It’s an Employer's Market
The job market appears to be shifting in favor of employers, making it a true employer's market. In a market of this type, job seekers outnumber available job openings, giving employers greater leverage in the hiring process.
In the technology industry, this can lead to potentially lower compensation and benefits packages – especially in senior management positions. It also means increased competition among job applicants – especially in director-level and staff positions. In the past, options packages have shifted to the high-end of the range as pay packages get smaller, but subsequently stock options then appear to be more valuable as exits increase leading to options packages becoming relatively smaller.
The U.S. Bureau of Labor Statistics reported today that total nonfarm payroll employment increased by 209,000 jobs in June. This means that since January the pace of monthly job gains has cooled considerably from what we have seen during the past two years.
It was also announced that the unemployment rate remained virtually unchanged at 3.6%. (The Fed's rough estimate of full employment is 4%.)
Additionally, the labor force participation rate in June was 62.6 percent for the fourth consecutive month, and the employment-population ratio, at 60.3 percent, was unchanged over the month.
Friday’s report showed that average hourly earnings growth was unchanged at 0.4% from the month before and also unchanged at 4.4% year-over-year.
All of this data points towards the conclusion that the economy is on course to nail a “soft landing” which means lower inflation without a recession.
It's important to note that the job market can fluctuate over time, and it can vary across industries and regions. While it may currently be poised to be an employer's market in some areas or industries, it doesn't necessarily mean that it applies universally. Job market dynamics can change, and it's essential to recognize that the Fed regards inflation as not yet fully restrained and has not declared a moratorium on interest rate hikes.
Startup CEOs and ELT should keep three things in mind when hiring during an employer's market:
Look for Potential and Cultural Fit: Moreso than job seeker markets, in this type of market you should assess the breadth and depth of experience and specific skills as well as a candidate's potential and cultural fit within your startup. (A typical mistake at this time is hiring a big company person who claims to be “startupy”.) Look for individuals who demonstrate adaptability, a willingness to learn, and alignment with your company’s values. Look for self-starting decathletes who can multitask and have the potential to juggle multiple responsibilities and duties.
Offer Intelligent and Competitive Compensation and Benefits: Compensation packages and benefits should be both intelligent and competitive, not just meeting industry standards but also adjusted to the expectations of potential employee’s salary range. Consider offering additional perks, such as flexible working hours, remote work options, or professional development opportunities.
Provide Growth Opportunities: Today’s startups must emphasize the growth potential and learning opportunities within your company and industry. Highlight how startup employees can make a significant impact, take on new responsibilities, develop their skills, advance their careers and develop professionally.
Remember, despite being in an employer's market, it's essential to attract the top talent for your company’s short-term needs and long-term goals.