Startups' Biggest Scarcity Isn’t Engineers. It's People and Culture Officers

If you take a quick browse through any popular job recruitment platform, a common thread starts to emerge, particularly at emerging and growing tech startups across the country.

“Hiring a Chief People Officer,” reads one job listing for a San Francisco-based startup on AngelList.

“We are seeking an accomplished People and Operations manager to join our team,” reads another from a NYC-based software startup that has under 200 employees.

On top of a current mass exodus of employees from their jobs, which has been dubbed “The Great Resignation,” an additional talent shortage has rocked the tech industry. But this trend is particularly visible in the People Operations department, which has historically been an overlooked department in tech.

“There’s a lot of interest from people who are trying to break in at the entry-level, which is great,” says Jennifer Kim, a Head of People and D&I strategist for startups. “But if you look at the top levels, I don’t think that pipeline is ready to meet the needs of startups today.”

In some cases, employers are offering large cash incentives to try and find top talent. Turner Novak, the founder of VC fund Banana Capital, tweeted he would give a $25,000 reward to whoever could refer a Head of People for the healthtech startup NexHealth.

The pipeline is further exacerbated by an overall shortage of talent in the tech industry, one that has been building up for nearly a decade. According to PwC’s Annual Global CEO Survey, a little over 50% of CEO’s expressed “extreme” concern over the shortage of skilled tech workers. By 2019, that number jumped to 79%.

The current situation, whereby tech industry job openings in people operations and D&I roles outnumber professionals, stems from two major issues that have evolved over the past five years.

The first is the growing awareness of the importance of people management that stemmed from the #MeToo movement. The increase in conversations around diversity and inclusion in the aftermath of the movement rocked the tech industry as much as any other. Kim says that “a dark underbelly” was finally exposed at tech companies, which for years were viewed as the paragons of Silicon Valley.

“There was a lot of risk because of the way these companies scaled quickly, and it revealed some cracks in the foundation around people, organization, culture management,” Kim says. “Companies started to realize that this work is more of a business imperative, when it used to be seen more or less as a luxury.”

This industry-wide wake up call was further expedited by the COVID-19 pandemic that coincided with last summer’s Black Lives Matter protests, both of which pushed a lot of employee pressure onto employers.

“A lot of organizations weren't ready to meet those pressures,” Kim says. “And we see it in terms of companies’ bottom lines and the struggle to recruit and retain talent.”

There is also newfound generational pressure from both millennials and Gen Z placed on employers. According to the Deloitte Global 2021 Millenial and Gen Z Survey, 34% of millennials and 38% of Gen Z believe that systemic racism is widespread in the workplace, and when it comes to which institutions they believe are making the greatest effort to combat this, business and business leaders rank last.

“Both generations have higher expectations and standards for work than any other generation that came before,” Kim says.

The second major issue for People Ops in tech, and arguably the crux of the current problem, lies in the upper levels of the org chart. The undervaluing of human resource work has been prevalent in tech companies for years. In 2016, one study found that two-thirds of HR leaders felt undervalued by their CEO and other top members of their companies.

“The People Ops function at startups has been a very leaky funnel for a very long time,” Kim says.

“If I think back to about five years ago, the best recruiters/HR people I knew at early stage startups are often not in those jobs anymore, having switched to other functions or dropped out of the industry altogether," Kim says. "It's a group that tends to get burnt out very quickly. People Ops professionals who were passionate about this work and were good at it, were not rewarded for it.”

After the events of such an intense year for both remote transitions and hard conversations around diversity, equity and inclusion at work, Kim says she still remains optimistic about the future. In the last few years alone, she says she’s noticed people from virtually every business function approach her and ask about pursuing a career switch to people operations. In her own business, she’s also starting to see interest from founders in crafting a good people and culture foundation from the get-go.

“This was not happening five years ago,” Kim says. “Back then, the prevailing attitude had been that the People Ops work will magically figure itself out. The clear answer is that’s not true, and we are finally starting to accept that.”