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Ep 474: Talent In Tech

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With the news cycle currently dominated by significant layoffs in large tech companies, it is essential to take a step back and consider the longer-term picture. Many employers are still struggling to find the right tech talent. Recent research has shown that skill shortages will continue for years as education systems are not setting students up with the right skills for our AI-dominated future.

So what should employers be doing right now to recruit and develop tech professionals, and what is the impact of remote and hybrid working on early careers talent?

My guest this week is Atli Thorkelsson, VP of Talent Network at Redpoint Ventures. Atli advises start-ups across Redpoint’s portfolio on talent acquisition and development. He has some important insights to share on the current state of the market and the strategies employers need to adopt to deal with the longer terms challenges.

In the interview, we discuss:

• The current state of the tech hiring market

• Long term challenges

• Development of early career talent

• The role of the Chief People Officer

• Building the right foundations for talent development

• How do remote-first organizations support mentoring and development?

• What are the biggest hiring mistakes start-ups make?

• What can corporate TA functions learn from start-up hiring practices?

• How will recruiting technology develop in the future?

Listen to this podcast on Apple Podcasts.

Transcript

Matt Alder (0s):
Just before we start the show, a quick message to say that I need your help. Whether you are a long-term listener or you literally just found us, I would be incredibly grateful if you could go to mattalder.com and fill out a very short survey about this podcast. It won’t take longer than two minutes of your time and will be incredibly helpful to me as I develop Recruiting Future into 2023. Just to recap, the website address is mattalder.com and it will take just two minutes of your time to complete the survey.

Matt Alder (40s):
Go on, press pause, and do it right now.

Matt Alder (Intro) (1m 2s):
Hi there. This is Matt Alder. Welcome to Episode 474 of the Recruiting Future Podcast With. With the news cycle currently dominated by significant layoffs in large tech companies, it is essential to take a step back and consider the longer-term picture. Many employers are still struggling to find the right tech talent. Recent research has shown that skill shortages will continue for years as education systems are not setting students up with the right skills for our AI-dominated future. So what should employers be doing right now to recruit and develop tech professionals, and what is the impact of remote and hybrid working on early careers talent?

Matt Alder (Intro) (1m 51s):
My guest this week is Atli Thorkelsson, VP of Talent Network at Redpoint Ventures. Atli advises start-ups across Redpoint’s portfolio on talent acquisition and development. He has some important insights to share on the current state of the market and the strategies employers need to adopt to deal with the longer terms challenges.

Matt Alder (2m 14s):
Hi there Atli and welcome to the podcast.

Atli Thorkelsson (2m 17s):
Hi Matt. Thank you so much for having me. Excited to be here.

Matt Alder (2m 20s):
An absolute pleasure to have you on the show. Please, could you just introduce yourself and tell everyone what you do?

Atli Thorkelsson (2m 26s):
Yes, my name is Thorkelsson. I am the VP of Talent Network for Redpoint Ventures. I have been here for about four and a half years focused basically on figuring out who Redpoint wants to work with in our portfolio and how we can make that happen in a mutually interesting way. And then working with all of our founders across the portfolio to help them understand who to hire and when to make those hires and all the good stuff around talent.

Matt Alder (2m 54s):
Fantastic stuff, fantastic stuff. So obviously highly volatile times over the last three years, huge issues caused by skill shortages, and at the moment there’s obviously a very big focus on the economy and layoffs that are happening, particularly in the tech sector. We’re very interested to get your view on what’s going on in the market at the moment as you see it, and how that’s affecting hiring?

Atli Thorkelsson (3m 21s):
Yeah, there is, like I said, there has been no shortage of kind ups and downs in the market in the last few years, particularly the startup market. We saw it first with Covid, and everybody running big layoffs immediately. I think what we’re seeing this time around is people from Covid a little bit, or from the Covid layoffs a little bit rather that moving too quickly might be, and being too reactionary might be a little bit of overkill. And so people were a little bit more thoughtful this time around. But we did see with the valuation pullback earlier this year. We saw a lot of companies start to think more about having a longer runway extending how long until they need to do their next fundraise because it’s a much less hospitable environment.

Atli Thorkelsson (4m 5s):
And so as part of that, one of the first areas that they cut were, we saw a lot of smaller layoffs that were more kind of efficiency layoffs than huge kind of pivots. So we saw a lot of 10 to 15%. And we continue to see a lot of 10 to 15% reductions in force. A lot of reductions in Recruiting teams, SDR teams, some marketing teams as well. And overall just everybody kind of battening down the hatches a little bit so that they could extend into what they hope to be a more hospitable fundraising environment. And then we did start to see later in the summer and closer to what we’re seeing right now, we’re seeing more companies that are actually being materially impacted by other startups and other companies reducing their spend, and that’s starting to impact their revenue stream.

Atli Thorkelsson (4m 56s):
We didn’t see that at the beginning of the year very much. And so that’s kind of triggering an entire new wave of layoffs as people again restructure how they’re thinking about the next couple of years of funding.

Matt Alder (5m 8s):
What are the long-term trends that you sort of see sitting below all of this? Because so much was made of, for decades. We’ve been talking about how difficult it is to hire in the tech sector and the skill shortages that are there. Is that still kind of underlying the general environment? What do you think, how do you think this is gonna pan out over the next sort of 12 to 24 months when it comes to talent? What are the sort of the longer term forces in play?

Atli Thorkelsson (5m 40s):
I would say yes, it is easier now than it was a year ago to make good hires I’d say. Now that’s with the caveat that a year ago was just about the hardest environment to hire that I’ve ever seen and hope to ever see. There were, it was almost impossible for a lot of functions, a lot of stages of companies. It was just very painful for a lot of reasons. And what we’re seeing now is, I mean now specifically in a kind of a micro conversation, we’re seeing a lot of people coming back from the summer. Kids are back in school, that kinda thing. We we’re seeing more candidates in the market, which obviously shifts the power balance a little bit towards the employer.

Atli Thorkelsson (6m 24s):
We’re also seeing fewer companies that are hiring. So it’s less competitive on that front. We’re seeing more candidates being more interested in exploring new things because their company has pulled back. They’ve run layoffs. Maybe their teams have been impacted. And so I’d say in the relatively near term, I’d say most likely the next six months, it’s a pretty good time to hire relative to the last five, six years. What happens in the much longer term? I’m not entirely sure about. I think there’s, one of my big concerns is that the development of talent over the last couple of years, especially early career talent, has been stunted by working remote in environments where maybe the company is not really prepared to work remote.

Atli Thorkelsson (7m 8s):
And so they’re not getting the same sort of mentorship, they’re not getting the same sort of development that they would have if they were in the office all the time with their managers and learning from their peers. And so I’m actually less concerned about what hiring is going to look like over the next year or two or three. And I’m more concerned about what’s gonna happen once those slightly less developed leaders start to get into true leadership roles and companies are kind of put on their shoulders to be successful and they haven’t had the same development as the previous iteration of leadership.

Matt Alder (7m 46s):
I think that’s a really interesting point and I suppose it really underlines the importance of talent within an organization in terms of not just Talent Acquisition, but also talent management and development and all the things that go with that. And obviously recently we’ve seen more and more tech companies hiring chief people officers to look at all those aspects of the business. Tell us more about that trend, why it’s happening and how you sing it pan out.

Atli Thorkelsson (8m 14s):
Well, I think to your point, people care a lot about, particularly in environments like they have seen over the last couple of years where it is almost impossible to make external hires or at least it’s very difficult and you need to pay a lot and it’s a painful process and candidates are pulling out at the last second all that stuff. In an environment like that, of course, it makes sense to double down on development of the people that are at your company to focus on, you know, to give them more opportunity for coaching, mentorship, courses and kind of individualized development. I think that is continuing to be the case. I think that gave the chief people officer more of a seat at the table over the course of the last, I’d say three years.

Atli Thorkelsson (9m 0s):
And then moving forward, I think a lot of what people are also thinking about is, I touched on remote work in an environment where companies are not actually ready to be remote companies. We’re continuing to see a lot of that. I mean, there are, our portfolio was always heavily weighted towards remote-first companies, I think relative to our peer set because of the types of companies that we invest in. But so that, you know, we were already looking at roughly 30% of our portfolio being remote-first companies. And those companies have thrived. I mean this has been a great few years for companies that were already situated to take advantage of those trends and they have the right infrastructure and foundational and kinda philosophical underpinnings to make that successful.

Atli Thorkelsson (9m 43s):
The companies that weren’t ready for that. That were forced into that are now figuring out, “Okay, what is the line for where we wanna end up?” Because a lot of them have not done that very well, frankly. They don’t have the structure to make that successful. And so they’re thinking a lot in tandem with these chief people officers about what is the right path for us moving forward and how do we provide the right foundation so that people can continue to develop. I think that’s another thing that is pushing people in that direction. And then there’s just a talent shortage and so everybody’s thinking about how do we develop our talent? How do we continue to grow, how do we do that in a thoughtful way, and trying to use the G People officer as a higher leverage role to do that?

Matt Alder (10m 38s):
Digging into what you were saying about the remote first businesses that you are working with, obviously, very complex issue and something we could probably spend a whole podcast talking about. But I’d just be interested if you could give us a couple of examples of what is it the remote-first organizations do when it comes to the way that they support their talent that the organizations who haven’t developed as a remote-first organization, but they struggle to do.

Atli Thorkelsson (11m 3s):
Yeah, I mean there’s a lot. I think part, the biggest overarching theme is that part of your culture. Are people comfortable with that and comfortable creating touchpoints with each other outside of kind of the need to know things. I think if you don’t come from a remote-first environment, it doesn’t come naturally to create touchpoints with your manager or with your team that aren’t based on, “Hey, I need this piece of information from you or whatever.” And I think there’s a lot that people just from being in the room when decisions are being made from off the cuff, kind of learning about what the company’s up to and the things that matter to leadership and stuff like that.

Atli Thorkelsson (11m 47s):
And then there’s a lot of foundational stuff that if you don’t start from the beginning of the kind of start from company inception, it’s much harder to implement later. Things like knowledge bases and wikis and stuff like that so that everybody has the right answers at the right time. Tools and resources that enable effective remote communication and remote collaboration being set up in the right way for people. And people not having to shift their workflows to accommodate a new kind of collaboration and productivity environment. But being able to do the same kind structured approach for their time with the company rather than having to shift everything, reevaluate how they do their job, and find new ways to make that work.

Atli Thorkelsson (12m 33s):
So I’d say yeah, it’s knowledge sharing, it’s touchpoints, it’s mentorship, and a lot of managers are experienced with, I’ll stop by their desk, see how they’re doing, shadow a call or two, things like that, but maybe are not finding as much opportunity to do that and in a remote environment and instead are defaulting to, what’s our weekly one-on-one cadence and what do we talk about in that structured time? And it just, it doesn’t allow for the same degree of kind of connection and learning. And then there’s also just a lot of productivity lost that I think we’ve seen more studies that are pointing to high performers, continue to be incredibly high performers and in many cases are higher performers in a remote environment.

Atli Thorkelsson (13m 25s):
Low performers really bottom out. I mean if they’re not required to do a lot of stuff, they won’t. And so if you don’t have the structure in place to understand how much people are actually getting done, then that’s another productivity falls out the window regardless of how good your team is. There are will always be people that are slacking in an environment where they can. And yeah, I’m sure the list goes on and on like you mentioned, but I think those are some of the bigger things you see.

Matt Alder (13m 53s):
Yeah, I don’t think there’s some great examples there. It’s switching back to hiring and acquiring talent. Obviously, you work with a large number of startup organizations or you’ve worked with a large number of startup organizations over the last few years. What are some of the biggest mistakes they make when it comes to hiring?

Atli Thorkelsson (14m 18s):
The biggest mistake that I see is under-engineering their Recruiting process. And that’s, as a startup founder, you’re very used to things moving quickly, breaking quickly, being fixed quickly, that kind of thing. But not being, you’re not having a lot of structure and process in place. And there are some advantages to that in hiring too. You can quickly determine whether someone’s making an impact so you can quickly shift to let them go or hire above them or make or changes as you need them to. But the reality is that those are very expensive changes to make typically, especially if you need to let go of somebody, especially if that person’s a leader. And so putting a little more time, a little more structured thought, and a little bit more effort into making sure you’re making the right hires the first time around.

Atli Thorkelsson (15m 9s):
And frankly, just making sure that you understand how to interview people, and what to look for, and that you understand the function that you’re hiring for well enough to know what to look for and how to pressure test their answers and things like that. It’s just, it’s a very painful loss to have to make these hires over and over again. And it also signals to the market that there’s something wrong there. If you’ve had three CMOs in 12 months the fourth CMOs gonna be a really hard hire to make because people talk. Tech is still a small industry and it’s very easy for people to understand, okay, they’re not prepared for making this hire.

Atli Thorkelsson (15m 49s):
And particularly if you’re kinda a buzzer brand and people know the company and they’re talking about it. It’s, it’s really painful and it can create this very difficult loop where candidates know you’re a challenging environment to work in. And so they get in there and even if you can hire somebody, they’re already kind of on their heels from day one. So it’s very painful to rip and replace. Everybody already knows that. But I think there’s just, there needs to be a little bit more thought generally and a little bit more self-awareness I think for kicking off a new role and raising your hand to say, I don’t really understand marketing as a discipline. I don’t understand what to push for. And there are too many founders that have, I think, a little bit too much faith in their ability to sniff out good talent when you have to get into the weeds on what makes them good, and is that the right hire for you at the right time.

Atli Thorkelsson (16m 44s):
Do they have the right style? Things like that. And if you’re a first, even if you’re second or third-time founder, but in a lot of situations you just, unless you’re really well prepared for hiring that function at that stage of your company’s growth you’re not gonna do it. Right. And hiring’s never perfect. You know, even the best interviewers probably make 20, 25% of the wrong hires that’s a lot better than the worst interviewers who are making mostly wrong hires. And so I think the biggest thing is just underestimating how much preparation needs to go into these roles. And then there’s also the advantage to a startup over a larger company in the interview process is you can be nimble.

Atli Thorkelsson (17m 25s):
You can move the process around to accommodate the right candidate. There are a lot of resources you can take advantage of, especially if you’re in the VC talent ecosystem. You can take advantage of those VC talent people to make sure that you’re not wasting time on candidates that they could backchannel quickly or that they already know things about or whatever. But making sure that you are not – as a founder, your company’s biggest resource is really your time, like, especially in the earlier stages, and making sure that you’re not wasting time on candidates that aren’t gonna be real or aren’t gonna be the right for you, utilizing the resources around you, and changing the process to accommodate the right candidate at the right time.

Atli Thorkelsson (18m 20s):
Those are some things that typically larger companies are have a harder time doing.

Matt Alder (18m 25s):
Yeah, absolutely. I just to dig a bit further into that, because obviously there are things that startups do that get larger companies just wouldn’t necessarily be able to replicate. What are some of the great things that you’ve seen startups do when it comes to recruiting that you think larger companies could replicate and learn from?

Atli Thorkelsson (18m 45s):
I think larger companies are more likely to, you know, I’m a big fan of having a structured interview process, but with a caveat that if you sense an opportunity to change it to make the company more attractive to the candidate or to get a better understanding of the candidate, you really should be doing that. And if that means that you find a candidate that has, you have a particular question about how well do they work with engineering, being able to just pull in an engineering leader to join the process to evaluate that stuff on the kind of on the fly, things like that where people in startups generally are more willing to just jump in and help however they can. And so if you find people that have questions on or where you have questions where they have questions about culture fit, find people that are culture carriers within your company and pull them into the process last minute.

Atli Thorkelsson (19m 37s):
Adjust the process according to the candidates and the process that you already have in place to make sure that you’re pulling the right levers to make the opportunities interesting as possible for the candidates, but also to make sure that you have the people in the process that can really truly evaluate on the metrics that you’re worried about. I think that’s the most noticeable thing is that they can be a little bit more nimble. Yeah, I think that’s probably the best thing.

Matt Alder (20m 9s):
Fantastic. So final question. We’ve obviously seen a huge amount of technology and innovation coming into the recruitment market over the last few years. And certainly, the problems that organizations have had recruiting over the last two years have really driven forward some really interesting innovations. Where do you think recruiting itself heading? What are you excited to see it develop in terms of recruiting and the technology that we’re using?

Atli Thorkelsson (20m 40s):
Yeah, from a tech perspective, I think there’s, we’re now finally starting to see, people have been talking about bringing AI into recruiting for a long time, but I think generally in a pretty nonsuccessful way. Up until very recently, we’re starting to see those models and those companies get good enough that it actually does, it’s actually very effective. And it’s particularly for more junior hiring and the higher-up funnel parts of the hiring process. We are starting to see really accurate models for, “Okay, I need to hire an AE who has worked on this kind of customer segment and this kind of deal cycle and things like that.

Atli Thorkelsson (21m 22s):
And being able to very quickly through a lot of these newer technology vendors spin up a long list of very qualified candidates that wasn’t really possible to do five, six years ago. So I’m really excited about that. I think that becomes harder to do with more niche roles and more executive roles and things like that. And there’s still a lot that has to be human-driven in the process, but to have an active and accurate top-of-funnel for your recruiting process is huge for every company. I think I have less exposure to the kind of more advanced engineering evaluation tools that are out there.

Atli Thorkelsson (22m 8s):
But I also think that some of those things are starting to become more and more interesting. And then one of the interesting trends right now to is there’s so much more exposure to and understanding of compensation data from candidates because they’re not turning to, they’re less likely to turn to the peer sourced things like Glassdoor and things like that. And more likely to have real data-driven decisions that they’re walking into these conversations with to say, the offer that you’re giving me is at the 60th percentile and the equity offers at the 30th.

Atli Thorkelsson (22m 49s):
And I want to go up these bands and things like that, it’s made an interesting shift in some ways to just a more informed candidate base. And I think that’s great, but it does mean that you as a hire need to be aware of those bands and need to be plugged into what they’re going to come to you asking for. And that’s largely driven by just the companies that have popped up that allow candidates to do that and they, they also allow the companies to do that. So everybody should be on the same page and it makes the compensation process much more transparent. And those are the some of the biggest ones that I’ve seen affected our portfolio companies.

Atli Thorkelsson (23m 31s):
But there’s a lot on the horizon. I mean there’s in the evaluation tools like as NLP gets better and better. That’s going to become a bigger part of the interview process for a lot of companies as these ML models continue to get better. That’s going to affect hiring in more parts of the funnel and more roles and just more broadly impacts the whole process. Yeah, it’s an interesting time for sure.

Matt Alder (23m 58s):
Artley, thank you very much for talking to me.

Atli Thorkelsson (23m 60s):
Absolutely. Thank you so much for having me on.

Matt Alder (24m 4s):
My thanks to Atli. You can subscribe to this podcast in Apple Podcasts, on Spotify, or via your podcasting app of choice. Please also follow the show on Instagram where you can find us by searching for Recruiting Future and TikTok where you can find us by searching for Recruiting Future Pod. You can search all the past episodes at recruitingfuture.com. On that site, you can also subscribe to the mailing list to get our new monthly podcast newsletter and get the inside track about everything that’s coming up on the show. Thanks very much for listening.

Matt Alder (24m 50s):
I’ll be back next time and I hope you’ll join me.

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