Five Talent Insights for the Year Ahead

There is never a dull moment in the world of human capital, but the past three years have been especially dramatic. The power pendulum between employers and employees has swung drastically from side to side, first to employers, then to employees, and now back again to employers. Times of uncertainty, like the early days of the pandemic, historically favor employers who control labor markets with offers of stability. As the pandemic descended, searches for c-suite hires were cancelled at staggering levels and top talent kept their heads down, thankful for a job in hand. But not even 12 months later, search volumes in tech were at all-time highs, fueled by companies embracing remote talent strategies. Employees, faced with what seemed like unlimited job opportunities, started voting with their feet, and thus an array of labor narratives such as “The Great Resignation” and “Quiet Quitting” dominated the headlines. But with the recent market volatility, layoffs abound, and once again power shifts. What does this volatility mean for high growth companies and their talent strategy?

In conversations with CEOs and executive leadership teams across Spectrum Equity’s portfolio, we’ve focused on quieting the noise and taking advantage of current market conditions and talent dislocations to scale teams optimally. Here are five ideas we have been promoting:

1. Hire if you can

We know that c-suite hiring in tech is down over 40 percent since its peak in early 2022, according to Thrive’s Executive Compensation & Hiring Benchmarks 2022 report. On an aggregated basis, 68 percent of our companies have continued to grow headcount. This is a moment when the majority of scrappy, bootstrapped, profitable growth companies can lean in. Their business models are resilient, and their relatively healthy P&Ls will appeal to talent. This equation should result in the hiring of some absolute gems.

2. Embrace hybrid work in a structure that works for you

Hybrid work is here to stay. As evidence, pre-pandemic, over 60 percent of the Spectrum Equity portfolio had fully in-person, in-office cultures. Today that percentage is zero. Within our portfolio, return-to-office practices are not uniform, and companies have largely continued to lean away from a one-size-fits-all mentality. Instead, they’re creating new policies, recruitment strategies, total rewards programs, and forms of collaboration and team events that strike a delicate balance between providing the flexibility that their employees demand and the sense of community and culture that are critical to high performance and well-being. Both are required to avoid employee turnover, and both are hard to balance. Push too hard to get workers to come into the office and many will leave to preserve their independence. However, if companies fail to build a tangible culture with no real sense of community among colleagues, employees will experience drift and switch jobs at a greater frequency.

3. Pay close attention to your managers

Managers have always been important, but their roles are even more mission critical in hybrid environments. Managers create connection and inclusivity across employees; they set expectations; and they drive performance. At high growth companies, they have marketable skills and many opportunities. According to Laszlo Bock, CEO of Humu, whose company authored the State of the Manager Report 2022, three years into the pandemic, managers are totally fried and are two times more likely to be actively searching for a job today than anyone else in your organization.

4. Be an employer of choice, especially to Gen Z

In 44 percent of our companies, Gen Z already accounts for between 20-40 percent of their workforce. According to the Pew Research Center, Gen Z is the most racially and ethnically diverse generation and the most well-educated generation. They are digital natives, spending more than 5 hours per day on their smart phone, and they are the most socially conscious generation. If you're an employer and you are not actively working on cracking the Gen Z code with cultures of collaboration and total rewards that speak to their values, you will be a step behind in the future tech talent wars.

5. Lead a culture that supports employee well-being

You are not just competing with tech companies that will pay more money. You are also competing with companies that will make employees feel good. According to the Deloitte Workplace Intelligence Survey, 70 percent of tech employees said they would be willing to leave their job for one that supports better well-being. No matter what decision your company ultimately makes about the structure of work – where employees are going to physically work, when they're going to work, and how they’re going to work – if your company culture and your leaders are not making people feel welcomed, valued, recognized, and rewarded, employees will opt out.

About the Author

Coley Florance is the Head of Talent at Spectrum Equity, where she works across the portfolio to identify talent needs and works with teams to recruit and retain key hires. This summary is based on her talk at Spectrum Equity’s 2022 Annual Meeting.

Content contained in this blog post is not intended to and does not constitute investment advice. Your use of the information in this blog post and materials linked is at your own risk. Spectrum Equity does not make any guarantee or other promise as to any results that may be obtained from using this content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence. Past performance is not indicative of future results, and there is a possibility of loss in connection with an investment in any Spectrum Fund. To the maximum extent permitted by law, Spectrum Equity disclaims any and all liability in the event any information, commentary, analysis, and/or opinions prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. The specific companies identified above does not represent all of Spectrum’s investments, and no assumptions should be made that any investments identified were or will be profitable. View the complete list of our portfolio companies.