How Will Your Startup Handle “The Talent Crunch”?

A number of stories have crossed the wire in recent weeks about the “talent crunch” in the tech industry. Although the unemployment rate in the U.S. remains high, many tech companies are struggling to find and to keep employees. Compounding what’s already just a general shortage of engineers, those tech companies with deep pockets are offering big salaries and bonuses to those willing to join (and hopefully stay).

In a bidding war for talent against the likes of Facebook, Google, and Zynga, how can startups compete in order to recruit and retain talent?

Of course, you can be the talent. And in an environment where seed funding is readily obtainable, that’s been a viable option. But once you reach the point where you need to bring on more bodies, whether as co-founders or employees, your startup faces competition from just about everyone else in the industry. The “Which startups in San Francisco Bay Area are hiring?” thread on Quora gives just a glimpse.

We’ve written about hiring for startups numerous time here – guides on recruiting both technical and non-technical staff. Making hiring decisions, particularly at the early stage of a company, is both challenging and crucial. With limited resources, you want to make sure you hire the right person for the right job.

But that challenge is compounded a thousand-fold when competing for recruits against companies that can offer more perks and fatter paychecks.

In a blog post this morning, investor Fred Wilson described the talent war as part of what he identifies as “storm clouds” brewing in the tech industry. Linking to a story in Techcrunch that tells of Google offering an engineer $3.5 million to not leave for Facebook, Wilson says that this, along with the massive deal flow, is all “unsustainable.” Sustainability aside, recruiting on that scale isn’t even fathomable for most new companies.

If you’re a startup who’s tackled (or is tackling) this, we’d love to hear your thoughts in the comments.

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