New Practices for Technology Companies that are Hiring in Today’s Super-Tight Market

Today many start-ups and established companies are struggling to fill open positions. Job openings stay open for much longer periods of time, candidate conversations are very competitive, offers for leading candidates are coming in from all over the country, and compensation packages are inflated, often excessively so.

CEOs, CFOs, hiring managers, and recruiters, as well as candidates, recognize this situation and understand the main contributing factors, which are as follows.

1. There are more technology start-ups than ever looking for talent. As a result, this throng of early-stage companies are competing with others in their same size, product category or market and at the same funding-stage to fill a mixture of open positions.

2. Early-stage funding rounds – especially Series A, but also later rounds – are much bigger these days.

3. Large, established tech companies – such as Amazon, Apple, Facebook, Google, and Microsoft, plus other public companies and ‘unicorns’ – are all offering extravagant pay packages in order to attract and hire candidates.

4. Certain areas of the country – such as Silicon Valley, San Francisco, Boston, NYC and Austin, Texas – are paying top dollar to hire local candidates.

5. Top talent in engineering – especially engineers with AI/ML experience – and sales and marketing won’t commit to a new job unless the pay and benefits package is significantly larger than in years past, and in many cases, exorbitant.

6. There are more VCs and PE firms on the scene competing for outstanding early-stage ventures and getting top-notch talent to join in on their deals.

Because of this present state, executives, HR professionals, hiring managers, recruiters, and job seekers have coined a phrase for it. That phrase, the “War for Talent”, is an apt description of the reality in the marketplace today. If you’re trying to fill key positions and you haven’t heard this term bandied about yet, you will soon.

The consensus among tech industry professionals in the hunt to fill open jobs is that there are no silver bullets for this situation. Instead, more and more of them are opting to use a broad set of best practices – some proven and some brand new – to attract and land their desired candidates.

24 Smart Strategies and Tactics for Winning the War for Talent

Following is a list of two dozen new and proven best practices that companies large and small are utilizing to successfully attract, hire, and retain top-notch talent. These 24 actions and approaches are sprinkled across the five distinct phases that comprise today’s hiring process:

Phase 1: Define the Candidate

• Plan to overpay. Establish a new range for your pay packages. Low-end: $300,000 for start-up executives and $180,000 for contributors. (That’s up 20% from former standard comp rates for both exec’s and contributors. And that’s just to start the conversations.)

• Your Job Description should include the ideal (must-have) and secondary qualifications, skills and other criteria. If you are looking for a manager, for example, your internal job description should state “10+ years” of management experience as desirable and “5-9 years” as realistic. If you are looking for an AI/ML engineer, as another example, your internal job description should state “5 years of ML programming” as ideal, “2-3 years” as desirable, and full stack programming experience as acceptable contingent on the new hire completing a training program on ML coding.

• According to Keith Cline from VentureFizz: “Companies should think deeply about employment branding and positioning the company as an employer of choice based on what candidates really care about - mission, team, culture, and opportunity to make an impact.”

• With a remote working environment you can hire anywhere. Therefore, don’t let location be a major limitation to finding and hiring the best candidates.

• Align all benefits and introduce new benefits so that the true needs of employees are taken into account, as is a real consideration of work-life balance issues. One company pays for standing desks for new hires who work remotely from home.

• Ensure that your comp and benefits strategies have enough flexibility to adapt and evolve with your candidates’ and employees’ wants and needs. Many companies are surveying their employees twice a year to maintain this alignment.

• Develop and deploy a Hiring Bounty for employees. These bounties now range from $5,000 upwards depending on the position. Bounties also leverage trusted relationships in employee networks. Considering how high recruiter fees have gotten, when successful, this approach clearly shows good ROI. (Terms and conditions require that you check with your lawyers before rolling-out this program.)

Phase Two: Create a Candidate Pool

• Recruit from all over the country.

• Place multiple job postings and the company’s social media.

• Coordinate filling open jobs with your executives, managers and employees to leverage their social media and personnel connections to bring in candidates. Create a virtual “War Room” and institute regular status report on all outstanding TBHs.

• If you use recruiters, plan to pay 30%. Recruiters are back – after a period when they were undercut by LinkedIn and other web-based recruiting services. Fees at that time was down below 25% – often around 20% of the first year’s salary.

• Focus on the human side of candidate qualification, according to Paul Blumenfeld, Partner at Genero Search Group. This means really understanding your candidates’ motivations beyond their LinkedIn profiles and resumes. Gain this insight by thoroughly checking with the candidates, their references, and people who know them from prior work experiences(so-called “back-channeling”). Don’t believe first encounters, or use superficial questions. Do a dive deeper.

• Use accelerators (such as TechStars and Y-Combinator Top 10), boot camps and incubators to access trained or start-up receptive entry-level and individual contributor talent and help offset the shallow candidate pool problem.

Phase Three: Shortlist Candidates

• Weekend interviews are now standard operating procedure. For competitive reasons, you now have to interview over weekends (but be respectful of Sunday morning church time.) Use interviews during the weekend to learn more about the candidates: How they got to where they are, etc.

• Expect a lot more turndowns. Self-evident but painfully true.

• Paul Blumenfeld also recommends all the shortlisted candidates should be met in person. He says: “A Zoom meeting is not enough.” Accomplishing this is more challenging during COVID but necessary for the hiring manager – especially for the CEO if an officer is being hired.

Phase Four: Pull the Trigger and Hire!

• Send your offer letter early. Negotiate salaries quickly and default to the higher-end of the range for pay packages. Once you decide your candidate is the right one, send your offer letter out as quickly as possible. It’s that competitive these days!

• Send multiple offer letters if the candidates are roughly equal – even for the same position! Expecting turndowns is the driver for this new practice – in sales in particular.

• Maintain constant contact with your hires. Don’t let up. Outbidding is common.

• Make a position attractive beyond just pay. Offer soft skills training. Do things like offering to pay for a great chair in order for the hire to work “more comfortably” from home.

• Negotiate longer guarantees on recruiting contracts.

Phase Five: Innovative and Effective On-boarding

• Start the on-boarding process immediately after he or she accepts the offer. Send a list of on-boarding activities, include a list of touch points, utilize steady email, FedEx and UPS mailings.

• Immediately after the offer letter is executed, send an on-boarding package to each hire that includes: Lots of company SWAG in their favorite color; extra helpful office supplies for remote work (for example, a microphone with a USB connector and/or a light for proper lighting for Zoom meetings); etc.

• Maintain constant contact with your hires. Don’t let up. Once again, other companies will try to lure away leading candidates with enticing offers. Counteract that with steady and effective communications.

It’s a war out there. The rules have changed. To win, you need to adapt. Otherwise, expect to lose your best candidates and suffer from open jobs for long periods.