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January 24, 2023

Recruitment Trends for Startups & Scale-ups in 2023

LevelUp Ventures
LevelUp Ventures

With another year in the rearview mirror, 2023 is like an open road: empty at first, with some flashing road signs popping up every now and there, but we don’t know where the road is taking us precisely – as of yet. So, what can we do about it? The keyword is ‘balance’: Balancing out your speed, planning your route for all scenarios and keeping your eyes peeled on the road, because the further we drive into 2023, the more interesting the journey will become.

To pave the road for your journey in 2023, we have looked at the aspects which influenced companies and their hiring the most in 2022 and present to you the results – our prognosis on trends which will shape your hiring this year:

Trend #1: Strategic workforce planning will be the key to mitigating risks instead of hiring freezes and layoffs 

One of the main contributors to the Big Tech forced exodus in 2022 was the over-hiring by tech companies during the unexpected boom amid the Covid-19 pandemic. With too much optimism at that time, many predicted a permanent acceleration of growth that would continue even after the pandemic ended. 

However, the continuous fluctuations of our economy created unexpected situations for companies. In order to not be thrown around by such precarity, the knee-jerk response of many businesses was to freeze hiring, cut costs, and even lay off employees. But that’s only a short-term solution. What we have learned from the 2007-2009 recession is that cutting costs deep and fast can slow companies down once everything returns to normal, effectively causing more harm in the long term.

In 2023, strategic workforce planning is a must, especially for startups & scale-ups, to mitigate risks in hiring and make sure you are making the right decisions – whether that’s adding a new team member or leveraging the team you already have. As the saying goes, “plan for the worst, hope for the best, but realistically, expect a combination of both”, that is exactly what Talent Acquisition teams should be doing, too: create best-case, worst-case and average-case scenarios and have a plan for all of them. 

The four things you should be looking at for strategic workforce planning:

1. The direction and goals of your company: Workforce planning is a top-down process that begins with clear organisational direction and defined strategic goals. These goals provide guidance and inform decisions related to the planning process.

2. The size of the existing team: evaluate whether you have the right balance in your team. You want to reach the point where your team is not overstaffed and inefficient but also not too small to hinder growth. 

3. The skill gap: based on the company’s goals and direction, look at the competencies and skills needed to achieve those. Do you have someone in your team who can achieve those? Then it could be the case that you can redeploy them. In case those skills are missing, you can either retrain an employee or recruit someone new.

4. Budget: evaluate your runway and know how much fuel you have in your company’s tank. Based on this, you can decide whether you have the budget to hire someone new or if you need a different action plan.

Trend #2: Remote work, compensation and benefits will remain at the top of the pro & con lists of tech talent

With inflation rates increasing and overall economic instability, there is a sense of caution in the air. Because of this, benefits, compensation and remote work have become the top of the pro & con list of both candidates and employees, altogether considered more valuable when it comes to accepting a job offer, and respectively, staying at a company.

When it comes to tech talent, the lack of flexibility/remote work is the second most likely reason why a potential candidate would not accept an offer, with women being more likely to refuse one based on this lack (48% of women compared to 42.5% of men). At the same time, tech talent is looking for new benefit offerings such as retirement matching (43.8%), education budget (40.8%) and equity (38.2%), with tech leads being the most interested in the latter (50% of tech leads are looking for equity as part of their salary package).

Despite the welcomed rebalance of the overly stretched talent market and increase in candidates per hire, the recent tech talent dispersal doesn’t mean lower salaries.

One of the main reasons why tech candidates leave their current job is still the salary, with 52.4% of developers leaving their current companies for a better offer of income. 

Find the right balance between compensation and benefits

As a startup or a scale-up, financial resources are limited, so competing with big tech that can afford bigger compensation packages, might seem daunting.

However, benefits can set you apart as an employer, but only if adapted to people’s preferences and needs.

One tool that allows employers to customise benefits is YourCampus, which offers a wide range of benefits, from which the employee can choose the one that they need the most. 

Don’t underestimate the power of remote work

Despite the return-to-the-office policies that employers are trying to reinforce, remote work is here to stay. Employees working in hybrid (part office, part remote) are more likely to have a better employee experience and less likesy to switch job positions.

Trend #3: DE&I should become part of your company culture rather than a KPI

As predicted last year, diversity, equity and inclusion have been among the trending topics. But with the companies seeking refuge in caution, progress in terms of DE&I has slowed down, as companies made cuts to budgets allocated to make workplaces more diverse and underrepresented talent was heavily affected by the tech layoffs. So, are the prospects for taking DE&I more seriously looking brighter in 2023? Only if we change our mindset. 

Implementing DE&I in your company is not just a KPI that you can tick off at the end of the year. It’s about creating a company culture and practices that welcome, accept, nurture and encourage diverse talent to thrive. Okay, this might sound philosophical and vague, so let’s put it into more practical terms. 

Define what DE&I means to your company and find the balance in your team

Hiring talent is a great opportunity to create a richer team culture and include a spectrum of outlooks, talents, and perspectives. So when you craft your role requirements, look at the skills, personalities and backgrounds you already have and don’t think of someone that could fit, but more of someone that can complement and add something new to the team. 

One way you can keep a great balance in the team is by using the DiSC personality tool, as it gives you a good overview of your employee’s personality and work manner. This way, you can check which departments need a few tweaks or improvements to reach their full potential or which colour category of people is missing to balance out all colours. 

Create an empowering and nurturing work environment

However, DE&I doesn’t stop after hiring. It continues by companies creating an inclusive, empowering and nurturing work environment and providing talent with the tools it needs to succeed. This way you are creating a DE&I flywheel which will allow you to retain diverse talent, which, in return, will attract more diverse talent. 

Trend #4: AI won’t replace recruiters, but it will become a great support 

In 2022, we all have experienced the unlimited potential of Generative AI, with platforms like ChatGPT. Do you need to write a job vacancy based on certain requirements? ChatGPT can do it! Tweak a reach out so it’s funnier? Yes, you guessed it – ChatGPT can do that too! So why do we even have recruiters out there? 

No matter how much we automate a recruiter’s job and rely on tools to get parts of the hiring process done, the recruiter is not obsolete.

With the popularity of AI & tooling increasing, some of the main things that are going to set you apart as an employer are the personal touch and translating business goals into a hiring strategy. Whether it’s a quick call to check in on your candidate after the interview or knowing what competencies to look for based on your business targets, these are all jobs recruiters are essential for. But we also can’t deny that there are things, such as unbiased assessments, in which technology is more accurate than recruiters. So, why not let them complement each other and have the best of both worlds?

Use AI as a starting point in your hiring process, but don’t rely solely on it

AI can accelerate your hiring process tremendously; from screening CVs to writing job vacancies and doing research, AI is a gold mine for recruitment. Here are some cases and tools you can use in your hiring process: 

1. Writing and improving job descriptions in ChatGPT: with prompts like “write a job description in bullet points based on this information <input of job requirements, information about the role and the company>” or “explain this job description to a 10-year old”  you can write from scratch or improve your current job description. Check out this video by Jim Stroud, where he explains what prompts to ask ChatGPT.

2. Automate your interviewing notes: while in an interview, you can now focus much easier on the actual conversation between you and the candidates, instead of making notes. Metaview uses OpenAI to automatically write down the script from your interview and structure the notes based on the answers. 

3. Get creative with your interview questions: whether you are hiring for a role with very technical requirements or running out of ideas on which questions to ask, Trovinto can simply generate creative questions to ask based on your job description. All you have to do is copy-paste your vacancy and it will automatically generate questions and suggestions of answers that would fit the said question. 

4. Generate boolean strings to make your search more accurate: ChatGPT has changed the playing ground for sourcers, making their searches fast and more accurate by adjusting the boolean string to the job description. You can use prompts like: “Create a boolean string for <channel> based on the following job description: <job description>”. 

For more ideas on how you can use AI in recruiting, we suggest you follow Jim Stroud’s video of using ChatGPT for recruiting and Hung Lee’s “Brainfood Live on Air” episode on recruiter use cases for ChatGPT

The drawback of AI

However, like any technology, AI is not without its faults. One major drawback of using AI in the hiring process is the lack of human judgement. And that’s where the experience and knowledge of recruiters come in, especially when it comes to culture-fit hiring. No matter how good your AI recruiting tool is, identifying the right personality and values in your candidates might be less accurate.

Wrapping up

Despite all of our fortune-telling efforts for 2023, no one can know what will happen in the world of recruiting, startups and scale-ups.. But one thing is clear: you can prepare yourself by understanding the information around you, evaluating the current situation of your startup or scale-up and devising a plan for all possible scenarios. 

When it comes to hiring for the upcoming year, start with the direction and goals of your company and then identify your hiring needs to achieve those goals. Making rash and uninformed decisions can cost you more in the long run. 

However, no matter what you decide, whether you need to hire someone new or hire internally, you need talent. And to have that you need to pay attention to the compensation and benefits you offer, as that can set you apart as an employer. Also, instill DE&I as part of your culture and work processes, by creating an empowering and nurturing environment where diverse talent can thrive. 

Building a team is no mean feat, but we’re here every step of the way, from hiring strategy to execution. So, let’s start the year with new recruitment practices in place to hit your hiring goals for 2023.

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