Inside the 2023 Talent Tsunami: Layoffs, Remote Work & More

0:00There's not a lot of increase around why should people come and return back to work. And is it returned to work or returned to office? If it's 47 % that wants something, 53 % have not listed that as something very significant. Or probably at the point now where we need to bring in the new ones. Organizations that can be transparent to say that's just not something we can provide. May actually even retain their critical talent a little bit longer. They're effectively paying for people to be on site. Even though it's more expensive for them to have people on site a lot of times, I'll just say two words Elon Musk The word top talent by the way is also subjective Remote work is a big divisive topic right now In fact, some people think it's the future while others say that the pivot to full blown remote work was quote One of the tech industries worse mistakes How can so many smart people have such different opinions on this topic?

1:00Well, remote work is actually just one of the many facets that come into play when you're trying to attract top talent. And quite frankly, that equation has only gotten more confusing as several trends intersect, whether it be layoffs or emerging technologies like AI. So how can companies navigate this storm and truly attract talent that really matters? And as they try to do this and they make changes to company policies, how can they tell if they're actually moving in the right direction? Let's just use a simple example. Let's say a company changes the policy and several people leave. Now is that unwanted attrition or is that the company culture becoming more aligned?

1:43Today, we have three people from different perspectives joining us to discuss some of these questions. The first is Rob Frawan. He is the co -founder of Key Financial, which is a tool designed to help you enhance engagement, retention, and performance through investing cash bonuses. Our second guest is AJ Thomas, she's an advisor and leadership coach that has led several people and culture teams from startup to enterprise. So you can bet that AJ has a pretty unique perspective on what it means to attract and retain top talent. And then finally we have Hung Lee. Hung is the writer and founder of Recruiting Brain Food, which is actually one of my favorite newsletters.

2:25Alright, I am so excited to dive in. But before we do, I just wanted to share that this episode was actually inspired by some of the unique perks that I had never seen before until I joined A6TZ. That includes a full body health scan that we get from QBIO or five weeks of full firm shutdown. Yes, that's right. Five weeks where the whole firm is shut down. In fact, we're actually on one right now. So if you're hearing my voice, if you're seeing my face on screen, I'm actually on vacation. The real stuff Smith is out of office. All right, let's dive in. As a reminder, the content here is for informational purposes only.

3:02should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16z fund. Please note that A16z and its affiliates may also maintain investments in the company's disgust in this podcast. For more details including a link to our investments, please see A16z .com slash Discoachers.

3:30Okay, so I feel like there are so many trends intersecting right now. There's the macro climate and layoffs. There is a return to office or in some cases people being forced to return to office. There are technology trends like AI. And so I guess just to kick things off with so many things happening at the same time, what are each of you paying attention to? What's really grasping your attention when it comes to this question of who it takes to attract talent in 2023? Yeah, I think you're right to mention all of these trends. I think they call it poly crisis these days, don't they? And I don't think you need to be like any sophisticated academic to be aware of it.

4:11Just being kind of in the washing machine that's been the last three years can tell you enough about sort of how much these trends are sometimes intention, sometimes they're accelerant, sometimes they're suppressants and they're all just moving us around. And the overall sense that most of us have, if we're truly honest with ourselves, is this sense of discompobulation? You know, this sense of, oh, I'm not sure, previous confidence that we had prior to 2019, 2020, I don't think any of us are as confident as we are as we were back then. Because we all know that we're in a world that is in the cost of these huge changes.

4:48And you've mentioned a few already to the geopolitical angle hostile the globalization the cost of living crisis record inflation the huge shift that COVID pushed everyone to remote and now push everyone back. And then if that wasn't enough, you know, only six months ago open a high launch chat GBT completely change everything again. So I think all of us are thinking, okay, it's going to be completely chaotic, it's going to be difficult to predict. It's thinking about how do we kind of build a resilient business against unpredictable change. And I believe it's actually an inflection point for us.

5:25It's an inflection point for those that are thinking about ways to attract talent, thinking about ways to actually even help talent self -select. And I think a lot of that is going to be grounded on what assumptions are we questioning? So with the wave of all of these things that are happening, it can be very easy to kind of mass collide into that and say, okay, all companies need to be doing this now or most companies need to be doing this now. I actually believe that where you want to land should be around what assumptions are right for the organization that you are trying to steer forward. You know, when I think about it from an employees perspective, and by the way, this varies from industry to industry, first, again, I think a lot of times we think about the tech industry only, and many industries are still going through a lot of the pain that, you know, we all saw in, you know, healthcare, transportation, logistics, other areas are still seeing incredible challenges, hiring employees and retaining them.

6:26But, you know, getting back to the key thing, I'm thinking about is how do you create some stability in the system, right? When you have all of these things happening, you know, macroeconomic climate, when you have, you know, AI, creating questions, I think folks are looking for stability more than they were necessarily thinking about a year or two years ago. And from an employer's perspective, that's frankly what they've wanted forever. Given so many things going on, are there any specifics that you're seeing, whether it's and data reports that you're reading, or just anecdotally what you're hearing, like, hung, you have so many readers of your newsletter.

7:01What do people really care about? I think the remote revolution, so to speak, opened a lot of people's eyes on this, and we've got multiple data points to suggest that companies that are operating a remote first policy typically have a significant advantage against companies that do not. And this pertains to, you know, the, if you like, quote unquote, top talent, let's talk about them in terms of the software engineers, the high demand people that we've always been looking through a cruise. I think VMware for instance did a sort of before and after comparison in terms of their time to hire when it comes down to where they doing on -premise hiring pre -big over -period and then they switched to remote hiring and they reduced their time to hire by 100%.

7:43So they went down from basically half the time and in fact not only through speed of processing candidates but also through reduction of assessment load because the logistics simplicity of doing a Zoom call compared to in -person interviews, having to configure everything with the idea that this person may never come on site, suddenly unblocked a lot of sort of other things they felt they had to do. So I think that's still the case. And I still think it is the case that the job seekers would ideally prefer a remote or at least a flexible working environment. And there is a bit of attention at this point where some companies are rolling back the remote policies or at least they're starting to put additional conditions upon it which you can see it's kind of a mission creep back to the office.

8:30But I think companies are trying to do this now maybe because they feel a bit more confident, market has swing away if you like from the candidate control and maybe now the companies are seeing a little bit of an opportunity to claw back some of what they may have always perceived to be an overly commissive physician when it comes down to working mode. Thinking about your question, what trends, what data, what things were saying, what some anecdotal things. Fractional work has hit the knowledge workers. And I think if you think about top talent, you're seeing a lot more folks really wanting to take control of the things that they are working on.

9:06I think there was study and a research that was done that around 65 % of folks would actually choose a job with slightly lower pay if it met working at a company that aligns with their mission or their personal values. And that's specifically true, I think, for the new generation that's getting into the workforce. Right? They want more autonomy, they want more freedom, they want the ability to be able to say this is the stuff that I'm working on, and it is creating impact. There is more of that type of critical thinking that is happening, I think, in the next generation of the workforce. What I'm seeing at least are organizations that can provide ways in which to engage their current workforce to say, okay, what are the things that are truly impactful that you want to lean into?

9:50It's going to be great. But also organizations that can be transparent to say, that's just not something we can provide. May actually even retain their critical talent a little bit longer, at least. And I know that's a little bit different than what you'd normally see like a point, eight point B. But at least what I am seeing is the more transparent the conversations you can have, even in hiring, right? I think years ago was like, come join this company, really awesome benefits. Here are all the things you're going to experience. Here are all the perks. And I think the companies that are going to win and I tend to be a little bit more future oriented on this and also curious.

10:24This is what it means to be at this organization. And here's what you're going to be signing up for. And if you can sign up for that, we're in for a wonderful road ahead. And if you can't sign up for that, we may just be frustrating each other for the first year that you're here until you leave, right? That's right. Those are the magazines that I'm seeing as I think the work force, especially those that are knowledge workers in the admin of AI coming into place and disrupting a lot of that kind of knowledge work. You know, folks are starting to think about more fractional work, side hustles, things they want to lean into that are closer than what they're passionate about and what they want to contribute to.

10:59There's two missing elements to this. One is what's actually in the best interest of the organization as well. Can they get the performance they want? I think the argument is yes, or productivity is great in all these things. But I think some studies are sort of coming out. Meta is sort of saying they notice that people are back at the office three days a week or more effective or if they've already been in the office for a while before they went out on remote versus native remote. because they join the company right during the remote phase. I don't even know if that term has been used, but I think about it from that perspective.

11:36Look, you've given an employee an option that says, hey, would you like to work from home five days a week with the complete option of coming into the office or not? Who's not going to say okay? They're going to say okay. People talk about performance and the productivity of people in the office. The thing, I don't think that is very clear right now unless you all have information on this. is what is the ultimate impact going to be on a trition or attention for people who are native remote or significantly remote now. I think we're too early in this process to know whether those people are still going to feel the connectivity to the organization or whether they're going to feel like they can just leave sooner because they haven't made the personal connections that as strong as they made the personal connections when and they were in the office all the time.

12:26So that's like one body of questions that I have and I think about. The other thing is about all these different perks, what's important to attract, you know, the kind of work source that you want. I remember the old adage that used to go between my parents where my mom would say, she's going to the store, they're having a sale, it's 40 % off, and my father would say, yeah, but it's 60 % off. And, you know, like the fact that There's still cost and expense associated with this stuff. A lot of the histories we get back go, 63 % of employees want that, 47 % of employees want that. We need to think about the reverse of those percentages, which means it's 47 % that wants something, 53 % have not listed that as something very significant.

13:13My personal perspective on this is something we're working on is completely flexible compensation benefits package where basically people can get exactly what they want from a content benefit perspective to you know with sort of employers to size it employees to personalize it because every one of us on this podcast right now is different we all have different experiences we're all going to read different things from our lives and guess what that's all gonna shift three six months from now systems out there should be flexible enough especially in this age of hyper -personalization to allow employees to make decisions today and then make slightly different decisions a few months from now without it negatively impacting the employer.

13:55I mean one thing that comes to mind there is the fact that we don't really have that much data to your point about who top performers are and what they prefer, right? Because we kind of give everyone the same set of benefits and I'm sure some analysis could be done across companies, but to that end you can imagine how to your point rob kind of any benefit could be seen in a positive or negative light. Like let's just use the wide swath of benefits that FANG offers. Well, if you're offering nighttime meals, you could imagine that, okay, people are going to work harder and later, you also might imagine if you're offering meals and massages and all of these kind of auxiliary benefits, you may just attract talent that wants to relax and not work very hard, right?

14:41There's kind of two sides of that coin. And the same analysis could be applied to a lot of benefits, right? One that I like is Andrew Palmer Lucky says that he offers his employees Tools and technology for all of their side projects not just their work projects because he thinks that'll attract ambitious people But again, you can imagine how someone might position that as oh, I'm actually funding people's next company not my own I think that's true But you know what I love about that is it's a principles -based approach to providing a benefit He's saying, I'm not telling you what to work on. I'm just saying that I'm going to provide you with the platform, with the tools, to do the thing that is exciting to you.

15:24And by the way, it might be that my kid's school wants to do an auction, and I want to run the online auction piece of it, and I want to create a really cool element. It might not be for profit. I think that's the key is allowing people to be able to, you know, of individualize and be their authentic selves. And I think that's a really big part of what culture is. Rob, I can't agree more on what you just said there. And also, I think there's a lot of wisdom that can be pulled from, I mean, it's graduation season right now. There are a lot of new folks that are graduating that are wanting this kind of work.

16:01I think A team actually published a really wonderful data set around what new grads are actually looking for with their new employers. And some of the standout pieces there are really about the terms, Robert, that you had discussed and I think you had offered earlier too, which is around that flexibility, that personalization. And then the thing that I'm adding along is, okay, what is it that is going to resonate with them to be able to create more impactful work? For them, career growth is impactful work, not the ability to go up around on this non -existent ladder that has existed for decades.

16:38And so that actually gives me a lot of hope for the new generation, but it also is going to take us being able to educate folks that are currently in the workforce to receive that kind of mindset, right? Most folks want a four day work week. Most folks want more flexibility. The fact that companies are thinking about how they fund other things outside of the work that people are currently doing in their organization is showing really interesting signals. You mentioned the younger generation and it does feel like there's some data showing up that you know as all three of you have alluded to This is not a monolith and it does seem like certain generations may be respond to different perks or different types of cultures Let's just use remote work as an example Can you really offer an organization where you know some people Get to work fully autonomously and others get to go into the office?

17:33Are you able to break down organizations so that you can kind of offer different generations what they're looking for? Or is this a matter of certain companies just needing to orient around certain group, kind of targeting Gen Z while others targeting maybe an older generation? How do you think about attracting different folks with so many different competing interests? One provocation that I have is do organizations believe that remote work is a philosophy for the organization or for specific roles in the organization? That's a nuance. No one's really talking about that. People are talking more about remote works for everyone, for the whole entire company.

18:13How can you get really strategic and say there are specific roles in the company that can be remote? How does that manage from a fairness and equity perspective? So that's a provocation. One other piece that is coming up as you ask that question is around how are people communicating the roles? Because again, if you go to a company, you think about the Atlassians and the automatic, you know, who runs WordPress. They were remote way before remote was a thing. They were remote when it was more stigmatized as a thing. And so I wonder how they're presenting things now with the learnings based on having come from pre -COVID remote to post -COVID remote.

18:57And I think there's a lot of wisdom there we can pull. Great. You mentioned the likes of Automatic and another company is like Basecamp and basically companies that were remote for us pre -COVID. So they made a conscious choice to do so rather than be forced by external circumstances, which is the vast majority of everyone else. And there were some interesting features as to how they did that. I mean, firstly, they did in fact target experienced workers. A lot of remote companies did not hire early entry talent because of exactly the concept of this person needed to have control of their home work environment, so to speak.

19:31So they couldn't be living with parents or in a busy flat share with, you know, of student college or whatever it might be, they also needed to have the experience of working independently without the proximity of management. And all of that kind of pointed towards someone who is basically a senior contributor that had experience. And again, if you look demographically at the types of people that are most pro -remote, the remote evangelist, so to speak, they are all of that demographic. They are individual contributors who have established a level of expertise that have built up some social capital, that have built up some capital capital so that they can go ahead and provision their home office in such a way that makes sense for their lives.

20:13Typically, there are even people that have got young families to take care of and think about, and that kind of adds a plus plus plus to the concept of having that control at work. You speak to young people entering a workplace for the first time, that is the last thing they want. There's a great bit of research by a company called Isons who basically conduct an annual survey for graduates in the US and elsewhere as to what they desire. And this is the first time when I encountered this kind of gerontocratic view of what remote was. It was very clear that someone who was an early career person did not want remote.

20:48It was something that they thought about, yes, no, they literally didn't want it. They wanted the office because they wanted the learning. they want the acceleration of learning through being alongside more senior people and they wanted to get out of their domestic situation, which is living with their folks, or living in a busy, you know, crowd -shared place. So H .E. is completely right and I think Rob, you mentioned earlier about this idea that, you know, we treated things monolithically and sometimes we need to make generalizations, of course, in order to have a conversation. But we're probably at the point now where we need to bring in the nuance because what What is positive for one group of people is negative for another.

21:26And when it comes to things like building companies and designing an organization, we might need to make choices as to which demographic that we service. If we are absolutely a remote first company, we are probably optimized as an employer for a senior individual contributor that has already achieved a certain degree of material comfort nor provide for home or working has social security in the sense of social capital. So in other words, they don't feel they need to come to the office in order to make friends. I went to an event last year in Barcelona and I was actually stunned by a comment. This is by the way at 2022 was like peak remote evangelism.

22:08Everyone was like totally into it. There wasn't even a question mark that that was a bad idea. Apart from one guy who stepped up and said I hate remote and everyone just stuns like who is this guy? He's here to say this heretical claim turned out he was from Latin America I think one is well or something and he said he was a recent immigrant to Poland around entire Poland and he said it was the worst thing ever to be remote from the office because he had no friends he had no social contact he literally had nobody because he was a new person in the country where he had no social contact no social capital and he actually walked one and a half hours into the office every day in order to interact with the two or three people that might be there.

22:51And when I heard that story, I started opening my eyes and realized, you know what, we have to consider the social environment, the social capital that everyone has, and the higher social capital you have, the more confidence you have, not have to make those friends at the office. But if you're a younger person relocating, you're an immigrant, you've gone to a different place, you probably want to go in and meet your colleagues. Well, super interesting, set of con ads. It's funny, my anecdotal, not scientific surveys have suggested that there's become this expectation for younger folks to have the right to work from home.

23:30I'm not saying they want to, it's just something that is kind of this, you know, nailing a little right that they have. And it brings up whole concept of, you know, should it be a privilege versus a right? I think when you talk about people that have built up social capital and things like that, it sounds a lot more like it's a privilege that somebody's earned over time and they're able to take advantage of it, right? My last company has come to call cabbage, we had 600 employees. I would have been that guy on stage in Barcelona back in 2018, 2019, who was refusing remote work because it was something that was being requested by a lot of people.

24:07And I was very committed to what I thought was in an office culture we had built that was really special and Really treated these authentic connections between people now We ended up through one floating day a week that people could take advantage of after you had been with the company for some period of time a year or something like that So that's how we actually dressed that and then we moved into the pandemic and I was blown away by the level of productivity of the team now Now, I think that pandemic period, especially for a company like Cabbage, which was serving small businesses that were really ground zero of the economic crisis from the pandemic, I think it was a very unusual circumstance.

24:47So if you're in a, and we're not in ordinary times now either, but if you're in ordinary times and you have remote work, that's the apples to apples comparison I would need to make to the pre -pandemic period. I think any time you have extreme extrinsic situations happening, you can't really get a clean read on whether remote work is as effective as working from home. You need like sterile environments in both situations. So my opinion, the other thing I brought up earlier was I still don't know what the long term impact of attrition is going to be due to remote work. I don't know if on average people are going to work longer for the same company or going to work the same amount of time, or they're going to work a fewer number of monster years because they never got that personal in -person connective with people.

25:38I have no idea that anybody's seen any statistics on that. I'd love to see them. The final thing is we actually have some clients who are advising the nantial benefits, and we got to be careful on these things because you don't want to create pay discrepancies, but they're effectively paying for people to be on site. Even though it's more expensive for them to have people on site a lot of times, they believe productivity makes it worthwhile to actually pay people more if they come in the office. That way people have a choice they could work from home and effectively earn less money, or they can come into the office and effectively earn more money by doing that.

26:19I will start by saying I'm a big remote work advocate, but it's been to your point, hung really interesting to see how different opinions have ping -ponged. And then also the nuance that is arising that we have to, I guess, at least acknowledge. It's kind of crazy that I've seen the spectrum go anywhere from. It's the only perk that matters to someone like Sam Altman saying, this is one of the tech industry's worst mistakes, right? There's such a diversity of opinion and maybe what we've already addressed is this idea that that's because there's a diversity of need in terms of the employees and what they're looking for.

26:56But I do want to just rapid fire get your perspectives really quick on this question. If companies as they are ping ponging from an era where many had to go remote and many of them are now debating the reverse, some of them have already enacted that reversal. does the return actually work? And I asked this because we are seeing some companies mandate that people aren't coming in. We don't have data yet on whether that reversal actually encourages more productivity. Just real quick, any thoughts on whether the return actually works. I think from a standpoint of getting people to return, again, what is the why?