Executives and companies are proceeding with more caution when it comes to hiring these days. Competition for top talent remains hot, but the uncertain economy has brought the hiring process back to reality after record activity last year. Companies are finding themselves “under audit” in interviews, having to prove to candidates they’re built to weather the storm.
True leaders have the scoop on how this economy is impacting executive hiring today. They have advice for executives on how to be more strategic when choosing their next role, and some tips for companies about how the economy is changing the interview process.
Get Granular—Ask tough questions about the company’s financial health. Last year the market was up, valuations were high, and everyone was doing well, which made it harder for candidates to judge the health of a business and less important to do so. Now, with downmarket trends rewarding only the most competitive companies, candidates must make sure their next role is somewhere with a viable business model. It’s important to ask about the revenue, the path towards profitability, go-to-market strategy and more. Is this business being built to win?
Understand the fundraising risks. Access to capital has reduced, putting more candidate concern on the financial strength of a business. Executives are asking probing questions about runway, burn rate and funding. How much money has already been deployed? Will this company get financed for the next round? What do their investors think of the business, and who would potentially leave the next round?
Dig into company strategy. Question how the firm is thinking about strategy in this market and what might look different in the future. Are they hiring the right talent or making changes to support their plans? How will you fit into those plans?
Be realistic about cash compensation. Cash compensation isn’t going down and is still relatively high after the last two years of wage inflation in a candidate’s market. But you shouldn’t expect a bidding war and large upticks right now, especially if you changed roles in the past two years.
Carefully consider your equity. With valuations down, it’s a good time to ask questions about your equity. What is it worth, especially if the most recent company valuation seems exorbitantly high now—or if revenue is low. Ask about how the current valuation of the company is being calculated. The valuation of the business is in direct correlation to whether the equity value creation opportunity is attractive.
There’s still tight competition for top talent. Executive talent remains highly sought after. Candidates are still likely to be fielding multiple offers—just not as many as they had in 2021. Search volume has slowed through the first half of the year, but that’s more of a return to reality after the record-breaking demand for executive talent.
You can slow down the interview process…a little. The speed of the interview process is moderating from the sonic speed needed last year. Great candidates still have multiple offers, but not as many. It’s a positive change giving clients more time to decide if the candidate is the right fit.
Spend time in person—it helps make decisions clear. Since companies have a bit more time for the interview process, it may be useful for both parties to sync up in person. Clients can assess a candidate’s communication style and how they operate. They can do a strategy session, or just go to lunch. Spending time together will make it clear if the right talent is also the right culture fit.
Some executives are looking at larger asset classes. With the market uncertainty, our recruiters are seeing an uptick in candidates who are willing to switch to larger public businesses, which some consider to have more stability to weather the economic storm. We’re also seeing executives that were only open to VC-backed companies, now looking at PE-backed businesses, as well.
Some public company executives are going to private companies. Candidate engagement is up at companies with stock prices and valuations that have taken a hit. As some of the public tech companies have slumped in the markets, the once “golden handcuffs” have been removed and some talent is now considering outside opportunities.
Final thoughts—we’re optimistic
The market has its ebbs and flows, and this too shall pass. The best executives are made in times like these, and many of today’s best companies have been built in downturns. We see amazing companies being built today. If you’re a founder, an investor, an entrepreneur or executive joining any of these companies, it’s time to increase the diligence, but still take the risk.
“There’s no better time for an executive or company to understand what they’re solving for to create personal and professional wealth.” – Todd Zangrillo, co-Head of the Consumer practice.
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