It’s hard to believe we’re already in the final stretch of Q1. Coming off a tough year, there’s still a mix of emotions and a mix of stages as to where companies have landed. Some see light at the end of the tunnel; others are making their way there.
But there’s one thing in common: 2023 served as a tough lesson for many founders, leaders, and employees. Gone are the days of reckless expansion and a growth-at-all-costs mindset, and there’s a newfound emphasis on strategic rebuilding.
The focus is now on slow, deliberate hiring and planning, ensuring businesses not only recover but strengthen themselves from future turbulence with the right talent. But getting the right talent requires confidence from both sides of the table. Candidates are more closely scrutinizing companies that court them, and companies are prioritizing high-impact talent who will stand the test of (hard) times.
Hunt Club’s CEO, Nick Cromydas, recently shared his insights on what to do when considering joining or trying to hire for a company that's either experienced or is currently experiencing a tough time.
“I've been talking to a ton of incredibly talented executives and CEOs about how to think about the current market, and what to do when considering both joining or trying to hire for a company that's ‘underwater’.
In these moments, we need to stop applying ‘standard frameworks’ and revert to creativity & transparency to win.”
- Nick Cromydas, CEO of Hunt Club
Where There’s Hardship, There’s Opportunity: 6 Tips For Candidates
We’re all more critical of every new opportunity that comes our way — even the opportunities that check most of our boxes. The desire for a sense of security and stability is so strong that it may have us turning down a real chance to further our careers, learn something new, or grow beyond what we might ever imagine.
That’s because we’re naturally risk-averse, but risk is inevitable in the current job market. Sometimes, there might be a great opportunity at a company that’s struggling to gain its footing. And if equity, compensation, or years-long job security are the only barriers to an opportunity you’re truly excited about, here are a few things to consider and tips to follow that may help you make a more informed decision.
1. Fortunes and careers are made in complex environments.
Oftentimes, the biggest accomplishments in your career come from challenges. Look inside and determine if you have the energy to move the needle even when it won't be easy. Great things don’t come easily, so look inward to determine if you’re up for the challenge. It could be worth it.
Some of the greatest businesses in the world were built on tough times, and even tougher talent who believed in it. Don’t just take it from us. Acquired podcast hosts, Ben Gilbert and David Rosenthal, explore the greatest stories in business, how they weren’t always built off smooth sailing, and how hardship is often a prerequisite for greatness.
2. Perform scenario analysis on stock prices
Truly assess the probability of what happens if you sell for 25% current value, 50% current value, 1x-3x, and how each scenario would realistically waterfall out.
3. Do your due diligence
Dive deep into the last 2–3 term sheets and all financings of a company (liquidation preferences, various rights, etc.) and, if possible, work with an attorney on how much "hair" there actually is on the deal. Equally important is speaking to leadership teams and ensuring the company and team are honest about where they're at presently and have a realistic grasp on what's to come.
4. Get close and personal to the financial side of things
Build deeper relationships with all financial stakeholders that extend beyond a simple "board interview.” Understand their commitment to seeing the company through, their appetite for future financing, and support for existing management. Assess them like you would the management team you're about to partner with.
5. Get creative on financial structures for different outcomes
For example, consider things like financial carve-outs or bonuses at various outcomes in lieu of or alongside equity that sits ahead of the preferred stock. Advocate for yourself. If you want to protect your downside, ask for what you think would make it a fair “deal.”
6. Build networks and relationships that will pay dividends
Don’t overlook the access and networks you'll be able to build and grow. Ask yourself, “Will the success here ‘flow’ more opportunity to you for years to come via who you win for and how you do it?” Times might be difficult, but it’s an opportunity to build your brand and a strong relationship stack that may pay off later.
When the Going Gets Tough: 6 Tips on How Leaders Can Attract & Retain Talent During Challenging Times
The odds of attracting and retaining top talent become increasingly stacked against companies without any financial leverage such as competitive stock options or equity.
However, despite these obstacles, there are still effective strategies that CEOs and leadership teams can employ to help companies entice and keep their highest-impact employees.
1. Be transparent about the value of the stock
Be honest with candidates about the value of the stock and the complexity of financial outcomes. For example, it may be years before you get back to 10–15–20x multiples on your revenue. If that’s the case, be transparent about this with top candidates.
2. Don’t make assumptions about what your talent wants or needs
Great talent doesn't always need an "up and to the right" story 100% of the time. More often than not, they need to feel valued, have fun, and have an economic outcome that rewards their hard work.
3. Consider your cap table
Have serious discussions on how you can restructure the cap table to make sure you can court the leaders you need to drive the next phase of the company
4. Get creative with incentives
Increase variable bonuses on clear outcomes that drive "above-market" comp. Introduce financial carve-outs at various outcome levels (if investment bankers can get 1–2% of the transaction price ahead of investors, work to create similar optionality for your executives).
5. Arrange set-price deals
Structure secondary purchases by the company or investors at "set" prices and outcome thresholds to create liquidity for employees and shareholders.
6. Show talent access to things beyond the $
There’s so much more you can offer talent besides a paycheck. Highlight the access to investors, funds, customers, and relationships that can transcend their careers for decades, not just this tour of duty.
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