What Silicon Valley CPOs Are Saying About the War for Talent

In a series of conversations with Silicon Valley Chief People Officers (CPOs), we have covered a range of urgent talent topics. In this installment, we offer their thoughts and our own on competition for talent in a down-cycle, along with the closely related topics of remote work and compensation strategies. The shifting business landscape has meant HR leaders and their teams have had to be even more strategic about attracting and retaining talent at all levels, yielding key insights and practices all tech companies can consider.

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Dispatches from the War for Tech Talent

Top of mind for many CPOs is whether and when the tech market will rebound from the recent downturn and layoffs, and how that might affect talent acquisition challenges. The general sentiment is that it’s hard to tell, given all the factors at play. ?

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As one CPO noted, “There are really big variables like interest rates, inflation, and the upcoming presidential election cycle, which makes markets skittish.” The consensus is that we haven’t yet seen the bottom of this cycle. Another said, “The strong performers are still employed, but some categories of tech workers haven’t hit their trough yet, so certain segments of tech will probably rebound more quickly in terms of worker profile.” In line with this, one executive pointed out that their business went through a months-long period of no recruiting, and now has over 150 open jobs as their market slowly picks back up.

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But another CPO pointed out, “The great thing about Silicon Valley is that there’s always a bull market somewhere.” Right now that “somewhere” is AI, most CPOs agreed. For example, one executive noted the large, growing number of AI startups that have won recent seed funding. At the same time, AI technologies themselves can and will displace white-collar workers—such as those engaged in copywriting, programming, and data management—further affecting hiring trends.

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In the HR function itself, this particularly pertains to areas such as talent acquisition, employee engagement, and HR shared services.? On the talent acquisition side, there is deep opportunity for AI to help deliver insights as far as the identification of talent and automating much of the manual sourcing work at the top of the hiring funnel.? Several CPOs talked about using Chat GPT for job description development—however all of them were worried about any use cases they involved sharing private data and most had initiated new data privacy policies. ?In the employee engagement realm, AI can help both delegate as well as evaluate various surveys, interviews, and other real time data collected on the organizational culture front. Lastly, AI has the ability to drastically change HR support functions which traditionally involved shared service call centers and employee self-service.?

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Remote and Hybrid Work

In regard to remote-work opportunities, one CPO said, “Unlocking talent across the globe has been really exciting, we don’t have to fish from the same pond as every other company.” We have seen additional benefits when companies work in a follow-the-sun model, leveraging time zones as a strategic advantage.

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Another CPO commented that hiring outside of Silicon Valley has reduced some of the employee entitlement that has been rampant for the past decade and that required high levels of compensation, creative benefits, and fast promotions in order to retain talent. One CPO commented, “We are giving managers a choice: do you want to hire in Silicon Valley, or can you hire a few more people in lower-cost geographies?”?

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Of course companies for years have hired talent in lower-cost global geographies, but the fact that it is being applied at all levels is evidence of moving from the until recently growth-at-all-costs mindset to a more disciplined, financially prudent environment where profitability and operating margins matter. If budget wasn't a constraint, would managers hire someone closer? Yes, but knowing budget is a constraint and they can hire two great people they don't sit next to versus one who can be onsite, managers are picking the two remote workers to better achieve their goals.?

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Several CPOs also noted that they are working on new ways to enhance collaboration for remote teams and expect this to be a key area of innovation over the next 3-5 years. (The idea of "Why should I move to Silicon Valley? I can do the same work from where I am" may also explain why most offices in San Francisco remain at 20-30% capacity.)

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CPOs noted that there is no perfect answer for whether your company decides to be remote first, hybrid, or back in the office and that it really depends on the type of business, leaders’ beliefs on productivity and performance management, and the culture you want to create.? All confirmed that the question of mandating a return to the office is a regular and on-going discussion in the Board room.?

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The Complexity of Compensation

“The downturn has definitely affected our views on compensation,” nearly all CPOs agreed. One commented that they make the same offer to everyone dollar-wise but someone starting this week is getting significantly more shares than someone who joined earlier because the company’s valuation is so low. Consequently, people who have been at a company for four or five years are unhappy.

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That means many CPOs feel forced to reissue new equity or risk attrition of high performers, while others are realizing they can't do that.?It’s difficult to convince a compensation committee of investors to reissue equity when they are underwater as well, and investors and board members are not, on the whole, getting refreshed.?

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Thus, several CPOs said they are dealing with attrition and employee relations issues due to inequity between new and former employees with regard to stock-based compensation. One CHRO noted, “We were giving candidates a choice of taking more equity or more cash in their offers over the last few years.?If you chose equity you are likely underwater.?Having equity ownership is appealing in the good times but employees now feel forced to change jobs versus waiting four or five years for their equity to climb back up.” ?

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In this context, many CPOs are trying to better educate their employees on taking a longer-term view: that the value of their equity will, over the next three to five years, even out and likely rise as companies return to growth. The majority of CPOs we talked with said, “We have not changed our compensation offers with the exception of doing less sign-on bonuses and generally less negotiation from candidates.”

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Whatever happens in the war for tech talent in the coming months, CPOs and their teams will have to think about how to handle a mounting strategic challenge: employee activism. That’s the topic of our next installment in this series.

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Please find my previous articles linked below:

“The Second Loneliest Job in the Business”—5 Things That Are Top of Mind for Silicon Valley CHROs

Part 1: Silicon Valley Chief People Officers Weigh In on the Tech Layoffs

?@gabrielleeyl Thank you for co-authoring with me