Is there a market rebound?

Welcome to your fortnightly update on the Fintech landscape, crafted especially for Fintech Leaders.

In this edition I want to talk about hiring. It's possibly the busiest I've been for leadership hiring since late 2021 early 2022.

So I thought I should talk about some of the drivers behind this hiring spree and debate if this is just a short spike in activity or the early signals of a market rebound.

Decisions are taking longer!

Have you ever heard the phrase "you wait all day for a bus then three come at once" - perhaps we can attribute much of the surge in hiring to companies delaying decisions over the past 12 months.

This is understandable given the uncertainty around interest rates and potential recession. It's hard to make long term plans for growth when you don't know the cost of capital one month to the next.

Stabilising interest rates plus lost time has resulted in companies quickly planning their next move. Talk of IPO's in 2024 are starting to emerge, and as I mentioned in the last newsletter, there has been a significant increase in CFO movement.

As we also approach the end of 2023 companies are setting their stall for next year and getting the right people in place.

An unprecedented economic landscape for a new generation of leaders.

Another reason for the increase in hiring is a recalibration of leadership talent and skills. As Warren Buffet famously said 'When the tide goes out you see who has been swimming naked'

As we've swiftly transitioned from a growth at all costs to cut costs at all costs environment, some leaders have struggled to evolve their skills quickly enough.

The result of the economic change is a restructuring of businesses and a recalibration of the skills required in leadership positions.

To date the CFO role and CMO role have been most impacted. We are now seeing sales, product and technology roles being impacted.

Companies are taking the opportunity to not only re-skill but 'move on' leaders who were hired at the height of the growth cycle.

We are also seeing the first generation of leaders in the workplace who got a medal on sports day just for turning up!

Whilst this might seem facetious there is a whole generation of talent who have never encountered an economic downturn. Running a business when money is free flowing is a very different proposition to running a business today.

Leaders asking for 'psychological safety' and 'less ambiguity' are sending signals that perhaps they are not cut out for leading in this period. Leaders are also assessed on their ability to perform and lead when there is chaos and uncertainty.

Business is competition, it's about winning and it is a brutal place to be when you are losing. Qualities like resilience, smart P&L management, hustle, assuredness and tactical execution are in short supply from leaders. But these are the very qualities every Fintech needs from their leadership team right now and for the foreseeable future.

These are qualities we can all develop, but like building muscle, it takes desire, time, dedication, stress and pain!

The swiftness in which the market has turned sour has caught everyone off guard and unfortunately people have struggled to accept the new paradigm shift, adjust their expectations and re-skill.

The merry go-round has started.

Some leaders have been moved on, while others have decided to move on. The stagnation of the past 12 months has seen some pent up demand. Many people are questioning their future career but it's been difficult to move against a backdrop of major redundancies.

Tech redundancies are at their lowest since the start of the downturn in May 22, maybe this is a factor in the increase in opportunities?

I expect to see continued business closures throughout 2024 as startups and scale ups run out of cash and can't get to cash flow positive.

This dynamic means there is serious competition for jobs and choice employers are, in the main, very much in the driving seat.

Is salary a key driver in seeking a move?

I'm seeing growing tension around salary packages. Leaders who joined at the height of the market are looking for a pay rise. However the market has seen a rebalancing of salaries to an extent. And you could argue that people who are already overpaid are now looking for an additional increase.

Founders and investors are rightly pushing back on pay rises. The impasse has led some people in leadership positions (especially CTO's) to resign without a job to go to. But the truth is there just aren't that many attractive senior gigs around and I'm seeing senior tech talent on the market 3 months and more.

Executives are not immune from the mental health pandemic.

Health is everything and mental health issues are playing an increasing role in Executive moves.

Recent high profile CEO exits in Fintech have taken the headlines but I sense amongst my network of leaders that there is a resignation/realisation that startup life is too tough, the rewards aren't there and it's time to bite the bullet ??

I've seen a BIG increase in enquiries from MNC and incumbents who are keen to attract Fintech leaders to their business and offer a safe, boring job. This is becoming an increasingly attractive option to many Fintech leaders who've spent the past 3-5 years, nose to the grindstone, running out of cash and with families to feed.

Funding is coming back.

There's a general sense that we are at the bottom of the cycle and it is time to invest again. Some big cheques are being written for the perceived winners. But hiring is highly strategic and we aren't seeing the volumes of 20/21

Job Hunting truth ?? bomb #12

You're too experienced - Just accept it!

I turned 50 yesterday - I think I'm still 21 but my body and my wife think otherwise ??

And I see a similar mentality when Executives start looking for a job.

Whenever there is a downturn I see some executives hit the panic button and start applying for jobs they once held 10 or even 20 years ago.

Their belief is they are a slam dunk for the job given their wealth of experience.

BUT! They completely forget/ignore the decision making process they used when hiring themselves.

Hiring is all about risk management.

Imagine for one moment you are the CEO making the hire,

Is there more risk in hiring ....

? Someone who has spent the past decade executing and making sh!t happen

?? or someone who has spent the past decade consulting?

? Someone with their career ahead of them who deserves their opportunity to shine

?? or someone who once had their opportunity and now wants an 'easy' life?

? Someone who has 2-3 years of challenges in the role before being promoted

?? or someone who leaves bored after 6 months?

? Someone who is delivering the EXACT results you want right now for your competitors

?? or someone who did this 10 years ago?

I hope you can see where I'm going with this.

As confronting as it sounds when you start chasing after jobs you are over qualified for you face competition from ....

- Those on the way up

- Internal applicants

- Those working for competitors

In terms of pecking order an over qualified candidate is bottom of this list.

My advice is to focus on where you create the most value and accept that when it comes to hiring de-risking trumps upside every time.

How do you de risk yourself and make it easier for a company to hire you for a role you're over qualified for?

- Approach networks and people who trust you. They are much more likely to see less risk in bringing you on board.

- Offer to work on a contract basis first. Offer a get out clause so that if you turn out to be a nightmare telling the CEO how to do his job you will leave no questions asked!

- Offer to work part-time or on a reduced salary in the first 3 months.

- Offer to make a large part of your remuneration success based or in equity.

Why salary is often the biggest hurdle to overcome.

When working on an executive search I want to understand salary expectations in the first conversation.

But whenever I ask someone their salary expectations I'm usually hit with....

MONEY IS NOT IMPORTANT

Why people feel the need to lie to me is anyone's guess ?? Money is important and in my experience it is very difficult for people psychologically to take a pay cut.

Indeed I've seen people out of work end up having offers rescinded because they tried to haggle over an extra $5000. Instead of thinking they were just about to receive a $250,000 pay rise they instead focused on the $5000 less than their previous package.

MONEY IS IMPORTANT!

And to illustrate this point further. I spend approximately 10-15 hours during each search negotiating salary.

The Art of Negotiating Salary

As I mentioned earlier I'm seeing push back on salaries. The art to successful negotiation is to share risk and upside. Over the past 5 years we've seen the majority of the risk fall at the employers feet and the majority of upside given to the employee.

I continue to see many executives struggle with the concept that this dynamic has switched, and employers are reducing their risk appetite by focusing on cost NOT upside.

Many executives in Fintech are asking for corporate base salaries (risk to the founder/investors) with a startup equity/upside package (risk to the founders/investors.) This type of approach immediately sends out a ??

The easiest way to explain how to negotiate a salary is to think of an insurance policy.

If you want increased cover with no excess you pay higher premiums.

You don't ask the insurer to reduce their premium!

If you want join a startup and have all your risk covered with a corporate base salary then you pay the premium with no equity/upside.

If you are prepared to take on risk and share risk by taking a reduced salary then there's room to negotiate for equity/upside.

And if you're tasked with growing the business, maybe you share that risk by asking for a monthly retainer and then a percentage of the revenue you bring in to the business.

For any negotiation to be successful it's important for all parties to consider what is fair and reasonable. Using leverage will often backfire and it is way more effective to demonstrate where you are reducing risk and creating value.

For example - you may ask for a 10% pay rise believing that it would cost more to replace you. That may be true, but what does the CEO do when every staff member comes asking for a 10% pay rise?

A good rule of thumb is to use the 3x multiple of your salary package.

If you can't demonstrate you bring in 3 times more revenue to the business than your salary costs - you are on shaky ground asking for a pay rise.

Here is the best book I've ever read on negotiation - https://www.booktopia.com.au/never-split-the-difference-chris-voss/book/9781847941497.html

If you're a Fintech Leader sign up for the Tier One People fortnightly newsletter for more useful leadership, careers and job hunting tips.

Until the next edition -take care.

Dexter