Navigating Today’s Choppy Talent Waters
By Andrew McLeod, CEO, Certn
It has been challenging to negotiate hiring trends and plans given the recession’s impending arrival and the significant job cuts that have already begun. Examples worth noting include Tesla, Lyft, Netflix – which recently let go of about 3% of its staff – and others. As of late July, there had been more than 30,000 layoffs in the U.S. tech sector alone.
Even while finding a job or hiring during a recession can be challenging, there are best practices that can make the process easier, and there are even opportunities on both sides.
Managing the shifts in the talent pool
Right now, the new Great Recession and the Great Resignation are dovetailing. A 1 in 10 risk exists that the United States will experience another recession in August. But many businesses are viewing talent incorrectly, regardless of whether they have made staff cuts or are actively hiring.
Starting last year, companies adopted the mindset that “talent is so hard to get that we need to offer higher salaries”. This is only true until you reach an unsustainable tipping point. The approach has become reckless, which has necessitated recent layoffs. Cuts will become necessary during difficult times if employees are earning wages you can no longer afford to pay.
This labor market is “unsustainably hot,” according to Federal Reserve Bank Chairman Jerome Powell. He noted that there are basically two job openings for every person who is actively looking for work, and that has resulted in a tremendous imbalance in salary negotiations. To increase talent density and foster contentment among workers, your talent approach should strike a balance between competitive pay and spending on learning and company culture. Using this strategy, businesses will be more adaptable when a recession hits.
Predictions for this year’s talent pool
Organizations are currently employing fewer individuals whose work has a greater impact. Businesses are hiring for talent density rather than just to fill seats. There’s a trend toward smaller teams with higher-calibre personnel.
Yet, as the recession approaches, earnings are likely to level off since employee options are more limited. In the tech sector specifically, we are witnessing a decline in the valuations of both public and private enterprises. In many of these companies, a large portion of compensation is based on stock or equity; thus, it’s not atypical to see up to 25% of a person’s salary effectively evaporate.
Due to these layoffs, there will also be a lot more people available for employment in the upcoming six months. As a result, there will be a larger talent pool available.
The L&D component
Organizations are striving to maximize their talent density given the current economic context. The one individual who is ideal for the position can't always be found, much less hired. However, you can employ those who have the highest potential and aptitude for learning.
This is a wise hiring strategy. Change your hiring procedure such that you are seeking candidates who might not possess all of the abilities required for the position but who do possess a love for learning and the inclination to pick up new skills quickly. Often, curiosity and a desire to learn are more valuable to your company than experience.
Investing in learning and development (L&D) will boost retention in addition to increasing talent density. In fact, 87% of HR directors reported that L&D would be a key part of their employee retention strategy in 2022, according to a recent Capterra survey.
Looking up during a downturn
Layoffs result in bigger labour pools for businesses to choose from when hiring. You’ll have the chance to increase your talent density. Additionally, given that wages are levelling off, there is an opportunity to hire those outstanding individuals in a more innovative and strategic manner rather than by simply paying them outrageous wages.
In addition, candidates get a chance to assess their priorities and values, as well as search for businesses that don't have a “growth at any price” mentality. When the economy is booming, a firm like that has its appeal, especially when highly competitive compensation is on the table. In contrast, as a recession looms, job seekers can better tailor their search to reflect their beliefs. This increases the odds that, if the economy nosedives, they won't be the first ones laid off.
Course correction for hiring today
The Great Resignation caused a shortage of workers, which resulted in salary increases. Now, with inflation a reality and a recession on the horizon, layoffs mean a greater number of available workers. It’s crucial to understand that paying employees too much can lead to subsequent layoffs. A better approach is to become the kind of employer that draws individuals who are eager to learn and develop. Companies with robust L&D programs typically have higher employee retention, as do those with missions and values that employees want to align themselves with. Pay close attention to these elements during the hiring process and employ those who have the best chance of succeeding in your business.
Andrew McLeod is the award-winning, CEO of Certn, a leading global data company that specializes in background checks for some of the most talent-centric companies in the world.
In addition to running one of the fastest-growing tech scale-ups in North America, he is an angel investor and advises leaders on how to thrive in the...