European Tech Startups Shift Focus to Retention as Hiring Slows Down

A new report reveals that European tech companies are prioritizing retention over hiring, as the hiring spree of the past gives way to a more sustainable approach.

In the wake of a tumultuous year marked by a zero-interest rate environment, remote work, and the great resignation, European tech companies are facing a new reality. The hiring frenzy that characterized the previous year has come to an end, with startups now focusing on retaining their talent. A report by hrtech Ravio sheds light on the changing landscape of startup compensation, hiring practices, and growth rates. As the European tech environment grapples with decreased VC funding deployment, a limited IPO window, and the need for profitability, startups are adjusting their hiring policies and working towards closing the gender pay gap.

Decreased Hiring and Smaller Raises:

According to Ravio’s report, hiring across European startups has decreased by nearly 40 percent compared to the previous year. Late-stage startups have been particularly affected, with a 50 percent decrease in hiring. The shift in hiring practices reflects the changing economic conditions and the need for startups to focus on financial stability. As a result, startups are budgeting for a reduced 4.8 percent increase in base salaries for employees this year, a significant decrease from the previous year’s figures. This adjustment comes as startups aim to keep the number of employees at the same level in the first half of 2024.

Retaining Talent in a Challenging Market:

With limited budgets and increased pressure to do more with less, HR and people leaders in tech startups are exploring non-cash incentives, such as equity and benefits, to retain and motivate their employees. Raymond Siems, Ravio’s co-founder and Chief Product and Technology Officer, emphasizes the importance of understanding market trends and the compensation packages offered by other companies when making these decisions. The current economic environment has put HR leaders in a challenging position, requiring them to navigate the delicate balance between financial stability and employee retention.

Closing the Gender Pay Gap:

As the EU Pay Transparency Directive comes into effect in 2024, startups are under pressure to address gender pay equality. The report highlights the need for startups to focus not only on pay but also on representation to close the gender pay gap. In terms of C-suite positions, women have the lowest representation, accounting for only 19 percent. However, there is no difference in median salaries between genders. The gender pay gap is most pronounced among individual contributors, where women make up 41 percent of the workforce but earn 22 percent less than their male counterparts. Startups are keen to close the gender pay gap but face challenges in prioritizing this issue amidst other business priorities.


The European tech startup landscape is undergoing a significant transformation as hiring rates decrease and retention becomes a top priority. Startups are adjusting their hiring policies to focus on financial stability and are offering smaller raises compared to previous years. Closing the gender pay gap is also a key challenge for startups, with the need to address both pay and representation. As the market evolves, transparency and data-driven insights, such as those provided by Ravio’s report, will play a crucial role in helping startups navigate the changing landscape and make informed decisions about compensation and retention strategies.






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