In our previous blog, Covid and Impacts on Hiring, we analyzed four key issues that companies would face during the pandemic: the hiring process, onboarding, compensation and benefits, and communication. In the time since that posting, companies have had time to adapt and augment their approaches as they create a new version of “business as usual.” Below, we return to the four topics we discussed previously, as well as look at what a return to offices will look like in the foreseeable future, based on what we’re seeing in our portfolio.
Let’s start with our four areas…
Hiring Process & Onboarding
Most companies in our portfolio have adopted remote interviewing processes, which they plan to maintain even after the risk of Covid is severely diminished. Many hiring managers in our portfolio have commented that video interviews have proven effective and efficient, especially when combined with tools to allow for real-time programming tests and exercises. This enables founders to hire much faster.
This increased speed is critical since the current candidate market is the tightest we have ever seen. We hear this from all the recruiting agencies we work with and from founders that are hiring right now. Candidates consistently have multiple offers (sometimes 5+), and some of these competing offers are coming in with significantly higher compensation and equity packages than typical. Some founders attribute this to cryptocurrency companies flush with cash and paying far above the market to facilitate recruiting. While this may be the case in a handful of situations, we generally feel this is more of a traditional supply and demand situation.
In addition to remote interviewing, remote work is also a trend that is continuing. Almost all the companies within our portfolio have fully remote employees, ranging from a role here and there to one company that has gone fully remote with no offices whatsoever. There has been one standard caveat with companies having fully remote employees; those employees need to overlap 3-4 hours per day with their time zone, allowing teams to have meetings and collaborate easily. Armorblox, which has almost 100 employees right now, has chosen Ann Arbor and Austin as secondary “hubs” for employees with a mix of hybrid and fully remote hiring. They are also hiring in India for specific roles as the founders are very familiar with that market and managing teams there.
As far as sourcing, some companies are hiring from coding academies, but within our portfolio, it is typically only on the consumer side and for roles that do not require deep computer science knowledge. Enterprise companies generally require more profound technical knowledge, which graduates of coding academies just can’t offer. The utilization of recruiting agencies, however, is something almost all companies are using. This ranges from companies like Replit, which only uses agencies opportunistically to see candidates that would not usually have ended up in their pipeline, to companies like Styra, which uses agencies for almost every hire.
Recruiters are also in very high demand. Agencies are hiring and training people from many different backgrounds to be sourcers and junior recruiters to keep up with the demand currently placed on them. We work closely with one agency, and the owner said that the market is so tight that he is offering benefits even though most of his employees are contractors.
Finally, onboarding has become more efficient as most founders have streamlined their communications to new employees (utilizing communications and sharing software) and setting expectations quickly. Generally, they assign a mentor or buddy to introduce a new person to the company providing a hands-on education on how to collaborate within the organization.
Compensation & Benefits
As predicted, we have seen more focus on mental health, with increased wellness benefits and ensuring people take vacation days. Some companies are even mandating that individual employees take a bare minimum of one day off per month and expense food and entertainment on that day. One company said the following: “One major change was that we officially implemented a policy of flexible PTO. Our team is filled with high-performing and passionate people, and we recognize that while sometimes we have to sprint, we’re really in a marathon. Taking time off to unplug is super important for pacing, which helps us stay sharp and push our creative boundaries.”
As mentioned above, we’ve seen offers pushing the upper boundaries on salary as the candidate market has grown incredibly tight, especially for those with rare and in-demand skills. We are seeing evidence of a general increase in salaries within the bay area and across most US locations within the US. It is happening internationally as well. An example is a company that has a large team of engineers in Poland, and after losing two engineers and seeing the numbers on competing offers that were coming in, they gave an across-the-board 30% raise in that location.
Communication
Teams are doing this in various ways, including regular morning stand-ups, utilizing collaboration tools like Notion, increased updates via email and Slack from founders and managers, and other modes of “always-on” communication. Tigran Sloyan of CodeSignal was recently on a podcast with Remote.com, and he said, “things have to be very much explicit and written down in asynchronous communication.” Thoughtful and frequent communication will be important as employees transition to a hybrid or remote model of working.
We also expect large enterprise software, such as Google Workspace and Slack ‘Huddles’, to continue to improve in this area to be able to better replicate the frictionless facetime and drop-in chats that used to happen naturally in a physical office.
Back to the Office? Remote?
Last year in our blog, we made some assumptions anticipating how our portfolio companies would return to work. In our closing paragraph, we said, “it will be important going forward for companies to have a foundational structure prepared that creates space for the spectrum of employees who will work completely remotely, fully onsite, or some hybrid of the two. What we have witnessed, and continue to witness, is the resourcefulness, creativity, and resilience of people.”
Across our portfolio, we are seeing that a large majority of our companies have either gone fully remote or some version of hybrid, with only a few companies planning to return full time to the office. Our companies have been resourceful, creative, and resilient and have figured out how to successfully work in a fully remote environment over the past year and a half. The benefits of remote or hybrid work for companies have been many, including eliminating expensive office space and recruiting from a much larger pool of qualified candidates, which increases the availability of a much more diverse pool of candidates. There have also been many benefits for employees, most of which have no desire to return to the office five days a week.
One of our companies, Styra, has decided to go fully remote. Initially, they would keep a casual headquarters where those local to the office could go in and work when they wanted. The leadership team received pushback from employees who foresaw an unfair advantage to those who would choose to go into the office. They would have greater access to the executives and managers. Their employees essentially said ‘fully remote, or not remote at all.’
Our opinion is that companies that don’t offer at least some roles as fully remote, and most other positions as hybrid roles, will have trouble recruiting in the future. In a recent Forbes article, a survey said only 27% of workers want to return to the office full time. If those numbers hold, any company that decides on a 100% return to the office will significantly reduce its ability to recruit qualified workers.
To paraphrase from our previous blog’s quote above, it will be essential for companies going forward to accommodate the full spectrum of employees that may want to work full onsite, hybrid, or fully remote. If they can’t, these candidates can easily find roles elsewhere that will.
Summary
In reviewing our four topics, things seem to have stabilized as companies became accustomed to working remotely. Most of the major changes were made early on, and now we see mostly minor tweaks and adjustments as companies optimize their processes and procedures. With all of that mostly behind us, the most important thing that companies need to figure out now is where to fall on the spectrum of returning to an office. This decision will affect their ability to attract, hire, and retain top talent. The benefits of remote or hybrid work for both companies and employees are evident, and the future is here.
