November 2, 2022

Hirewell Data Insights: Hiring Trends Q4 2022


Episode Highlights

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The hiring market may be down but it certainly isn’t dead. Some industries cooled while others are still piping hot.

And in-demand positions are changing too. Sales down, marketing up. TA down, HR up.

They don’t know what the Fed’s going to do next, but Matt Massucci and James Hornick covered the real numbers Hirewell’s seeing to understand how the inflation and rising interest rates have affected the hiring market so far in “Hirewell Data Insights: Hiring Trends Q4 2022″.

Episode Transcript

Alright everybody, welcome to the Talent Insights Podcast special edition, the Hirewell Data Insights, Hiring Trends for Q4 2022. Which all you loyal followers know are going over Q3 data, brought to you by Hirewell and Sourcewell. Joining me is man of many words or few words depending on the day,

CEO of Hirewell, Matt Massucci. Hey James, thanks for having me. Yeah. Came up with that one right now. I can’t tell if this is a many words day or a no words day, but we’ll see. You know I never can tell with you. Depends on the topic. All right. So we’re going to go over the Hirewell data insights for the last quarter.

So we’ve got quite a few new takes. I think it’s, I felt like the last few shows were just a bit repetitive because like things kept going up and maybe the last show we started to see things plateau. But we definitely saw some new things this time. So why don’t you kick us off here? What do we kind of see now?

Yeah, agreed. We first started doing this, what probably like a year and a half ago. I think we have done six or seven. And yes, it was kind of a straight line up. Everything was just hiring. People are going crazy. When we last talked, I think we filmed the last one, it was like a Q2 recap.

I think we filmed it kind of early August. We can officially say that hiring peaked in Q2. I think May is sort of what we saw it. This is kind of like the Fed announcing a recession six months after it’s already, we’ve been in one and everybody knows it. So it’s kind of the master of the obvious.

But yes, hiring did peak in Q2. May was kind of the top of the market. We definitely saw softness in Q3. And kind of the two, sort of two key things we saw happen, we’ve got this, our OnDemand recruiting practice made up of outsourced recruiters. It’s kind of a real bellwether of kind of what’s happening in hiring.

And so we really saw like a slowdown there in June and July, interestingly. So it did rebound kind of shortly after, but I think that was sort of the first wave when companies started to freak out was saying, “Oh gosh, what’s happening?” They’ve paused hiring clearly if you have an outsource engagement.

The beauty of an outsource engagement is you can potentially pause it. And that’s one of the things we play up to clients and sure enough they did. But we ‘ve seen that start to rebound a little bit. The other thing we saw is just kind of on our search practice.

We saw a decrease in openings back in June and July. It was roughly a 30% drop. But the time, some of it felt seasonal, right? Summer can be a little bit of a slow time in hiring and combining that summer slow down with kind of the uncertainty and without a doubt there’s a factor to it.

But again, I think the interesting thing on both is there was- while there’s like this 30% decline in the number of openings that we saw, we did see a rebound in August, September, and in October. They’re still down from where they were at the first five months a year but it’s probably down 10 to 12%.

So that’s kind of where I’d say it’s at is, things are not at their peak. But kind of 10 to 12% down seems to be kind of the average we’re seeing. I have a bit of a theory on this too, but we’ll save that for the end because I actually brought in some sales data, which I promised everyone last time, even though that project is still getting off the ground.

But continue. I don’t want to throw you off your game. Yeah, yeah. No, fair enough. And yeah, there is. We’ve got all kinds of theories. The other big takeaway was, being as diversified as we are and having affect like six practices, some groups still were really strong. Some were hit a little bit harder. I think the most interesting one, they’re kind of a microcosm sort of for what happened in the world, but also kinda where we see right now is our sales recruiting practice. So they’d had a monster first half of the year and really saw kind of a little bit of rockiness in that July, August period.

It’s pretty easy to attribute kind of why they dipped and then kind of where we saw the rebound from. The nature of our client base it’s very diverse, but there’s a pretty heavy emphasis on tech SaaS, kind of these high growth series A through C organizations.

And that was an area that was really kind of impacted the most. The dip they saw was kinda the early part of the quarter and where they saw a really big uptick was in more non-traditional or very non tech areas, you know, logistics, supply chain, manufacturing, anybody looking to hire sales or business development folks in those areas as really kind of offset very much of that.

So it’s just, it’s a little bit of a rotation and kind of what companies are hiring. But it’s definitely kind of fascinating to watch. I was having a conversation on this exact topic like a week ago with another recruiter who works entirely in tech and doesn’t, he’s not diversified at all in other areas.

And his takeaway was like a series A firm is going to be doing better than series B and C and is that what I’m seeing? I’m like, I don’t know man. Like we’ve got other things- with the other parts of the economy are doing so well, like it’s almost silly to kind of split it when you’re still talking about kind of tech firms. But yeah. It’s the supply chain function here has been still growing like gangbusters and the fact that that’s- people have to be reminded that there are other industries out there and people sell other things besides software.

You know what I mean? So yeah. It is interesting you say that. And I think it is partially the size. I think it’s also kind of where they’re at in their runway, right? And so I think a lot of these later stage companies, like they’re trying to go public and the calculus has changed for them, right?

Where like all of a sudden the stock market cares about your earnings, they care about a path to profitability, and these places didn’t have it. They overhired and they really had no sort of need to kind of be able to actually make money and then whoops, things change. And so I think there’s some of that.

I think where we’ve seen it is, it’s just, it’s really kind of where they’re at in their funding cycle. Like sure, if they’re already profitable, then great. They’re doing well. Or if they did recently did a raise and they’ve got plenty of money in the bank, that’s a really prime opportunity for that organization to hire and take advantage of the talent out there because you’re just, you’re not competing with the big players, right?

There’s no doubt. Like in Apple’s earnings yesterday, they- I forget how they put it. Like they’re not doing a hiring freeze but they’re being very deliberate about their hiring. And I think that’s sort of what we see kind of across the board, especially these bigger tech companies, so. Yeah, I guess the next piece is our marketing function.

Interestingly enough like that, in past kind of slowdowns has sometimes been hit harder, but we actually saw that group up quite a bit from Q2 to Q3. I don’t know if it’s just a fearless leader, Dawn, who, you know her, she’s able to kind of navigate waters but it- it’s either Dawn Maragos being the greatest recruiter ever, which she probably is, or it’s also maybe the rest of the world’s getting a little smarter about this whole growth thing and realizing that like modern marketing and demand gen

is better bang for your buck than hiring a giant sales team if you’re trying to run profitable business development. I don’t know. Could be both, so. Yeah, yeah. No, absolutely. The concept of 50 BDRs or kind of a well-oiled marketing machine. Yeah. I think that’s, it’s an interesting take and it’s hard to argue.

Yeah. So then next, if we think about our human resources or talent acquisition practice, again, if you had told me there’d be a slow down, that would be the area I’d be most worried about. And it’s interesting because we’ve talked endlessly about the trend in recruiter hiring, how for the better part

of 18 months it was just on fire. I think last year Hirewell placed a hundred corporate recruiters. We saw salaries spike 37% as the year went on. The first half of the year was still gangbusters and it dropped. That was probably the single biggest area where the number of recruiter hires we did

dropped 70% in Q3. The interesting thing is like their practice was, their overall kind of slow down was that same number I’ve talked about at kind of 10, 12% because they’ve really seen an uptick in HR leadership roles, process roles, HR business partners. Again, it’s an interesting trend.

Yeah, I talked about this on our- quick plug, our Hirewell weekly audio chat for everyone out there. So we’ll see if this is still going on in another quarter. But LinkedIn now has the clubhouse function. So we’ve been doing it once a week on Fridays, usually around 10:30 am CT while we grab one of the leaders in the organization to kind of talk and then people can join us.

So we had a lot of kind of questions and answer and stuff like that. So Rosanna, Rosanna Krug, who runs our HR practice, she joined us and was talking about this- mentioned out generalists are really kind of the biggest in-demand area followed by total rewards people. Which is kind of a huge flip flop, as you mentioned from years past where it’s always been recruiters.

Recruiters has typically always been the number two most filled role we’ve done at Hirewell behind like software developers. I mean, who knows. Maybe that changes, still still the case this year. And it’s all those like manufacturing companies, supply chain companies, other more traditional industries that need,

they’re building out new offices, new facilities, need to have HR leadership and HR generalists kind of running those facilities, which is, it’s a good shock. Surprising, but it’s also positive to see that these kind of like new positions are, or these are the new positions people are hiring for.

And that HR is still kind of a growing area in some respects, so. Yeah, it’s good to see. And I think the other- that group did multiple CHRO searches in that quarter, which is, we’ve always done it. But it was a higher proportion than in the past, which was exciting to see.

I mean, obviously those are the ones we love working on, but it also shows that companies seeing the value of people and talent and getting kind of their right leader to help set the direction going forward. It’s just more important now than ever, which is not shocking. So the next area is, I talked a little bit before about our OnDemand recruiting practice, right? RPO is what other places call it. We hate the term RPOs. That’s why we don’t use it. But we call it OnDemand recruiting. And so outsourced recruiting, again, it can be giving us the entire function,

it can be utilizing our recruiters in an embedded model where they operate kind of as an extension of their recruiting department. But as I mentioned, we definitely saw- in July I was definitely concerned. We saw a drop and I’m like, “Oh shoot. What’s going to happen?”

But there’s been a pretty steady stream of projects since. I think once companies realize, hey, we still need to hire, we may not know how long this is going to go, so it makes sense to use more of this fractional or sort of OnDemand model to manage hiring spikes.

I think they’re all listening to the 10 Minute Talent Rant is what’s happening. All the talks we’ve had about not just hiring and firing recruiters. If you have a spike, why don’t you just find a partner for it who knows how to deliver. So it’s catching on. I know you tune in. Maybe they are. It’s exciting

And then I guess the last two things, our real estate practice has been- it’s not in the show notes. I’m going to go little ad lib here, but our real estate practice has been really strong too. And that was an area where I thought would- I wasn’t sure what to expect there.

They tend to operate in the Texas, Florida, Sunbelt, a mixture of multi-family. Not doing a lot of office, but multi-family, self storage, kind of variety of things. That is kind of still going, kind of

guns are blazing. Lots, lots happening there. So that’s been an interesting one too. And then lastly is our tech practice, Obviously that’s the biggest function in Hirewell. It’s kind of what we’ve done for 20 years and I think it’s always like the best- it’s always what I pay the most attention to because I think it’s what we see the most of and what we kind of sort of look at and feel.

And so again, like I keep talking about that kind of 10 to 12% drop that we saw. That’s pretty much what it looked like in our tech practice. But again, when we talk tech, that’s digital, product roles, kind of functional roles, plus engineering. So again, we saw that 12% dip there, but then when you just strip out just down to the engineering hiring, it was barely down at all,

right? I think it was down four or 5% in terms of the number of engineers that we saw hired. I think it was where we pretty consistently place 50 to 60 a quarter of software engineers. And again, it was down a little bit from the previous one. But not tremendous. But another interesting thing that- we also do track the average salary for those folks.

And again, this isn’t saying the average salary for software engineers, but is the average salary for all the people we place. And for the first time in I think six quarters, we did see a decrease there going from the average engineer salary from 150K to 139K. So interesting. And kind of a, I think a sign that like there’s not this upward race in kind of- race to the top and what you have to pay in total comp to bring on engineers.

Yeah. Never thought I’d see the day. Thought it was nothing but straight up. Anyways. So let me transition a minute here. Since the last show, those of you who tune into all these shows probably remember something from three months ago, like it’s yesterday. I was talking about like I can get more sales focused data to talk about kind of what we’re kind of bringing in.

Of course, I didn’t expect our data provider to cut off recruitment services and we have to kind of redo the whole thing and redoing a whole revs plan. But we’re in the middle of that and we actually, we found a better one. So it actually worked out pretty well. But it’s not all set up yet. But I didn’t want to come empty handed to this show, so. I guess further answering the question of kind of like what has demand looked like from a hiring perspective and I look at agency sales- I think as a function of a couple when companies really struggle or there’s a couple reasons why companies might pull back on how much they spend on agencies.

One might be like, they’re not hiring as much. But the other one might be like, they’re really tight on money and they’re not going to start using agencies until they know they have to. So there’s maybe some reluctance, but. I’ve been tracking the amount of net new hire- net new clients we have per quarter.

And when I say clients, I mean actual companies that pay us not just sign a contingent agreement and they’re not actually clients. These are actual, you know, whatever. There has been a reduction in terms of net new but I think, I honestly- like last Q3 to Q1 or to Q1 this year was like the high water mark. That was where like I think we were at the absolute peak.

So I don’t know if it’s even fair to see it as a pullback. But Q3 2022 compared to Q3 2021, about 17% less net new clients we had. And then comparing Q3 to this past Q3 to Q1, which I think the higher watermark was about 25% less. So there’s has been kind of in terms of companies hiring or companies coming to us when they need to hire, it’s definitely been down a bit. It was fairly flat between Q2 and Q3. So this isn’t like really a new trend. But the other thing that was interesting on the flip side, is that I’ve also looked at our metric- I don’t know if I want to throw that exact dollar amount out there, but we have a metric which we consider large clients, like a large engagement, what that looks like.

Through three quarters this year, just Q1, Q2, Q3, so we’re currently in Q4. It’s up 44% versus all four quarters of last year. So while, yes we had, I mean Q1 was huge. But even still while things are kind of tapered down, it does seem like there are more companies doing larger initiat- like there’s still companies doing large initiatives, potentially more so than last year.

So my theory is that like there are still companies doing lots of hiring when you do lots of things, which is why we haven’t seen a complete like slowdown. But the companies that have one or two hires, smaller engagements, those are the ones that either kind of pulled things back or trying to do things more internally, at least for the time being.

Yeah. And I don’t do as many sales or client calls as you, but I do some here and there and especially the last quarter, like it’s the same question. Like I’m oftentimes talking to like a senior business leader who maybe doesn’t necessarily do a lot of hiring or they’re a little bit removed from it, and they always ask the same question, like, “How’s the market?

What are you seeing?” And it kind of sums it up though. The one I was actually on just earlier today is that exact conversation. Like listen, there’s not- you can’t post a job if these guys, we’re hiring software engineers, need to hire 10 or 12 software engineers. You can’t post a job and just expect- you’re not going to get hundreds of great resumes.

There’s just, there’s not a lot of great engineers who are just dying to look right now. The biggest advantage, and I think it sort of kind of goes along the point you’re talking about, is if you are able to hire now, you just have for the first time ever you have an advantage where you’re not competing

with these huge tech companies, with these unlimited budgets and these inflated prices that can just throw so much total comp, someone that you can’t keep up. So where we’ve seen some nice, some nice projects come through have been just more traditional companies, where we’re working with a large financial institution that needs to go through a digital transformation needs to hire 30 40 tech and digital folks.

And it’s a great time for them. So you’ve got a good story to tell. Now if they’re trying to tell it six, nine months ago, it’d be tough because is that what people want to do? But then people realize, “Well, shoot. Like my equity in Meta isn’t what it once was.” And maybe- and I hate to laugh about that, but maybe there are more important things.

Maybe working for a company that actually has real earnings, has a real business, is going to continue to grow and sees the value of technology. Like they’ve got a good story to tell and there’s more and more of those popping up, so. I do- yeah. We always turn this into a stock market conversation. We want to, but I do wonder what’s going to happen to- like for the last couple years, long term incentives and stock options and stuff like that have really carried the way for a lot of organizations to be able to hire.

Just so lucrative is when people see like other people they know who have just made tons of money off the stock, but now it’s the opposite where people have options and all of a sudden it’s worth like half of what it was before. Like what’s the motivation to stay when things kind of take a dive that hard?

Yeah. Well, the thing- like I don’t know when this trend started. It’s been a couple years. But the big tech companies will talk total comp, especially when they’re talking engineers and the total comp for these principal engineers can be 400K, could be 600K. Now granted, that’s a combination of base, bonus, and equity.

And I’m just sort of fascinated like- I appreciate why they do that, because they make it a nice round number and kind of lump all these things together to make it sort of apples, apples to oranges. But how does that work now that the stock’s down 30 to 50%?

Like if it’s grants fine, doesn’t really matter. If it’s options, it sure does. So like it’s just- Yeah. Interesting time. And yeah, like I said, I think it’s for companies who have more traditional businesses. Because listen, it’s not like these places didn’t have folks in technology or maybe they didn’t have enough and they were relying on tech consultants and they were recognizing, “Hey, we can

actually hire full-time talent, bring these folks in and make a difference.” So it’s definitely a big trend we’re seeing. Yeah. And I think like every, you know, we always wrap these things up with what does the future look like? You know, I don’t know. I wish I had it. I wish I had an answer.

I do not. I made the joke, like I was watching CNBC yesterday. I was curious because all the big tech companies did earnings this week, right. And as you said yourself, Meta has went out and like that ends up not even being in Bellwether anymore because everybody’s just unfortunately- Meta is done.

Yeah. It didn’t- when their stock tanked, it had almost no effect at all in the market. And usually when one of the big Fang stocks like tanks or takes off it like has an immediate impact on the future’s market. And no one cares anymore about what happens at Meta. They still care about Apple, they still care about Microsoft and Google and Amazon.

But Meta is the odd man out and I think they’re done. Yeah. And those other four all released and Apple’s were pretty good. Kind of gave a little cautionary guidance and after hours they were initially down like 7%. Amazon’s missed and they were down a bunch. And I’m like, “Oh gosh, today’s going to be a blood bath in the market.”

And then it went up. Probably- I don’t know if it’s the biggest day of the year, but it’s up, it’s close. So, yeah. Personally, I think the market’s been so beat up at this point that it’s just looking to know that all the bad news is out. And when Apple actually made their earnings and their forecast was fine, it was like okay, they’re not falling apart.

So maybe- but I think that we’ve just had so much bad news for so long, everyone’s just waiting for is there another shoe that’s going to drop? And it’s been like two weeks and people realized that- I think there was some other CPI number that came out today that met expectations as opposed to like higher than- or.

So who knows. Yeah. And I think that’s not to go- I don’t know if anyone’s every paying us for our economic insights, but public releasing- they’re probably going to do another rate increase. Again, it just, it drives me nuts. Like they have now put the unemployment rate as like the, or the jobless claims is their latest barometer they’re trying to squash out.

And we’ve talked for months. Like there’s not enough people working. Our immigration policies and Covid all these things have just severely, severely limited the labor participation rate, and it’s a mess. And if you know- that is going to try to squash unemployment, it’s going to do some serious damage.

So hopefully they get a little smarter and just recognize, “All right, yes, inflation’s real and we need to address it. But if we’re trying to like crush the job market, that’s going to be serious.” So stock- yeah. And the thing is like I always make fun of people who try to break the stock market. I don’t know where it’s going to go, but it is- it does relate to the labor market when it gets completely beat up.

Because when everyone has less money, when venture capitalists and PE firms have less money, and companies have less money, they can’t do as much hiring, they can’t do as much raises. You have to do layoffs. So even if these- even if we think it’s hysteria, even if we think it’s oversold, it still has an impact. Which is why I’m always rooting for it to go up because I work in employment, so.

Yep, exactly. It’s pretty simple. Anybody who roots for recession has got way more problems and there’s nothing good about it, so nothing fun. Two old guys who’ve been through a few, so. Alright. So it’s all smooth sailing from here. Well, thanks everyone for tuning in to the Talent Insights Podcast, part of the Talent Insights series, which is always available for replay on as well as YouTube, Apple Podcast, Google Podcast, Spotify, and Amazon.

Everyone out there, thanks for listening. Matt, thanks again for chiming in for this. Glad you’re in a talkative mood today and have a great weekend, everyone. You get three months. Bye

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