This is a logical assumption and applies in some cases, and more talent is available to hire. However, are you certain that this available talent pool contains your desired top performers? Are these people from companies with reputations for attracting great talent? Do these people have the appropriate skillset you need? These are important considerations when hiring talent in any market. Let’s examine our current hiring climate and how layoff decisions are made.
The past few years of COVID spurred investment into healthcare technologies, and we had a vapid IPO market and lots of capital looking for a place to land. Many companies started and grew simultaneously, requiring talent to grow. In addition, remote work resulted in remote hiring, and the demand for talent became very tight. Employers also over-hired in defense of the “quiet quitting” movement. Now capital is not as readily available, and many companies are letting people go.
Let’s talk about how companies execute a RIF (reduction in force) and how decisions are typically made regarding who stays and who is let go. Senior management meets and looks at the business as a whole, what parts are managed well or profitable, and who is meeting the key objectives. Then the senior team examines which products and service lines are profitable. The underperforming units are naturally where they start to look at reducing expenses. Hiring freezes are often put in place as well.
The HR department is then brought in to work with all managers and employees regarding performance and contribution. Low performers are often let go first; many companies practice letting go of the bottom 10-15% annually. Other companies wait until the capital flow is restricted and market conditions turn down before letting people go. Strong performers are rarely in this group.
Then come some harder decisions, like the next layer down the next 10-15% need to be let go. This is when leadership becomes uncomfortable and lets go of a few mid-range performers.
If the company has filed for bankruptcy or has failed a clinical study or market adoption for their product has not taken off; the company cannot secure another round of funding, or the strategic buyer they were in negotiations with backed out of the deal, they cannot get reimbursement, or the market timing is off, or the product does not work as they had expected, then bigger staffing cuts are made. These conditions are not always predictable and often fatal to the company.
This is when top performers and key executives are let go.
What is important for you, the CEO or Board of Director Member, is to know the “why” behind why the person is no longer working. You want to verify what the person tells you through reference checking and doing your own homework on candidates.
When you find a top-quality candidate, do not expect to pay them less because they are not working. This person has invested decades into their career in making companies successful. Otherwise, they would not be at the level they are currently. Many talented people in the market often have more than one choice of companies to work with, and if they are a great fit for you and your team, paying them fairly is the best way to welcome them into your team.
Feel free to reach out to us to help you find your next top performing executive.
With all The Layoffs, I Can Get Great Talent for Less Money, Right?
