Why hypergrowth is killing the talent pool

Why hypergrowth is killing the talent pool
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Reem M. Osman is the chief people officer at UAE-based nybl, an artificial intelligence startup

Over the past couple of weeks, the tech giants of the world have announced tens of thousands of job cuts as they struggle with global economic crises and over-optimistic expansion policies enacted during the pandemic. 

The list of layoffs across both the established and startup tech sectors has shocked job and investment markets. The Middle East and North Africa have not been immune. Startups that were venture-capital darlings just a year ago are now running out of runway, firing the people they hired in a frenzy driven by the promise of “hypergrowth”, and scrambling for potential buyers. 

In retrospect, the crash seems almost inevitable. The momentum of startup and investor funding, supported for a decade by valuations that did not always take realistic earnings into account, as well as permissive monetary policy by the US Federal Reserve and Bank of England, has been arrested sharply by rising interest rates and slowing demand caused by impending recessions in many areas of the globe.

These macroeconomic conditions have taken the wind out of the sails of companies whose business model was based on sustained hypergrowth. Promising the world to investors and employees when the startup economy is booming is one thing; following through on those promises year in, and year out is another. 

Organisations that pursue a hypergrowth strategy need to be exceptionally fortunate to sustain their trajectory. The result, in most cases, has been all too predictable. Unable to sustain growth projections, and having overinvested in capacity not matched to reality, these organisations eventually crumble under the weight of their own expectations. 

Those who suffer are, in the first instance, the employees who were hired when money was plentiful, and targets were excessive. When reality bites they are suddenly seen as surplus baggage. The resultant layoffs are emblematic of a realisation within the sector that hypergrowth was not a sustainable goal, and that it overloaded people and processes unnecessarily.

The effects expand more widely than just employment. Investors lose trust, startups begin to look like overly risky asset classes, and innovation is stifled. Job markets become depressed, and it is more difficult to attract good talent. The losses are already being felt regionally and shine a spotlight on the importance of a humanistic approach to growth and talent management. 

Businesses focused on growth for growth’s sake, and which leave people behind, as a result, do a disservice to our industry, to the talent pool, and to themselves. If, as a founder, you have not planned to bring people along on the journey to success, then what else have not you planned for? Importantly, what does it say about your priorities? Agility is one thing; opportunism is another. 

An underlying transactional attitude towards employees has been painfully obvious in the way in which some companies have chosen to lay off their workforce. In some, mass layoffs have taken place over Zoom. In others, workers have found out they have been fired only when they can no longer access company emails, or via their colleagues. It is an unbelievably disrespectful environment that shows a company’s priorities. 

Good founders should have confidence in their people to support the company’s growth strategy to allow it to pursue growth that supports its people. Providing such a culture allows for a more robust, more resilient, and simply a more human place to work. The result benefits all stakeholders. 

Startups should have a good idea of the sort of talent they are looking to recruit, with a clear long-term plan for their growth in mind. The hiring process should be thorough, broad in content, and focused in intent. When you employ the right amount of people, you need to value them accordingly. 

People who join a startup in its early stages join for the journey, so career planning and development is integral to the people experience. This means it is critical the business has a long term-view of both its business growth trajectory and its employees’ growth aspirations. Growing steadily and hiring intelligently results in a group of people who feel part of a community, and who feel empowered, confident, and respected, with a low turnover rate.

The tech sector is not fundamentally at risk – far from it. The technologies being developed today show exceptional potential to change the face of the earth and humanity for the better. This year’s layoffs are a timely reminder to founders to remain grounded and focus on results and humans, not promises. Because their startups exist and grow because of their people, not at their expense. 



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