Forecasting talent | Rise, created by Barclays

Ell Seder, UK Director at Santa Monica Talent shares his thoughts on the future of work and hiring

How do you see the current situation in light of your previous experiences?

Nothing that’s happened before could possibly prepare us for the situation we’re now in. But in the world of digital talent, some past experiences do come to mind.

I started work during the dot-com bubble and later experienced the credit crunch. In this crisis, I can again see fundamental changes coming that will have a lasting effect. From how we currently work to the end of ‘blitz-scaling’ (where companies grow rapidly with the aim of becoming the first mover at scale^[1]), there’s a big shift coming as we enter a buyer’s market for talent for the first time in a decade.

How does remote working affect the talent market?

An interesting result of this situation could be how it affects where employees of London-based tech startups are located. Rather than focusing on the Greater London talent pool, companies could now realise that employees can come from elsewhere in the UK. It should also give Londoners who’ve built their careers in the capital the freedom to move elsewhere in the country.

How do you think roles will be affected?

We may see more interim, fractional consulting and portfolio careers.

With funding pulled back, it could be difficult for ambitious companies to pay for experienced scale-up executives full time, so offering part-time or interim roles will be more efficient. This will allow people to build portfolio careers, a growing trend long before COVID-19 hit. Earning 100% of your income from one source is a risky way to operate, and interim positions will offer a lifeline for employees and employers alike.

What's your take on furloughing?

In May 2020, 7.5 million UK employees were furloughed^[2]. The question is, how many will actually get their old jobs back? If only 40% to 50% return to work, there will be a catastrophic impact on the employment market. These numbers are changing all the time but our market intelligence suggests many companies will struggle to fill all of their old positions. Legal complications too could arise if firms use furloughing to avoid paying redundancy packages.

The UK Government has extended the furlough scheme, giving companies more time to reflect on whether to retain staff or to downsize and rebuild in 2021.

Companies with a strong sales revenue structure and lean overheads could come out of this crisis relatively unscathed. Meanwhile, businesses with a bloated headcount and large offices will face more pressure. And, perhaps most importantly, FinTech businesses that rely too heavily on Venture Capital funding could be caught short.

And what about salaries?

London has lagged on tech salaries behind San Francisco, New York and Singapore, with flat or stagnated pay for many years. I think the effects of COVID-19 will push down salaries a further 20% to 30% for the next 12 months.

Is this the end of blitz-scaling?

Reid Hoffman and Chris Yeh’s famous book^[3] and scale-up strategy is looking a bit out of date now. It’s very difficult to see how blitz-scaling can work in the short-to-medium term, and growth at all costs before profit isn’t going to work in the post-virus world.

Founders and investors will refocus on selling products for a profit, before growth. It’s probably less about which sectors are most affected, and more about which business models are more successful.

What's your thinking on organisational structures and maybe even upskilling?

It’s musical chairs for Sales, Marketing and HR. Always the first to be scaled back in a downsizing panic, these departments will be stripped down, probably in that order.

Interestingly though, the only option to bounce back quickly will be to aggressively market and sell products. So there will probably be a rush to rehire from competitors, quite possibly on lower salaries, in what will suddenly be a candidate-rich market. Rehiring an HR function will have to happen quickly as it's not easy to screen 1000 CVs per role.

I think this means there will be a really big opportunity for nimble companies to cleverly upskill during 2020.

What about permanent and contract roles?

After a decade-long talent shortage, we’ve now moved into a buyer’s market, with an oversupply of candidates for almost every role.

Interestingly, although software developers won’t find their careers stalling, there may be a large pool of contract developers entering the permanent workforce for the first time. Why? Because although the proposed May 2020 IR35^[4]deadline was put back a year, in preparation most corporates reduced their contract developers in December or January – before the Coronavirus hit. The contract roles have dried up and their only choice might be full-time positions.

This could be great news for smaller FinTechs offering sanctuary with a full-time role. Alternatively, a fixed-term contract with company benefits could be attractive too.

For the ‘A players’, it’s a different matter. How do you attract that top 5%? Maybe real equity conversations will start to take place to attract and keep entrepreneurial, risk-taking talent looking for a long-term project.

References

^[1] https://hbr.org/2016/04/blitzscaling

^[2] https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october

^[3] Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies, HarperCollins, 2018

^[4] Broadly speaking, IR35 is a set of UK tax rules that make sure workers who provide their services through their own limited company pay the same tax as employees.

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Find out more about the author of this article, Ell Seder on LinkedIn.

Santa Monica Talent

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