August 23, 2022

Hirewell Data Insights: Q3 2022

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Stocks down. Inflation up. Unemployment down.

Not to mention layoff chatter at an all time high…with actual layoff data at an all time low.

So what the hell is going on?

Matt Massucci and James Hornick shed a little more light on the current contradictory market by opening up their books in “Hirewell Data Insights: Hiring Trends Q3 2022″

Episode Transcript

All right everybody, welcome to the Talent Insights podcast. Another special edition, Hirewell data insights, hiring trends for Q3 2022, which of course is always the Q2 data, brought to you by Hirewell and Sourcewell. Joining me once again, our fearless leader, Hirewell CEO, Matt Masssucci. Hi James. Thanks for having me.

Oh, it’s always a pleasure. Yeah, so how are things, I guess? How’s the market looking at this point? Yeah, it’s a million dollar question, right. I know trying to film this we’re a little, even later than usual with the summer vacations and whatnot, doing a Q2 recap mid August is not necessarily ideal.

I was out last week. You’re going to be out next week. So wanted to kind of squeeze this one in and quite frankly, a lot of the stuff is, you know, things you and I have both been talking about in different platforms. I like to think doing this as a quarterly recap, we’ll hopefully draw just tons of, you know, tons of viewers.

But yeah. I mean, we’ve seen a lot. Like just to kind of recap, sort of like the macro economic outlook for Q2, it was an ugly quarter of the stock market, right. It was S and P down 16%. Worst quarter since Q1 2020, which obviously, the height of COVID went down 20%.

But prior to that, that was the worst quarter in 50 years. We said we’re on inflation 9.1%. And you know, for those of us who spend a little bit too much time on LinkedIn, layoff announcements were all anybody wanted to talk about. So some scary times. Jeff and I had to go as far as make a 10 Minute Talent Rant on like layoff posting his fear porn at this point,

just the amount of like sheer volume people talking about it. And I guess that was the thing too, that I want to get across is like looking at the actual data and I didn’t believe this when it first came out. I’ve talked about this a few times. Looking at the numbers as straight from the government, 2022 actually has the least amount of layoffs on record going back to 2000.

And that’s because like manufacturing companies, food manufacturing, supply chain, real, like all these places are, they haven’t been laying off. It’s just the tech firms that everyone’s familiar with is finally getting hit for the first time ever. And that’s not to poo poo anybody. Don’t mean to come across as insensitive if you’ve been let go or whatnot, but we’ll do what we can to help. But it’s just that it’s very asymmetric in terms of the amount of attention it’s got versus what it’s been compared to like normal times in the entire economy.

The one thing I did want to kind of talk about, which we kind of hit into a few times probably already is that like recruiters are- I don’t want to say unfairly, but I guess it is unfairly. Like taking the actual numbers, if you take the layoffs.fyi data, which if you haven’t checked that out, it’s pretty cool.

It’s where companies that do layoffs a lot of times put up the list of the people from the company had to let go so that they can find like their next gig more easily. Recruiters are basically twice as likely more to get cut from a layoff than anyone in tech or any other group. And a lot of that’s because when you think about it, recruiters are the only group that your job requires ongoing hiring.

So a company can be profitable and doing well with a flat head count and everyone who works in tech and sales and marketing’s fine, but when you’re in recruiting and there’s no new roles opening up, like what’s your purpose, you know? And we could go on a completely different tangent. There’s a lot of things that recruiters could be doing, but in that mindset of a lot of companies that just maybe aren’t as forward thinking strategic, they’re just like, eh, get rid of them.

Well, yeah. And I know again, at Hirewell have been beating that drum a lot over the last couple weeks. I hate to say we saw it coming, but unfortunately we kind of saw it coming. Yeah. We have an HR recruiting practice that has been just absolutely slammed over the past year.

You know, we saw the rise in salaries, for our loyal followers who look at this every quarter, you know, we saw going back to Q1 2020, the average salary for a recruiter we placed was around 85K. That peaked in Q4 of last year at 117K and there were outliers to that- or not even outliers.

I mean it was not uncommon for senior recruiters, especially a tech focus to be making 150, 160, $170,000. And again, I know you and Jeff have ranted a little bit about this, but the absolute reticence of CEOs of funded tech companies to do anything but hire full-time recruiters, not imagining that the hiring could ever slow, hopefully it’ll change over these next couple cycles. And when companies can realize, hey, not everybody needs to be full time. We can consider consultants to help manage hiring spikes. Again, different conversation for a different time. I know you and Jeff have hit on this a few times, but it’s all part of the problem. But again, back to kind of what we’re seeing, there’s heavy layoffs for recruiters in particular, but then you look at these jobs numbers. I posted an article that went out last week or I guess earlier this week about, you know, we need to stop being shocked when job numbers come higher expected,

right? I know you did something where the June numbers gained 372 jobs and July was even bigger. I think it was 570. And there’s a variety of things for it. What scares me a bit is the fed seems to have started to turn their eye towards unemployment and salary inflation is what they need to stamp out.

And the premise of what we’ve been publishing lately is, you know, it’s not a demand- of course raising rates is going to- it’s going to kill demand. Of course that’s- you know anybody who’s studied economics, it eventually will cut off demand, but that’s not the problem in the labor markets right now.

It’s a lack of supply and there’s just not enough people. The labor participation rates at an all time low, or at least not all time, but a 50 year low at 62%. You know, I think it’d been as high as 68%. And immigration policies have changed and there’s just, there’s not enough workers out there.

That’s not going to change anytime soon because we had the largest generation in our country that’s basically at the retirement age. So the only- 10,000 baby boomers a day are retiring and 20% of them own businesses. That’s another tangent entirely, but it’s just crazy, so.

Yeah. So long story short, it’s crazy times. Q2, I was interested in looking back the numbers because I, with all this going on, what the heck did we see? And so we pulled the numbers and they’re interesting if you want to kind lead off as sort of what we saw in general?

Yeah. So I’ll read through your notes if that makes- to go through this. Perm starts were flat from Q1 to Q2, which I was very pleased by because I thought- I think everyone thought they were going to go down. So the fact that perm hiring hasn’t really changed was like really good to see.

New job orders were down a bit. So I think that was internally when we’re, I don’t think anyone was freaking out, but when you see your job orders and clients coming to you with less job openings, like you start to, you start to worry. But the fact that, that didn’t really affect the amount of actual starts we had and the actual like hires, like it was good.

I guess I will commit. I don’t know if it’ll be Q4, we’ll say Q1 next year. One of the big projects I’m working on internally is actually getting better data sources for kind of our sales initiatives, both inbound and resources and whatnot. So we should have better data around this in the future. But I can say that like our inbound and outbound response rates had dropped from Q1 to Q2.

So like the net new number of clients we were seeing or net new interest we were seeing was down a noticeable amount. I commit to getting a better number on these kind of things in the future. But again, it didn’t really make any difference in terms of our actual like revenues and hiring

we did. So the amount of companies out there that we work with that were still hiring, going full bore, you know, pretty much pretty consistent. Yeah. Yeah. Agreed. And then in terms of like the biggest change we saw from Q1 and Q2, and actually I’ll preface this- using Q1 of 2022 as any sort of barometer is pretty nuts.

I mean, the growth we’ve seen quarter over quarter in hiring has been just astounding and I know it’s not just us. Anybody I talk to in the recruiting and talent acquisition space is converted. I mean, it’s just, we’re at all time high. So it just was not sustainable to keep growing at that rate.

So as you mentioned, flat was pleasing to see. But where we did see a dip was the total number of hires. And just for context, we got 120 recruiters kind of nationwide and our practices did 470 hires in Q1. That did dip to 420 in Q2.

And that entire dip was within our contract and staffing and basically project based practice. Again, it’s one of those things in hindsight, it makes perfect sense. Anybody who’s done this business for a long time, like the idea of contract and contingent labor, it’s a leading indicator on both sides of economic turbulance.

So going into some challenging times companies are going to reduce their reliance on contractors. It’s an easy thing to cut that first. And then the next cut is unfortunately, obviously full-time employees. But you know what, it’s also something where it becomes the first sign of things picking up. And again, going into Q2 it was frankly hard to find people open to contract work with 3.5% unemployment. It’s super hard to find people who are open to project based work. We have started to see an increase- I know it’s technically Q3, but in July we saw a rise in the number of contracts starts, but there are still projects wrapping up.

So there’s a lot of churn there and that’s going to be something interesting to watch. And then, when we break out kind of the two areas we love to talk about are recruiters and then engineers. Those are kind of the two areas sort of one in one a that we do the most hiring for.

I’ll touch on recruiters first and we’re seeing some interesting numbers there. Again, Q2 the number of hires for full-time recruiters was flat from Q1, which again, was fairly promising to see because I thought we’d see more of a dip there. But again, where we really saw the big change was the demand for contract recruiters or project based recruiters.

You know, that’s what our HR practice does. Finding people typically for kind of midsize and large organizations who need to augment their existing staff and want to bring on a contractor. That dropped significantly. Again, I think I felt by 90%, which is not surprising.

It’s sort of what we’d assume where if you’re hiring is going to slow down, clearly you stop bringing on contract recruiters. Yeah. Salaries and the two things we always track, as you were saying, recruiters and engineering. So recruiters is interesting. So back in previous year, so the beginning of 2021, I think the average salary we were looking at that point in time was like 86K.

And then that went up to like 117K in Q4. So it was like almost right around 30% year over year increase or whatever. And then Q1 was 109K. So it definitely dipped a bit from that peak. And then Q2 was 105K. So recruiter salaries are going down slowly. I think Q1 to Q2 wasn’t a significant difference.

And these are all levels, all types of recruiters. You know what I mean? We’re not cherry picking like one kind of specific vertical. But perhaps more sustainable? Like it’s still a pretty big increase over where it was a year before that, you know what I mean? Going from like the mid eighties to just over a hundred still, but that has happened.

There has been a little bit of a kind of tail off in recruitment salaries. Yeah. And again, not terribly shocking just with sort of what’s happening in the world- the need to overpay. Because that’s what was happening is there were just, there were no- it was hard to find good recruiters and you have to pay more to attract them.

Then the other side of the spectrum was engineering. It’s still hot and that was sort of, I wasn’t sure what to expect there because you hear Apple slimming hiring plans, Facebook or Meta whatever calling them these days, did the same thing where these places were just gobbling up every possible engineer they could.

We saw kind of same number of hiring Q1 to Q2 in terms of engineers. But interesting things as we saw salaries continue to go up there. So the average salary for an engineering hiring Q1 was 135K. We saw it go to 150,000 in Q2. Again, that’s roughly a sample size of whatever, a hundred plus engineers.

So it’s not massive but it’s large enough to see that those numbers are continuing to go up. And I’m curious if that’s sustainable. Feels like that’s going to be sort of something that’ll flatten or maybe dip a little bit because there’s just, it’s a lot of money. It is. I mean, I was having conversation with a CIO of a fairly well known company before I even got on this call.

And like he was hoping I had better news for him. You know? He’s trying to hire more devs, but he’s running into the same things. And I think that when it comes to tech hiring, it’s just nothing surprises me with the- we could see this go up for the next six quarters.

Wouldn’t surprise me at all, but who knows? Maybe someday there will be a correction. Yeah. And what has been interesting there is the diversity of the places hiring. Again, and we’ve seen the companies who just really struggle to hire engineers, the financial services firms, the insurance companies, manufacturing companies at legacy, you know, organizations that just could not compete with

again, the Googles, the Apples, the Netflix of the world, now able to bring on people. And that’s why we’ve seen that, that demand stay consistent because there’s just, there’s been such a shortage that it’s just companies that couldn’t do it are now able to. And it’s definitely their time to shine.

Yeah. All right. Why don’t you wrap this up here? I know I’ve got some announcements and stuff that you want to get into. Yeah. Yeah. So again, looking back at like what we’ve done in Q2, I guess it’s kind of been a lot, right. A year ago we took investment from Prytek that coincide kind of first ever acquisition, formally ICV, now Sourcewell.

Our internal team’s been using it. We’ve seen a lot of synergies and driving a lot of revenue of our internal team between using Sourcewell. I know you’ve been heavily involved in getting a beta program where our client’s been able to use the tool themselves for their internal teams to hire tech folks. Yeah.

So quick announcement to anyone out there. If you’re still interested in potentially doing a beta trial Sourcewell, we’re still opening that up. We have a lot of kind of product updates coming in the next, hopefully the next few weeks here. So some pretty big upgrades there. But the other kind of big part too is that we are now

using this- we’ve always used this ourselves. We’re using this in conjunction with our OnDemand recruiting division- which if you’re not familiar, that’s the group that can do things on a flat rate. Someone’s fully dedicated to you. These are people that are previously have worked in sourcing your recruiting capacities internally at organizations for set durations, whenever you have spikes. Because we’re able to be more efficient by kind of pairing that service with actually using a far more efficient sourcing tool,

we’re going to be doing things on a more fractional basis. So maybe you don’t need a full time sourcer. You still need someone who can kind of step in and get some work done to kind of help out your team. Let me know. That’s something we can totally help with. Happy to have a conversation with you. Yeah. And I know you’re going to be putting out some content on this over the next- I know you did a little bit today and some over the next couple weeks. But the fact is sourcing’s a huge pain in the butt.

It’s super time intensive. It’s labor intensive. Recruiters don’t like it. And we see inefficiencies there as being kind of the next step in how we can really start to- or continue to disrupt the recruiting TA space. We’re excited about that. But back to the acquisition front- so again, Sourcewell is the first thing we’d done.

And then effectively in Q2, we did two acquisitions or two investments. So at first was Rainmakers. We acquired them, I guess it was technically the end of Q1 but we’ve been integrating them, seeing a lot of exciting stuff happening and work alongside of our sales recruiting team.

But then the next big deal we did was an investment within Triton executives. So it’s a great organization based on the UK, executive search firm. But what we love about them is they take kind of a similar like-minded approach we have into helping companies from a long term perspective.

They’ve got an offering they call exec RPO, which we think is phenomenal. It’s our version of Managed recruiting, but it’s at the executive level. So they’re able to help companies build out entire management teams. They have a couple large clients where they’ll conduct upward of almost a hundred Executive level.

So that can be senior director and above hires at a more manageable price point high level, you know, high touch. But again, we’re super excited about that and we’ve started to do a little bit with the integration with how we all can work together. And I think that’s really- it kind of completes everything we’re looking at.

You make fun of me for using the term talent ecosystem, but that’s what we’re trying to build is this, and I’ll come up with a better term with that.

Don’t worry. But everything from helping companies with executive search, Hirewell has always been great at both high level roles as well as kind of the volume opportunities, but then also the self-service technology. And again, that’s what we think the future is. So we’re excited about it.

And I think the rockiness of the market, while it’s challenging, I think it’s going to open company’s eyes that there’s a better way out there. And that’s what we’re looking to do. Yeah, 2010 called, it wants it’s ecosystem buzzword back. But it’s all true. The other thing too, I think you kind of left out here is that, you know, TritonExec and they’re being based in the UK, they do a lot of work in UK, Europe, AsiaPac, they have a office in India. So really we’re very much a worldwide firm now.

We’re also expanding the rest of our services. So if you do have other needs in other areas, not just in the US base, we’re able to help now. Plus Matt’s going to pay for me to go to London a few times to visit the team over there. So on his dime, can’t wait. I’m excited. Yeah, no, obviously I left out the key part.

We are now global 200 recruiters across four continents. Sorry, I lose track of how many continents, but a bunch. Yeah, it’s exciting. I have booked my first trip over there, so we’ll see if you can make it or not. We’ll stay tuned. All right. Well, everyone out there,

yeah. Thanks for tuning in the Talent Insights podcast. Part of the Talent Insights series, which is always available for replay on talentinsights.hirewell.com as well as YouTube, Apple podcast, Google podcast, Spotify and Amazon. Matt, thanks again as always. Everyone out there, we’ll see you soon. Thanks James. Bye.

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