Enough articles have been written about engineering crunch in the valley while some solutions like increasing equity grants to engineers have been suggested, the bigger issue of the broken recruiting pipeline has not gained the attention it deserves. Its a job of recruiters to source potential candidates and most recruiters are compensated in form of a percentage (usually 20-30%) of the annual base salary of the hired individual.
Most companies, big or small, have a usual four-year vesting schedule for equity grant with one year cliff (ignoring exceptions). But most of the time, recruiters are compensated upfront almost as soon as candidate accepts the offer. Notice the misalignment of incentives. While companies are looking to hire someone for a longer duration, they are inherently rewarding recruiters can find “selectable” candidates who are just good enough to clear interviews since anything more would be a waste of effort with no regards to “fit” (technical and otherwise). Even weird is that since most recruiters work on contract basis for short durations, there is an incentive for them to get the candidate who joined the previous company to interview at his/her new contractor company. I have heard a few strange stories narrating the same.
Why not compensate recruiters regarding the fraction of (salary + equity grant) of the hired engineer over the next four years too?
This way, the recruiter will be incentivized
- to focus on a candidate who will show stability – work for at least four years.
- To focus on a candidate who will be better than average – since more money/equity the candidate earns, the more reward recruiter will get.
- To focus on a candidate who is a better fit – since a better fit is most likely to show stability as well as stay for long-term with the company.
- To track candidates who are right – since maintaining a 10-20 years relationship with such candidates will be more fruitful.
- To focus on a company whose equity will be meaningful – since a part of their compensation is in equity.