In this guest post, Paige Carratturo, co-founder and CEO of talent venture firm Sea Change, discusses the critical role of data in mitigating the risks in climate-related hiring.
Making the wrong hire is a real risk. According to certain estimates, the cost of bringing on an ill-suited employee can soar to a staggering $240,000 for a company, not including the subsequent harm to the team’s morale and the possible decline in overall productivity and even profitability.
In smaller companies, the impact of employees’ efforts can affect the ability to hit financial targets or meet project milestones, potentially affecting further funding and support. Indeed, making a wrong hire can potentially deal a devastating blow to newly established startups or divisions within larger companies.
In the climate space, a wrong hire not only limits a company’s sales, product, or engineering performance but also depletes financial resources that could otherwise be directed toward slowing the pace of the climate crisis and ensuring that the rest of us have a liveable planet. The continuous cycle of hiring and training new replacements, prompted by decisions based on intuition, stands as an antithesis to the swift #DeployDeployDeploy motto coined by Jigar Shah of the Loan Programs Office of the U.S. Department of Energy.
Risks are evident
The answer lies in adopting risk management data to guide hiring decisions within the climate tech industry. Although discussions among investors, startup CEOs, and corporate leaders often center on analyzing the competitive landscape, pinpointing technological weaknesses, and assessing the potential for growth, among other factors that could hinder their success, it’s the hiring of the people to carry out all of these initiatives—along with the availability of that talent and the ability to attract it— that is often pushed to the sidelines.
Nonetheless, the infusion of substantial funding into the climate technology and mobility sectors, even amidst a broader softening and uncertainty in the market, has fostered fierce competition to secure the most exceptional talent critical for propelling the industry forward. Given the amplified stakes, a heightened emphasis on talent risk management is currently taking center stage and grabbing attention.
Even McKinsey has recognized that a track record of strong leadership and the ability to draw in top-tier talent constitute two of the four pivotal factors that can either cement or shatter deals within the area of climate-focused investments.
The data vacuum
HR management tools abound. However, they tend to focus predominantly on mitigating risks on the “buy side” post-hire. For example, there are enterprise software solutions that track diversity, equity, and inclusion (DEI) metrics to align with the disclosure requirements for “human capital resources.” These solutions work in tandem with staff surveys, effectively capturing employee feedback and gauging their emotional well-being—a key metric for retaining a productive workforce and minimizing attrition risk.
While these tools certainly play a role in identifying and rectifying potential issues before they can damage a company’s image or financial stability, there remains a void on the “supply side,” particularly with talent acquisition and its ramifications for company expansion. The existing data landscape is characterized by opacity and scarcity, with valuable insights often challenging to source and locked away in the minds of industry experts.
Additionally, these people operations or talent acquisition tools are typically designed for larger, established corporations and are not well-suited to the specific needs of climate tech companies, which are frequently smaller. Further, these tools lack the essential data necessary to provide clear insights into the external candidate market before that candidate has applied and entered the applicant tracking system—and even before a search begins. Despite some attempts to incorporate AI or develop in-house solutions, real-time data about supply-side factors like the competitiveness of the talent pool, candidate behavior and expectations, availability, and compensation rates remains difficult to obtain.
As they venture into the process of hiring for new sustainability or renewable energy divisions, even larger corporations frequently need more clarity. They still need to figure out the necessary roles, how the newly recruited individuals will integrate into the current organizational structure, and even how to create a precise job description.
When understanding the talent landscape within climate tech, executives in the C-suite and investors frequently maneuver with constrained information, much like relying on a flashlight with a dying battery. Closing this knowledge gap requires implementing additional tools to mitigate the risks associated with acquiring talent, fostering organizational growth, and meeting stakeholder expectations and climate change goals.
Talent maps for visibility
Just as with supply and demand, the absence of data does not allow you to appropriately “price your product.” In talent acquisition, this translates to structuring competitive offers to attract the desired A-players. Organizations wrestle with the difficulty of designing talent maps that synchronize with the timing of market conditions favorable for company growth and expansion while also aligning with the visions of investors and executives. These talent maps are essential in predicting the timeline for onboarding employees while ensuring that company milestones meet investor expectations.
Drawing a parallel to the real estate market, think about selling your house. In such a scenario, you’d likely turn to a realtor to provide crucial market data, including the number of homes available, expected time on the market, and comparable selling prices. This data, commonly referred to as “comps,” guides sellers in assessing market scarcity or oversupply.
Likewise, the talent market operates on a similar principle. Investors, executives, and managers require data to help them better understand the situation, including a risk assessment, while companies must grasp market dynamics to make strategic hires. Without this information, both investors and businesses are vulnerable to substantial execution risks.
Engaging in the hiring process without the necessary supply-side data or a well-informed strategy not only wastes time and capital but also jeopardizes potential business opportunities. The consequences of such missteps have a ripple effect on every aspect of the company.
While companies frequently resort to corrective actions to manage issues related to hiring, the shifting capital landscape has considerably reduced investor acceptance of short-term solutions, such as employing contractors. As a result, embracing a blind approach could inadvertently delay or derail a forthcoming funding round, endangering the likelihood of success.
Improving the chances of success in climate tech hiring
While funding for the transition to clean energy and carbon reduction hasn’t completely disappeared, the investment landscape is undergoing a bit of a transformation. Investors are now much more experienced and savvier, and senior leadership teams are scrutinizing potential candidates more closely than ever. The dynamics have shifted so that it is now a seller’s market.
While having the right employees is critical for success, investors and senior leaders must fully understand what their companies need and then work hard to seek those necessary skills. Though the data gap exists, companies can use several strategies to make stronger and more effective hiring choices.
- Extract Insights from Success: After every successful hiring decision, it’s important to look back and figure out what worked and what didn’t during that hiring process. Take a closer look at where you found the job applicants, how interviews were conducted, and how salaries were discussed. This will help you acquire best practices in the industry and use them for subsequent hiring efforts.
- Tap into Peer Wisdom: In the absence of readily available data, it becomes crucial for C-suite leaders and HR managers to establish networks with peers in other companies to share hiring experiences. Through virtual or in-person coffee conversations or industry conferences, peers are often willing to extend guidance to those outside their competitive sphere. If a company exhibits exceptional hiring skills, use the opportunity to learn from their experiences—a treasure trove of knowledge awaits!
- Engage Experts: Certain teams are focused solely on interacting with candidates and assessing their needs, as well as finding indicators of the job market landscape. These individuals are on the front lines in hiring decisions within their specific industry domains. Their insights encompass up-to-date data about professionals open to new opportunities, current salary trends, and broader market dynamics.
Considering the future trajectory of the climate tech industry, it’s reasonable to expect the emergence of tools that assist in understanding and acquiring talent. Such software could provide immediate insights into the market, offering information about potential candidates, including their availability and expected compensation, to enable more strategic and informed hiring decisions. This enhanced market transparency would prove valuable for various executive functions, spanning legal, financial, and operational needs. Over time, incorporating such tools could reduce the risk associated with talent acquisition and, consequently, the execution risk for both startups and established companies.
Addressing climate change necessitates more than just technology; it’s the individuals who design, engineer, develop, market, sell, and implement it who will.
Paige Carratturo is the Co-founder and CEO of Sea Change, a talent venture firm that provides advisory, business intelligence and retained search services to climate tech investors and their portfolio companies, as well as some of the largest global corporations that are transforming their executive teams in order to meet the complex demands of moving to a more sustainable and climate-focused operating model.
At Sea Change Advisors, she drives thought leadership and leads advisory services and C-level recruiting. Paige co-founded Sea Change as an evolution of the Enertech Search Partners brand, which was founded in 2009. Paige is a thought leader and frequent speaker about topics related to talent strategy, leadership development, acquisition, and retention.
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