For big corporations, the Great Resignation has made it harder than ever to fill vital roles as employees resign en masse, expressing desire for a better work-life balance.
This sustained exodus, however, has been a once-in-a-century opportunity for startups looking to recruit experienced workers who might normally have avoided migrating to a nonestablished business. But even as entrepreneurs have a deeper pool to recruit from, they’re facing new challenges that could make hiring from that pool more challenging.
It’s a balancing act that many founders are still figuring out how to navigate.
“There’s no mathematical proof that things are easier for startups, but it certainly feels that way,” says Phil Libin, founder and CEO of video communication company Mmhmm and A.I. product developer All Turtles.
It’s not just the Great Resignation (or the Big Quit, the Great Reshuffle, or Quiet Quitting, or whatever term you prefer) that’s impacting the talent pool these days, either. The economic slowdown has prompted many companies, especially startups, to trim their payrolls, which only boosts the number of highly qualified candidates.
“I’ve noticed in the last three months the available talent pool to some of the companies I’m involved with has dramatically increased,” says Matt Kinsella, managing director at Maverick Ventures. ”Even below the executive level, in talking anecdotally to CEOs who are trying to hire developers, etc., that has gotten quite a bit easier.”
From July 2021 to July 2022, the rate of job quitting in the U.S. reached levels never seen in the 22-year history of the U.S. Bureau of Labor Statistics. And a McKinsey survey found that 44% of the people who quit had little to no interest in returning to “traditional jobs” within six months.
That is, in part, because of lessons learned in the pandemic. As stay-at-home orders forced most working Americans to shift from an office environment to a telecommuting one, many learned they could not only still get their jobs done, but could also spend more time with family and pursuing their own interests.
A matter of trust
The subsequent push by certain companies to return to the office as COVID numbers have declined has made them reevaluate what’s important to them.
“What seems to be happening now isn’t between in-office or remote or hybrid. I think the real distinction is companies are sorting themselves into low trust and high trust businesses,” says Libin, who previously was CEO of Evernote. “There are a lot of companies that have traditionally been low trust environments, meaning they don’t trust their employees. It’s the whole butts-in-seats culture. ‘How can we possibly know if you’re getting work done if we can’t see you?’…Those companies are saying if we have to have people working from home or in a hybrid way, we have to monitor to make sure they’re looking at their computers for enough hours in the day or measuring how many hours they wiggle their mouse. And there are a lot of workers saying, ‘No, I’m not going to have that kind of a lifestyle.’”
Startups, though, are well known for their fast-paced, long-hours lifestyle. So does jumping from a corporation to a company on an IPO track really offer more time to live your life?
The answer, of course, depends on the startup, but more and more these companies are taking steps to add more flexibility to workers’ schedules, letting them reclaim some of their own time.
“The ability to have some freedom as to when you execute the tasks and where you execute them from, even if there might be an overwhelming amount, is probably more appealing than having to grind it out on the clock,” says Kinsella.
Regaining lost time
In the tech startup space, remote work is basically the norm, which can save several hours of commuting time each day, giving workers in high-traffic areas like California or New York (who often deal with three- or four-hour total daily commutes) as much as 20% of their waking day back.
Some other companies, in addition, are enacting rules meant to eliminate wasted time. Fintech company Chime, for instance, has enacted Focus Fridays, where meetings are banned every Friday afternoon. And two years ago, it began offering “recharge” days to all employees.
“At a company that’s emerging, you don’t always get the work-life balance you might get at a 10,000- or 20,000-person company where you have a lot of redundancy in the system,” says Beth Steinberg, senior vice president of people and talent at Chime. “We tried to be proactive in addressing that…Over two years ago, we put in ‘take care of yourself days’ where we shut the company down at least once a month, if not twice, where everyone can have a day where they’re not having to take [personal time off] and taking a day and then having to come back and have to do additional work.”
Libin’s companies are taking things even further, doing away with their physical offices entirely and giving the money they used to spend on rent, security, coffee, etc., directly to employees, which works out to $800 per month per person. The workers then use that however they choose to ensure they have a good work environment. (Libin says he has joined some clubs and museums in his area, where he can go work whenever he chooses. Others have opted for bigger apartments or higher-end equipment.)
Just as big companies are wary of a looming recession, the startup world has been impacted as well. Venture capital firms are tightening their purse strings, as noted in Sequoia Capital’s dire “Adapting to Endure” slide presentation, which famously said, “Rates are rising, money is no longer free, and that has massive implications for valuations and fundraising.”
As a result, some startups are ceasing all hiring, despite the size of the pool, while others, like Chime, are taking this time to focus more on integrating people who have recently onboarded. Kinsella notes that the current economic situation could mean people who left during the Great Resignation might not find the salaries they were hoping for initially.
But not everyone in the startup world is bearish about the current slowdown.
“You definitely are seeing a lot of companies that have imposed hiring freezes,” says Libin. “Over the past couple of months, hiring has been slower in startups because cost of capital has gone up. I don’t that that’s a long-term effect, though. My guess is we see that wash out over the next six months or so.”