by Rebecca Fielding
Turnip? Yes, turnip. Not the vegetable but the shape. Healthy, cost effective, sustainable tech organisations (that will generate long term return) are shaped more like pyramids, not turnips. And right now it feels like we’ve got far too many turnips.
In conversation with a CTO client recently he referred this to phenomenon as a diamond rather than a turnip, but for my money that gives it a little too much undeserved ‘shine’!
But why do I say this? And why now?
The business case is clear. Against a backdrop of:
Business strategies that rely on simply poaching experienced engineers from competitors, by offering more money, are not only flawed but also unsustainable. Quite simply we are creating far more roles than we have skilled people to fill them. The way out of this conundrum is to ‘grow your own’.
And whilst this longer-term strategy might not be appealing (or some might argue even necessary) in the immediate start-up phase of building a business, it is a critical factor as you tip into longer-term investment, scale-up, sale, going public or exit strategy conversations around the value of organisations. One of the single biggest risks (valuation wise and operationally) to any tech business is the security of these highly sought-after skills and people.
Moreover, junior/future engineers are not only the key to business security and sustainability in the long term, they can also be more cost effective and efficient in the short term (when hired, coached and managed well).
As economic uncertainty has led to reduced confidence, we are seeing headcount freezes and reductions across the tech sector, particularly in the rapid scale-up space. Notably, this is disproportionately impacting upon future talent pipelines, with internships and conversion to perm roles reducing across the board.
Multiple scale-ups have dramatically scaled back their early careers hiring in response to the climate. In just one employer example based in Berlin they have shifted from 250 interns in January 2022, to 170 now and expect to lose over a further 100 by the end of the year (without converting to permanent roles). Amplify this across the whole sector and we see a gloomy picture for the state of the early careers tech market in 2023, which will lead to a critical skills crunch for everyone over the next 3-5 years.
We are also seeing experienced hire redundancies - Tier mobility and Sellerx just two recent examples - and hiring managers are preferring to use (some might argue perfectly sensibly) their fixed headcount to hire experienced colleagues that can hit the ground running. But now is exactly the time that smart organisations will be making a different call and investing for the future rather than focussing on short term return. Or even more tactically just adjusting the model to resourcing budgets rather than fixed headcounts – thereby encouraging leaders to think about cost efficiencies when hiring.
So what is the call to action?
Tech investors: Must ask questions about the shape of organisations (is it more turnip or pyramid?), internal mobility rates, the sustainability/security of their people, skills and talent pipelines over the next 5-10 years. Only by doing this can you be certain of your investment and the sustainability of what you are buying - I’ve seen tech valuations increase significantly when solid, long-term, future talent pipelines and retention can be evidenced. Otherwise what is to stop another business simply out-pricing you in the future and your investment haemorrhaging talent?
Tech leaders: Can shift from people headcount to budget, even better you can ring fence or set aspirational %s of early careers/junior talent hiring and internal mobility rates. Internal prestige, criterion for progression and reward can be linked to successfully nurturing and bringing through the next generation of talent (a critical and oft overlooked skill that adds enormous value to your business). This will encourage hiring managers to invest for the future, not just base decisions on immediate efficiency and operational delivery.
Tech people experts: Must understand the investor and commercial valuation impacts of investing in the next generation. Future talent programmes are not simply an altruistic ‘nice to do’, employer brand enhancer or community engagement tool – they are critical to the valuation and future success of any tech business. Shifting internal mobility/appointment ratios from 30-40% to 60-70% is possible over a 2-3 year window and can save the business millions in terms of productivity, retention and recruitment fees – people partners need to evidence this impact in commercial terms. Moreover these commercial arguments must be made consistently, ensuring the pipeline for the future is protected and sustained during tougher trading periods, not simply cast aside as an easy cost reduction. People leaders can also create the people development processes, frameworks and tools to make early careers hiring as low maintenance as possible for busy hiring managers. Finally, early careers attraction, hiring and development are niche areas of skills and expertise – you need to ensure you have those skills in your team.
I’m certainly not arguing that all leaders in tech should be people leaders or that senior engineers aren’t business critical. I know experienced, highly capable, senior engineers drive significant value through their expertise and delivery. And indeed the skills and motivation of these talented individuals don’t always sit neatly with people leadership, coaching and nurturing the next generation of talent. There is no good argument for trying to make a square peg fit a round hole and the need for both people leadership and technical pathways through tech organisations is clear (and an entirely different topic). However, those hiring managers with responsibility for developing and nurturing early career hires need to be supported with the right expertise, programmes, tools, reward mechanisms and operational structures that make is easy and attractive to invest in future talent in their teams (otherwise why would they make their life harder?).
I genuinely believe now is the moment for early careers to be a boardroom conversation and commercial valuation consideration/multiplier, in a way that I have rarely seen during my 20+ years. And whilst this is relevant for any organisation, perhaps none more so than tech where competition and demand for skills are far outstripping the existing supply. If we wait another 5 years to elevate this conversation, it may well be too late.
I’d love to hear your thoughts on this. Fiercely disagree or perhaps agree? Different perspective or something to add? Let me know in the comments.