What traditionally is known as the sleepiest quarter for executive search (Q4) saw astronomically high activity in 2020. With hope and a vaccine on the horizon, new roles opened in sectors such as healthcare, life sciences, and technology at over 50% YOY growth from 2019 in the United States. Nearly all industries saw this uptick; and not only for newly-opened executive roles, but also across every position.
As a Talent Manager for Octopus’ US Portfolio companies in the US, I support over 40 companies, many of which are in the healthtech space. During the last three months I’ve witnessed the hockey-stick increase of recruiting activity within our portfolio firsthand, and have been curious to learn how this activity may impact our portfolio companies in the thick of hiring. I’ve noticed a few things:
- The speed of making a hire seems to be cut in half.
- Demand for executive hires is off the charts, but especially in healthtech.
- To meet the demand, candidates without healthcare backgrounds are being hired into healthtech companies right and left.
- Demand for diverse candidates is at an all-time-high, but interest from diverse candidates is at an all-time low.
To learn more, and to explore whether these observations were valid, I asked Mariah Lang, Principal at True Search and expert in executive healthtech search (she’s placed C-Suite execs at Quartet, Hinge Health, Eden Health, and Valut Health to name a few) to share her insight on what these dynamic shifts and upticks might mean for leaders and entrepreneurs in the health space looking to scale their executive teams.
SRB: The last 12-18 months have been a wild ride for all of us – what are the biggest changes you’ve noticed?
Mariah: We saw some clear trends starting at the beginning of Covid in March of 2020, when most searches came to a screeching halt… except for searches in healthcare. But even in healthcare, the roles we were looking for suddenly pivoted. Businesses decided they didn’t need a CFO, but a go-to-market leader. They pivoted executive hires to a CRO or VP of BD to help them figure out how to mitigate the impact of Covid, or in a best case scenario, capitalize on the moment.
The second shift we witnessed was that the healthtech businesses that were taking off had a virtual care delivery model. We saw companies like Hinge Health and others in the digital MSK space just soar. These businesses had made a bet on virtual care, and 2020 proved that bet was right on the money. Here, we saw big healthcare businesses pivoting to keep up at scale with the shift to remote everything. Does their business or care model make sense in a remote environment? If not, they needed to change, and fast.
The third shift came along during August of 2020, when it seemed like everyone needed a CFO! Demand for the role picked up overnight. Now, in 2021, requests are coming in for every role. We’ve seen an insane uptick in the market. It is good to see so much activity and it gives us a lot of hope that the market is recovering, but the talent market is not ready for the demand. We’ve never seen such a demand for talent before and there aren’t enough candidates in the market to fill the number of open roles. Right now, is a real supply and demand issue when it comes to talent. At True, we’re turning away new clients regularly because the demand for new executives on the team is off the charts. We don’t have the capacity to take every search on anymore.
SRB: This point around scarcity is interesting.. I’m sure you are seeing more and more folks who don’t have healthcare backgrounds, but have an interest in transitioning into the health space. What is that looking like?
Mariah: 5 years ago, when you’d call someone about an executive healthtech role, they’d respond by saying “healthcare is a mess” or “I don’t understand healthcare”, or “it’s too complex” and hang up. Now, candidates are getting to a point where they may say “I don’t understand healthcare, but I should.” More and more people are open to learning about healthcare and want to be on a team that is making it better. If you look at companies like Hinge Health, they needed to find someone from outside the healthcare space to have experienced the level of scale that the business needed. But the efficacy of bringing folks in from the outside really depends on the role. Some roles won’t make sense to hire someone from healthcare into, others only make sense to.
A favorite search from earlier in my career was for a VP of Product at a health tech company, and we only looked at gaming profiles. The business was trying to make its experience with users stickier. People were opening the app, thinking it’s cool, but not engaging with it further. How do we get people to stick with the app? Gaming was our solution and we found someone willing to make the jump. A lot of folks are willing to pivot into healthtech, especially because they have a connection to the health space through their family, friends, or personal experiences. The winning recipe is combining an interesting skill set and passion for the space in a role.
SRB: How do you talk to candidates who haven’t yet thought about making that transition?
Mariah: I do get responses from potential candidates who say things to the tune of: “the ramp up time into healthcare is just too long” or “I don’t have a biotech background” and they will self-select out of the process. If I can chat with them, I’ll ask if this comes down to personal interest, because it’s okay if healthcare isn’t interesting to them, or do they not think they could be a fit because they may lack an academic qualification or industry specific background. If it’s the latter, I’ll share why I’ve reached out to them and why I believe their background is interesting. It takes a little bit of education, but reaffirming that when they join the company, we can help them get up to speed in the space with support from inside and outside of the business can go a long way.
SRB: With all the disruption 2020 brought to the way we work, how has the exec hiring process changed?
Mariah: We’re working at a breakneck speed and decisions are being made quickly. We saw the interview process overall shorten and executives are getting offers after two interviews with the CEO or the team. It’s easier to schedule interviews now that people are home, so things can move faster.
Initially the challenge with remote interviewing was the anxiety of hiring a leader for your business whom you’d never met in person. The market was (and still is!) moving so fast, there wasn’t time to hesitate. Because of this, clients were losing out on great candidates. Even when they had narrowed their search down to a finalist, they couldn’t pull the trigger since they hadn’t met in person. And they lost the candidate. Other companies came up with creative solutions like taking the candidate out to a distanced outdoor coffee or a walking interview if they were in the same city. Eventually, clients realized that this virtual reality was the new normal and that it didn’t really matter if you had been able to shake hands (or bump elbows) in person or not.
SRB: Have you been noticing other trends when hitting the market and reaching out to candidates about exec health tech roles?
Mariah: Over the last year it has been incredibly hard to place female executives. The response rate from women execs is alarmingly low during our outreach. There’s a lot of data about women leaving the workforce to take care of their families during the pandemic. Even when women do stay in the workforce, they aren’t open to taking a risk at this time. I can reach out to 50 men and 50 women on a search and I’ll get 30 responses from the men and 3 responses from the women. Hopefully, with stability coming back to the market and life beginning to normalize, we will see a change here. We’ve seen some of the most interesting roles come to life during this time, so it’s unfortunate that a time where demand for diversity is at an all time high, diversity responses are at an all time low.
SRB: Has this scarcity of talent and demand for talent affected compensation?
Mariah: Absolutely. There is no more geographic compensation. People have moved since so many can now work remotely, but they aren’t willing to sacrifice the compensation they were making in NYC or the Bay Area. I don’t know if we’ll ever get back to geographic compensation. What we’ve learned is that if you want to close the candidate, you need to pay a NYC or Bay Area salary even if they are in Arkansas. I’m sure the market will correct down the road, but I don’t see it happening anytime soon.
SRB: What’s the future of remote work?
Mariah: I’m starting to get clients saying “remote until things open back up” or “remote until the end of 2021.” Relocation is back on the table, but there are companies that surely will stay remote or at least remote-first. We’re going to start to see employees have some sort of office presence.