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Hiring? These top recruiters have a lot of wisdom to share with health-tech founders
Top talent may have different priorities than you might expect...
Recruiters at the top agencies know all the things. Trust me on this. In both my investing and prior career in journalism, I make it a point to reach out to recruiters and exec search firms on a regular basis to talk shop. Think about it. Their job is literally to talk to people all day long who are considering a job change - and then convince them to consider a new opportunity. It’s no wonder that some recruiting firms are even starting venture studios and funds.
So who better to talk to than a group of recruiters for some perspective on these crazy past few years in health tech and what to expect going forward? 2021 was one of the frothiest years most of us have experienced as valuations for startups hit sky high levels. It was also a very busy period for recruiters - and many were constantly turning down business. This year, things haven’t slowed down too much on the hiring front as the market moves in the direction of a recession. But it may soon. And that will create all kinds of challenges and opportunities for both employers and job seekers.
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Knowing what to expect when it comes to hiring trends matters. Most founders will tell you that a huge part, if not the biggest, part of their job is hiring and retaining talent. Finding the right people can make or break any business, particularly in those early years. And there’s also the excruciatingly hard part of the job, which involves letting people go.
To get some color on recruiting trends, strategies, key shifts and more, I recently reached out to some of the top health-tech firms. Riviera, Oxeon, Onboard Health and Aequitas Partners were willing to oblige (thank you!). Notably, these firms are fairly differentiated in the types of roles they hire for. Onboard Health looks for talent across product, marketing, comms, ops and other roles, while Riviera focuses on high-ranking technologists like CPOs and CTOs. Both Aequitas and Oxeon focus on C-suite and senior leadership, but are agnostic on the role.
Here’s a summary of what they had to say:
Is the slowdown noticeable to recruiters?
It’s really a mixed bag. Some of the firms say things are beginning to get a bit quieter, particularly for higher-level roles that require bigger budgets to fill. Others disagree and say that many startups raised a lot of capital last year and still have plenty of VC money to spend on building their teams.
That said, top firms like Oxeon are seeing more caution and deliberation on key hires. Boards are starting to push companies to be more mindful about burn, and as a result some firms are seeing executive compensation tighten up a bit (according to Oxeon, they’ve seen a 5-10% reduction in total cash packages over the past 6 months).
All in: It may be too soon to tell and we should know a lot more in 2023. The real transformational moment will be if companies that are planning to raise in late 2022/early 2023 ultimately struggle to do so. And at that point, things could plateau for even the best firms. And all of that could be good for leaner, earlier-stage startups, as long as they can convince potential hires that they’re in it for the long-haul.
Do early-stage companies have an edge yet in this market?
Yes and no. One the one hand, firms say that opportunities are opening up to recruit top talent as more growth-stage companies start to lay off entire teams and slow down hiring. Oxeon is seeing rejected offers (often a proxy for candidates having competing, well-funded offers) decline. Rejected offers are down 20% year-over-year, the firm’s principal Tom Keefe told me, which he said is “positive news” for businesses competing for talent.
On the other hand, some firms are also seeing more candidates look for roles with companies they view as more stable. In this time of uncertainty, some candidates are less likely to take a job with a super early-stage company that may not be around in a few years. And those willing to take a leap of faith may ask for more references in the process.
“Execs from companies that are going through layoffs or stock devaluations are looking for stability, and as such, early-stage companies need to sell even harder to prove their stability,” said Polina Hanin from Aequitas Partners. Oxeon’s Keefe agrees, noting that more candidates flocked to startups from corporations in 2020 and 2021 due to the fear of missing out. Some now are starting to flee back to the perceived safety that big companies offer.
Most of the recruiters recommend tracking layoff announcements as a way to determine who may be on the market. But Hanin warns that by the time the news is made public, many top leaders affected will already be having conversations with multiple companies. Oftentimes, the writing has been on the wall for months. So it’s also worth getting ahead of it by more regularly keeping feelers out to exec-level candidates, versus reacting to news once it’s known.
Is it harder for health-tech companies to hire than other sectors like Fintech or B2B SaaS?
It depends. Most of the firms agree that health-tech companies often have a great story to tell, which is appealing to some candidates. But there’s also hurdles to overcome that are somewhat unique to health tech.
“The challenging perceptions are that healthcare moves slow and pays low,” said Timothy Gordon from Aequitas Partners. “Attracting highly paid Silicon Valley tech startup talent away from an unregulated space with higher pay is fundamentally difficult,” he added.
But Gordon said it all depends on the role. He most often looks to other sectors for openings in finance, engineering and marketing. In his experience, marketing hires are often concerned about the size of the health-tech market and the ability to reach consumers, as well as the availability of a proper budget. Engineers, meanwhile, might perceive a lack of complexity when it comes to the technical problems involved and may also share concerns about the compensation. CFOs and senior finance hires tend to have the most questions about how revenue is collected in health-tech and the complex operating models.
He notes that none of this is necessarily insurmountable, but companies should have good answers to these questions. And the good news, he shared, is that many people tend to stay in health-tech once they’ve been recruited in.
Any tips for early-stage startups when it comes to hiring?
Bringing in high-ranking execs to a startup is never easy and there’s always a shortage. But Hanin recommends giving mid-level individuals who have worked in growth-stage startups or larger companies (or both) a chance who can really grow with the organization. “They are hungry for the chance to be given autonomy and responsibility to prove their capabilities,” she said.
For his part, Chett Garcia, a recruiter from Riviera, recommends educating potential hires about the benefits of working at a startup in a market downturn. “The immediate cash compensation will be lower, but rewards can be great, and early-stage building is more insulated from the public markets,” he said. This may not be obvious to everyone, so it’s important for startups to be able to share this message in a way that resonates without overselling themselves.
How important is remote friendliness to employers and candidates?
This is a tricky question. Most of the firms agree that it depends on the candidate how much they care. Those who live in suburbs a few hours from the city, for instance, are among the most inclined to want to have flexibility. Working parents with young kids also generally prefer remote environments, particularly when faced with daycare closures due to the pandemic.
Meanwhile, younger folks in cities often prefer a hybrid approach, or to be in the office most days to learn from colleagues. Senior executives with easy commutes also tend to like cubicle life.
Where it’s netting out overall though is most candidates still want flexibility versus hard and fast rules. “Some candidates, maybe 10 or 15%, want to be in an office more than not,” noted Riviera’s Garcia. “The remainder of the folks generally want good culture and flexible options for working where it most makes sense.”
Employers, however, are a mixed bag. And they may have more of the power to decide in a prolonged recession. We’re already seeing a shift in the news to big employers instituting more and more days back in the office. CNBC’s Alex Sherman wrote one of the most thoughtful pieces I’ve read so far on this topic after interviewing a lot of CEOs. It essentially argues that CEOs tend to become senior leaders because they work long hours. And in the course of their career, most of those hours were spent in an office. So they assume that everyone else must feel the same. Plus, the office represents the only place where CEOs get to hear any semblance of water cooler chat, because it’s unlikely anyone is spontaneously calling them on Zoom for a heart to heart.
Overall, Oxeon is now seeing fewer “middle ground” approaches and more CEOs are tending to embrace one path or another. “On the company side, CEOs are either pushing to co-locate their teams for in-person work as a strategic culture, learning, and development investment or opting for a fully remote business model that prioritizes monthly in-person meetings,” said Principal Tom Keefe.
That said, strategy is important in either case. I’m told by most of the recruiters I spoke with that candidates are increasingly asking recruiters if CEOs have put real thought into their remote policy. What’s no longer working is to randomly opt for remote-first or office-only, without putting any programs in place to ensure employee satisfaction and retention.
Hardest roles to hire for in ‘22?
There was some disagreement here but a few roles came up again and again.
One such role is People Ops or anything in senior HR/Talent leadership because of the “high demand around building better cultures and talent teams,” said Andre Blackman, who runs the recruiting firm Onboard Health.
Most of the firms also agreed that Product and Engineering are also consistently difficult, particularly when there are so many opportunities outside of health-tech. And some won’t last long in their roles, leading to more churn. “One other trend I see is when a candidate who left traditional tech sectors to try out health tech will often find the pace of innovation, growth, and product shipping to be too slow for their tastes and decide to go back into other sectors,” said Riviera’s Garcia.
Several of the firms noted that truly great clinical leadership such as a Chief Medical Officer is also very hard to find, particularly for companies that are looking to scale (for those looking or contemplating adding this role to the team, I wrote a guide on that here). Exceptional CEOs are also consistently hard to hire - and that’s true for all stages.
When’s the right time to bring in recruiting help?
Most of the firms agreed that it’s earlier than most founders think, but it depends on the company. Often what works well is a mix of both internal and external support - but that needs to be well thought through. One word of warning from Garcia is to ensure that the internal recruiting team and agencies aren’t working on the same role, as candidates may see “double outbound.” That will weaken the brand and make companies look disorganized.
There’s no one path that’ll work for everyone, notes Blackman. “The important thing is that whoever you partner with has the relationships you are looking for and are aligned with how you want to build the culture of your organization,” he said. “Getting talent hired is only part of the game.”
What is most important to candidates these days?
Aequitas shared that they ran a study in 2021, where candidates cited the biggest three reasons for changing roles as: Compensation (26%), Company mission / product (25%) and leadership team (20%). They’re in the midst of running the study again, and their early data suggests that compensation this year is far beyond the others. The tally so far is Compensation (36%), followed by leadership team (22%), and then company mission (20%).
To that point, companies in health-tech can fall into the trap of over-emphasizing their positive mission. Gordon has seen founders think they can under-pay relative to the market because of it. But candidates still have families and mortgages and rents to pay, and that may not be a viable option for them even if they want to join. “We do see organizations fall into the trap of thinking that their mission and culture can allow them to pay below market comp, and it usually bites them,” he said.
Blackman noted that having a strong mission, particularly around equity, shouldn’t just be a rallying cry. It needs to be demonstrated through action. “When we work with clients we always discuss the value of having an employer brand,” he said. “You can put out all the memos you want but if it's not linked to how your company is operating internally and externally, there will always be consequences.”
Oxeon noted that other areas that are important to candidates these days include: The investor syndicate, the candidate’s broader career goals and the quality of the management team. Logistical items like relocation packages and non-competes are also key drivers. Keefe from Oxeon said more candidates are also asking smart questions about how the business makes money, and the extent to which there’s strong product market fit and an ability to scale.
Just for fun… Favorite interview question?
I asked a few of the recruiters to throw in their favorite question to really get to understand a candidate in the initial meeting:
“Tell me your story” (“this one really helps get a sense of the candidate’s personality, their goals and key areas to dive deeper on” – Chett Garcia, Riviera)
"What is the most ambitious goal/product you set out to achieve that you accomplished in a quarter or less and how?" (this is a great question to assess a candidate’s “startup readiness” – Chett Garcia, Riviera)
Give me an example of how one of your personal values has impacted your work – (Andre Blackman, Onboard Health)
“Of all the people you have managed, who are you the most proud of and why?” – (Tom Keefe, Oxeon)
“If you had all the financing that you needed to start a company in healthcare from scratch, and didn’t have to worry about personal finances, what healthcare problem would your NewCo solve?” - (Timothy Gordon, Aequitas Partners)
It may not seem like it, but it’s a great time to start and build a company. With valuations and funding rounds finally coming down to earth, the best companies will stand out and have an easier time hiring great talent. Moreover, there’s a huge interest in our sector and it’s just the beginning. I regularly receive emails from smart and talented people from other industries, or more traditional health care, who want to work in digital health.
So there’s lots to feel optimistic about on the hiring and talent front, even in this down market!
That’s it for this month’s edition. I hope you all found it helpful. And as always, please reach out anytime with questions or ideas of your own. I’m also all ears for any favorite interview questions. I’m reachable on Twitter @chrissyfarr.
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