The job of a hiring or staffing firm professional is not the same as it was a few short years ago.
Unprecedented events, such as the Covid-19 pandemic and increased layoffs in many sectors of the economy last year, have changed the hiring market and thus the role and responsibilities of a recruiter. Effects of these changes varied across industries for staffing firms, and companies are approaching hiring new employees in different ways.
Across the board, recruiters generally saw job searches pause or slow in 2020. Then, beginning in 2021, employees in many different sectors left their jobs en masse in what became known as the “Great Resignation.” This continued into 2022 and, according to the U.S. Bureau of Labor Statistics, a record 51 million Americans quit their jobs last year.
Talent-acquisition firms in technology, real estate and finance all described an enormous boom in job-search activity in the last two years. This year has been more of a mixed bag, with real estate seeing an increased hiring demand while interest in technology talent dropped off.
Some firms are tightening their reins and hunkering through a phase of slow business, looking ahead in the hopes that job recruitment picks back up this year. Others never slowed down and are seeing the busiest year or quarter of their careers.
Overall, the rate of job creation in Los Angeles has slowed over the last year. According to the California Employment Development Department, nonfarm employment increased by 7.8% between February 2021 and February 2022. However, from February 2022 and February 2023, it increased by only 2.3%.
This trend is not unique to California. The Bureau of Labor Statistics announced this month that total nonfarm employment increased by 236,000 in March, while the average over the last six months had been 334,000 per month.
REAL ESTATE: Booming growth, and preparation for even more
Kent Elliott, principal of real estate executive search firm RETS Associates, said this year is the busiest he has seen in 20 years of recruiting. RETS has an office in Newport Beach and recruiters across the country, including Los Angeles that work from home. Talent demand, he said, is strongest for asset manager positions as real estate firms look to maximize cash flow for their existing holdings and investments.
“Hiring has come back extremely strong in commercial real estate and we’re seeing all sorts of activity,” Elliott said. “We feel that it’s the era of the asset manager right now.”
He said the worst place to be now is in talent acquisition for real estate firms that focus on office spaces. Some businesses are less interested in maintaining their office leases as remote work becomes more commonplace, which has translated into office-product real estate firms hiring less. Elliott said the strongest sectors in real estate for hiring right now are industrial development, multifamily and retail.
Amy Zimmerman is the president and founder of Palos Verdes-based Amy Zimmerman and Associates Inc. The company provides recruitment services across several industries, including engineering, finance, marketing and health care. Zimmerman agreed that office real estate is in a state of flux, as more people want to work from home. She said it’s an “employees’ market” right now, and that she’s not seeing many hiring freezes.
Going forward, Elliott thinks employers are deciding that it’s time to upgrade their existing talent to prepare for future growth. Some are replacing individuals who are not performing to their standards, while others are promoting internally then hiring new talent to fill the open positions left behind.
TECH: Cycles of shrinking and growth
After businesses laid off or furloughed workers across industries in 2020, hiring exploded in the technology sector in 2021 and 2022. This began to dampen in the last few quarters as many companies announced massive layoffs. This includes Amazon, which has announced 27,000 job cuts since the start of 2023, and Santa Monica-based Snap Inc., which said in November that it would lay off 20% of its staff. Meta announced 11,000 layoffs in November, before doubling down last month to report it would cut 10,000 further jobs and close recruitment for about 5,000 current job openings.
Rory Bebbington is the chief executive officer of Marina del Rey-based Fabric Staffing, a recruiting firm that specializes in talent acquisition for tech companies. He said that, after an enormous number of hires in the sector in 2021, the ensuing layoffs may not have been smart, but they weren’t surprising.
“I think probably it was too much of a growth phase where companies were just throwing money at people just to get the talent in the door because they were desperate,” Bebbington said.
Bebbington said that hiring and layoffs are a common yearly cycle, but that these cycles have grown extreme during the last few years. He added that, at least in tech, there is a current recession and that the recruiting market is potentially as bad as it was during the Great Recession.
“I don’t know how it could get really any worse than what we’re seeing currently,” Bebbington said. “It’s the most layoffs I think we’ve had in this country for years, as long as I can remember.”
Even after the March closure of Silicon Valley Bank, candidates are not necessarily running away from startups. Many of the layoffs in tech over the last six months have been within larger or more long-running companies, such as Amazon, Meta and Netflix.
“Most candidates I talk to would rather go for a company that is (in its early funding stages) versus a large enterprise company,” Bebbington said. “Mostly because they are companies in high-growth stages, which also means more opportunities for growth and upward mobility and therefore job security.”
Rony Kort is the vice president of people at venture capital firm Greycroft, which has headquarters in both downtown and New York City. He heads up talent acquisition for its startups and said the labor market there is still strong for tech. Employers are not rushing the hiring process and are being intentional about whom they bring on, which gives both sides time to get to know one another.
“The hiring process over the last few years did not allow for this; companies and potential (employees) had to make decisions about one another within a matter of a few days,” Kort said.
Bebbington said that while recent tech layoffs have been massive, those companies may have to shift back to hiring soon if they get rid of too many jobs. He said he anticipates that by the third or fourth quarter of this year, big companies that have cut huge amounts of their staff will have to rehire and the hiring boom will resume.
“You can’t lay off (thousands of) people and not rehire a percentage of that back,” Bebbington said. “What’s happening to all that work those people were doing?”
Chris Von Der Ahe is the managing director of Southern California operations for Century City-based global organizational consulting firm Korn Ferry. He said some businesses went too big, too fast and are paring back hiring now. He sees these layoffs, particularly those in the tech industry, as companies trying to recalibrate.
“From my perspective, these are companies that just were perhaps a little bit too aggressive out in the marketplace in terms of their overall staffing level,” Von Der Ahe said. “So it’s just bringing it back down to a more standard level.”
Bebbington said his own plan for Fabric Staffing is to retain its staff in anticipation of hiring recovering. It had prepared for a slow start to 2022 after high hiring rates last year, but is already seeing light at the end of the tunnel.
On the executive recruitment front, Von Der Ahe said C-suite hiring isn’t scaling back. Talent demand for executive positions is strong and Korn Ferry’s business is still much higher than it was in 2020.
Similarly, Greycroft’s Kort said company founders are focusing on “must-have versus nice-to-have” hires to ensure candidates’ skillsets match their growth plans.
“The hiring market is still tight and the opportunity to be thoughtful and intentional in hiring is a benefit to both employers and employees,” Kort said.
Bebbington said prospective clients should think ahead and look at the pool of talent that’s currently available in tech amid layoffs, as it’s a great time to get quality employees for less money.
“If you wait till (the third or fourth quarter) when the market does bounce back, because it will, then you’re going to be back competing with everyone under the sun again,” he said.
FINANCE AND BANKING: Planning for the future
The finance world is seeing an uptick in succession planning. Michele Gil, managing partner at downtown-based retained executive financial services search firm Chrisman & Co., said the pandemic spurred discussion of the topic. Executives and management teams realized they needed to firm up their replacement and successor plans and concretely think about the next generation of leaders.
“Quite frankly, it’s good corporate governance,” Gil said. “They should be doing this anyway, they just sometimes forget because they think, ‘oh, look, I’m going to be here forever.’”
The search for new talent and successors is driven less by preparation for a future incident or issue, but more by an interest in evaluating whether a finance organization has a team that is prepared to help them advance. Recruitment firms describe employers as being increasingly intentional about whom they hire. After a chaotic few years, companies are focused on ensuring the talent they bring on can keep up with their future plans.
“They’re looking for talent that will grow with the institution,” Gil said. “They’re looking for talent that brings a skillset that can be valuable to them as they scale their business.”
Gil has had conversations with current and former employees of the recently closed Silicon Valley Bank. Despite the institution’s rapid fallout, employees spoke highly of its company culture. The attitude of investing in emerging companies, whether or not they were risk-averse, was exciting and described as being different from traditional banking. Gil said that, hopefully, its team will be kept intact in the bank’s new iteration.
She anticipates some candidates will flock to work at banks that are perceived as more established and “safe,” such as JPMorgan Chase or Bank of America. However, company culture can matter to candidates as much as a feeling of security, and in response, some employees are moving to smaller institutions, such as community banks.
“(They’re) saying, ‘I’m tired of the rat race, I want more control of my destiny,’” Gil said. “‘I actually want to influence strategy and I can do that under smaller institutions.’”
Wendy Norton is the managing director of private equity hiring firm Norgay Partners, which has offices in Playa Vista, New York City and London. She anticipates that the collapse of Silicon Valley Bank will push some candidates to gravitate towards more established firms. Depending on the personal nature of a candidate, going to a “brand name” financial institution may feel more comfortable.
“There is a place for the first-time funds, and candidates are going there because you can get in on the ground floor and really have the opportunity to grow,” Norton said.
On the venture capital front, Kort said that employers are taking more time to be intentional about whom they bring on staff, which has also allowed candidates time to see if a potential job is the right fit.
Norton and Gil have watched some major financial institutions on the East Coast either move operations to the West Coast or expand their existing teams here. Candidates may also be moving to Los Angeles after initially starting their career in the New York market for either a lifestyle change or the opportunity to be a “bigger fish” than they may have had otherwise.
“We have a huge investor relations and fundraising practice nationwide, and a lot of those firms are hiring first-time fundraisers on the West Coast,” Norton said. “This is a huge untapped territory for a lot of private equity and alternative investment firms.”
The Office Debate
Recruiters say that employers and employees are at odds when it comes to how often staff should work from the office.
For those who specialize in C-suite talent acquisition, being in the office isn’t always a matter up for negotiation. Michele Gil is the managing partner at the downtown-based finance services recruiting firm Chrisman & Co. She said having an executive officer be completely remote is difficult if their team is in person because opportunities for mentorship or team building are impeded.
“We’ve said no to C-suite candidates that say, ‘well, I’ll come down once a month,’” Gil said. “Doesn’t work.”
When it comes to non-executive level job searches, mandating that employees work in an office full-time might scare off potential talent and cause a company to lose its existing employees. Amy Zimmerman, president and founder of Palos Verdes-based Amy Zimmerman & Associates Inc., said that the pandemic led many people to realize they wanted to be closer to their families, which remote work supports. Marina del Rey-based Fabric Staffing’s chief executive, Rory Bebbington, said that after pushing employees to remote work during the pandemic, bringing them back isn’t going over well. Companies that give an ultimatum may see their employees walk away.
“The whole world has been crying out for remote work, especially software engineers, for years,” Bebbington said.
Kent Elliott is the principal of real estate executive search firm RETS Associates, which has offices in Century City and Newport Beach. He advises employers to avoid extremes in terms of how much in-office time they demand from workers, and stressed that disallowing remote work might kill company culture.
“If your policy is to get back to the office five days a week, you’re going to have difficulty retaining that talent,” Elliott said. “And then, once that talent leaves, you’re going to have a difficult time replacing (them).”
Senate Bill 1162: Pay Transparency in Job Postings
One of the newest provisions of the California Equal Pay Act is Senate Bill 1162, which went into effect in January. It requires companies with 15 or more employees to include a pay scale for a position in any job posting, both internally and externally. When the bill was passed into law in 2022, Gov. Gavin Newson said that it was intended to help address and identify pay disparities based on gender or race. Some recruiters questioned the lack of specificity on how exact compensation ranges must be. The only definition of a pay scale offered by the bill is that it’s a “salary or hourly range.”
Kent Elliott, who is the principal of Newport Beach-based real estate executive search firm RETS Associates, said that the resulting compensation ranges aren’t very accurate and may exclude additional compensation possibilities, such as bonuses or equity for employees. RETS has a Century City location.
“I think the intent was to create equitable treatment,” downtown-based Chrisman & Co. managing partner Michele Gil said. “But some of these ranges, I mean … they’re so big. What are you really trying to accomplish here?”
Recruiters generally said the bill has positive intentions, but has made some parts of their job more difficult. Rory Bebbington, the chief executive officer of Marina del Rey-based Fabric Staffing, described SB 1162 as having two sides. On one hand, it prevents clients from going through an entire interview process only to get an offer and have it be less than they expected. It has also made candidates pickier about what positions they will consider.
“On the flip side, candidates aren’t applying to jobs where it’s below what they’re looking to make,” Bebbington said. “So it’s harder to recruit talent.”
Elliott has seen candidates apply frequently for jobs they are not “remotely qualified for” because the listed compensation or job title was enticing, without looking at the experience or skill requirements. He described an increased interest in applications, but that doesn’t translate to interest from the right applicants.
“It makes our job a lot harder,” Elliott said. “We’ve got to go through a lot more candidates (only) to find that the vast majority of them are not qualified.”
Gil said that applicants shouldn’t shy away from a job posting just because the listed pay is less than they want to make. She said that if an employer finds a candidate that is the perfect fit, but the candidate wants more than the listed salary, that company would likely find a way to meet their demands.
“If you’re an amazing person, that institution will figure out how to get to (your desired pay),” Gil said. “I think there’s some unintended consequences that come with such transparency. It’s well intended, I think, but there’s some things that create other types of behavior.”
