5 ways startups can leverage tech layoffs to attract top talent

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The views expressed by Entrepreneur contributors are their own.

The initial wave of tech layoffs grabbed global headlines with a sense of shock and awe, and more tech workers were laid off in 2022 than in 2020 and 2021 combined, according to Nerdwallet. While big tech itself has fired unprecedented numbers in a very short span of time and continues to navigate various economic headwinds, the broader tech industry continues to focus on innovation and strategic growth.

These signals do not mean that the overall employment economy is bad nor do they reflect the broader talent market. According to Zip Recruiter, 37% of those laid off in the tech industry found a new job within one month and 79% found a new job within three months, underscoring the many opportunities available. Additionally, dropout rates remain the highest in over 20 years, and unemployment sits at a steady 3.4%-3.7%, an incredibly low range. These tech employees are also looking into other industries CNBC notes that many other industries like healthcare, education and government are seeing an unprecedented level of interest from top tech talent. Similarly, small and mid-cap technology companies are experiencing a newfound popularity.

Related: Why companies need to leverage outsourced development teams to weather economic downturns and layoffs

The best employees who suddenly find themselves unemployed can still remain in the driver’s seat. The talent wars may be less drastic than they were a year ago, but they still exist. This creates a huge opportunity for early growth companies to reflect on recent events and look within their own culture to ensure they are best positioned to attract some of this talent. The ability of startups to hire and retain these resources could be a key determinant of future success. Still, it’s not a done deal.

Early stage companies are different from most other companies in the market in that they have the flexibility to rapidly pivot and innovate their culture. To attract and retain these freshly-available (and incredibly smart) opportunity-seeking talent, startups need to implement a number of key practices and procedures that will allow them to stand out from the crowd.

Here are five strategies they can consider to position themselves for sustained human capital success:

1. Embrace hybrid and remote work environments

Offer hybrid and remote working flexibility options. Not only will this provide a broader geographic base from which to hire, but it will actually encourage diversity in the workplace. As Aki Cho points out in his article “The Reason Bosses are Freaked out by Remote Work,” hybrid and remote work environments will cater to a more ethnically and gender diverse workforce.

2. Create a collaborative and flexible co-working space

Early-stage companies are having to tear down the walls that once surrounded isolated offices. The office must become a place that employees want to visit rather than have to visit. Startups can rethink the purpose of the office, designing with collaborative structures and making the furniture inspiring and welcoming. Plus, there’s the opportunity to extend opening hours, allowing both early risers and night owls to have somewhere to operate during the time period they’re naturally wired to perform at their best.

Related: Your tech employees are your most powerful reputation tool as your company recruits

3. Offer liberal stock packages and clearly define vesting schedules

Most employees of large tech companies own a very small piece of a very large pie. By joining a startup, they now have the opportunity to own a significant part of their company’s success. Offer generous stock packages, encouraging employees to not only join feeling like co-founders, but also find a long-term commitment to success. Clearly articulate your company’s maturation schedule and communicate value through frequent evaluation exercises. Extend refills when goals are met and the business meets clearly defined and well-communicated metrics.

4. Create and communicate vision, mission and values ​​that represent something different

Early stage companies have an opportunity to stand out from the big technology pack. Create a vision, mission and set of values ​​that represent clarity, aspiration and inclusiveness. Develop a clear communication plan and incorporate it into employee hiring, onboarding, and retention materials. Stories of fired employees attest to feeling anonymous, neglected and undervalued. A clear communication plan will serve as the first step in demonstrating that this time will be different.

5. Be proactive in hiring

Many tech companies have experienced massive growth during the pandemic. According to CNN Business, some grew as much as 100%, in 2019-2022 alone. As these same companies are now reducing their workforces by record numbers, those being laid off are concluding that their hiring was based on reactive, inadequately weighted growth. Many feel like they don’t matter. Early-stage companies can tell a different story by clearly defining the roles they are hiring for, implementing a reasonable company-wide hiring plan, and holding themselves accountable for the long-term retention of those they hire.

As the tech layoff trend continues, next-generation leaders are realizing that this time is more than transactional. Affected employees are reflecting on their experiences and reframing their definitions of a meaningful career. It can be argued that startups are best placed to tackle this new north star; they are nimble, collaborative, and able to present the most ownership-oriented reward structure. With intentional planning, focus, and ongoing championship, early stage leaders can leverage this unique hiring opportunity to build world-class teams that lay the foundation for lasting success.

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