Tanvi’s Take: Forget Hiring and Interviewing, the Real Opportunity is in Compensation and Benefits
The Great Resignation is here, and the numbers are bleak. As of August, there were are more than 10 million open jobs in the U.S…. the highest level ever!
Companies are feeling this…
- The restaurant industry is the worst hit, with no signs of improving. 10.8% of leisure and hospitality jobs were open in July 2021, higher than any other industry.
- 50% of small and medium businesses are finding it harder to find qualified workers.
- Mid-career employees aged 30–45 are quitting at the highest rate.
- Resignations are highest at tech and healthcare companies.
To combat this, companies are going all out — with signing bonuses, college funding benefits, and increased minimum wages. Applebee’s even gave away free appetizers to boost applications.
While companies are heavily investing in benefits and trying to improve the general wellness of their employees, in the venture space we’re seeing a ton of money going into the hiring and interviewing space. All the big names are getting in on it: Tiger Global, Bessemer, Sequoia, Norwest, Lightspeed, Accel, Greylock, Index, etc. (just waiting on you a16z). In fact, in the past 5 weeks, there have been 1–2 fundings announced per week, cumulatively representing more than $600M in funding (listed at the end*).
If you take a closer look at this recent swarm of fundings, you’ll notice most of them are focused on technical roles or tech companies. What about the talent issues faced by restaurants, SMBs, and the healthcare industry?
Are hiring and interviewing products even the right fit for the issues we’re seeing?
While improvements to hiring and interviewing practices are certainly needed, these are not the key issues in today’s resignation spree. Work-life balance, fair wages, and pure burnout are driving The Great Resignation, and products that help recruiters assess and hire individuals aren’t going to help.
Instead, what companies need to do is rethink compensation and benefits. At the end of the day, winning in a competitive recruiting environment comes down to the money and quality of life. That’s really what employees are after, and startups helping companies address these areas will win.
Four Compensation & Benefits Trends I’m Tracking
1. Benefits as a Service (a new kind of BaaS)
Why the heck are benefits even tied to your employer? What about the restaurant workers and SMBs that don’t have access to enterprise-grade benefits but still need them? A company providing benefits as a service would turn the entire ecosystem on its head — unlocking D2C markets of gig workers and freelancers as well as B2B markets of SMBs and restaurants (who would then have a better value prop to retain their employees). Catch is currently providing benefits to uncovered individuals. I’m interested to see what they do with their $12M Series A and whether they’ll go after the B2B opportunity in the space.
2. Equitable Compensation Tools
Sadly, it’s no secret that women and minorities are paid less. But with increasing data and discussion on this topic, this is no longer an acceptable oversight for companies, who accordingly are looking for tools to help them. Companies like Syndio ($17M Series B in Jan 2021), Pequity ($19M Series A in June 2021), and Compa ($3.9M seed round in Aug 2021) are stepping up to the plate.
3. Compensation Offer Communication
You could have the best dang compensation package but if you can’t explain it in an easy, exciting, and engaging way you’ll get nowhere. Today, it’s on the employee to discern and analyze how good a compensation package is, and given the hiring environment, this is a lack of foresight by companies. Enter Figure ($7.5M seed round in May 2021) and Welcome ($6M seed round in Dec 2020), which help recruiting teams create engaging compensation offers that also double as sales tools.
4. Employee Benefits Targeting Mid-Career Employees
Since this is the employee demographic quitting at the highest rate, companies should investigate what kinds of benefits mid-career employees want — whether health-related (e.g. global fertility benefits with Carrot), financial (e.g. financial wellness with Honeybee), or something else. To paraphrase Elle Woods…“benefits give you endorphins. Endorphins make you happy. Happy people don’t leave their companies, they just don’t.”
The Great Resignation represents a fundamental shift in the employer-employee relationship. Enterprise companies, mid-market companies, small and medium businesses, and gig platforms need to learn how to understand and manage this shift. Startups helping them do so will go far!
Questions? Thoughts? Please comment on this article, I’d love to hear them!
*Hiring and Interviewing Platform Fundings in the Last 5 Weeks:
Week of Oct. 11th
- Karat (technical “interviewing as a service” platform): $110M round
- Personio (recruiting and onboarding for SMBs): $270M round
Week of Oct. 5th
- ModernLoop (recruiting operations for tech talent): $3.3M seed round
Week of Sept. 27th
- Gem (recruiting platform): $100M round
Week of Sept. 20th
- Crosshq (data-driven hiring): $30M Series A
- Clovers.ai (AI-driven interviewing platform): $15M seed round
Week of Sept. 13th
- CodeSignal (tech assessment company): $50M Series C
- Canvas (diverse hiring platform): $50M Series C
