and acquire stronger talent than ever before with less competition and at a lower cost. So if your company has the resources and conviction to invest in people right now, like a savvy investor, you’ll reap the long term rewards.