What does the looming threat of a recession on the horizon mean for recruiters and their talent acquisition strategy?
The summer had economists from around the globe embroiled in a debate about a possible recession coming in the next few years (or months). As of October 2022, the U.S. Labor Department data put the current inflation rate at 7.7%. The recent layoffs in the tech industry are just the first of what is soon to be a string of cutbacks by companies looking to save costs. For recruiters, this means freezes in hiring and fewer openings. It will also include the uphill task of finding the best candidates for them from the coming influx of recently laid-off job seekers. Now is probably a good time to brace for tough times in the next few years in the talent acquisition industry. To survive and thrive recruiting in a recession, here are some hard truths you will need to accept.
Candidates will hesitate to switch jobs.
In a recession, recruiting will probably be your biggest challenge. People will be less likely to want to leave their current positions for different ones, and that’s a hard truth you will need to accept. Once the layoffs start rolling in, an employee’s first instinct will be survival amidst job uncertainty. They will be keenly aware of how vulnerable the market is, and they’ll be hesitant to move to a different company for fear of losing what they already have for something they are unsure of.
Getting the best candidates to accept new roles in tough economic times will be challenging, but it won’t be impossible. While you recognize that you will meet plenty of hesitation and resistance, you mustn’t let that deter you. Instead, change your talent acquisition strategy to focus on a company’s high-priority hiring needs. Understand a candidate’s primary concerns about a move and consult with the company on the best ways to alleviate them. If it’s a fear of being the first to be let go because they were the last to be hired, explain that the high-priority nature of the role guarantees its security. If they have relocation concerns, work with the company to offer flexible work conditions.
Quality candidates often have competing offers from other companies, even in a recession. They will likely choose the ones that align best with their needs and values. So, building a relationship of trust with potential hires will go a long way in securing recruitment in tough economic times.
There will be many applicants, but few good candidates.
An economic downturn comes with the loss of many jobs. Along with it comes a flood of people looking for jobs, and not enough positions open to accommodate them. As you navigate recruiting in a recession, it’s essential to understand that talent acquisition will become a case of a larger job-seeker pool but fewer excellent candidates.
A bigger applicant group will have the unintended effect of wide variations in candidate quality. Make no mistake. The good talent will still be there. The only difference is that finding them in the sea of underqualified aspirants will take more effort. There will likely be more challenging work up ahead. Still, a recruiter can take it as an opportunity to explore hiring individuals with easily transferable skills.
A 2019 City of London Corporation survey found that over 90% of U.K. employers thought transferable skills were a high priority for new hires. Regardless of where you are in the world, this is especially true for managerial positions where some skills transcend industry. There may be one applicant with related experience and skills from an adjacent field that could pivot into a new role. A more open-minded approach to candidate selection could broaden your talent pool quality, helping you deliver capable hires every time.
Companies will cut talent acquisition funding.
Recruitment is usually one of the first industries to feel the pinch when a recession hits. With saving as a top priority for many organizations, recruiters must accept that funding for new hires will inevitably decrease. Hiring freezes are often the first reaction by companies in an attempt to reduce spending on talent acquisition. Budget cuts will minimize or completely suspend the use of recruitment technology and resources like ongoing software subscriptions. This behavior is expected during a recession.
A corporation will no longer be able to afford the mass hiring endeavors which recruiters have come to enjoy for good revenue. But don’t take this as a sign of less work for you. See it as an opportunity to explore other talent acquisition and development avenues that may be just as beneficial if done well. Shift your focus towards diversifying your services as a recruiter to more than just the standard applicant search, screening, hiring, and onboarding. Consider offering skill gap analysis services to help companies identify the essential missing skills they need to succeed. This would then govern future hiring choices and allow for more specialized talent acquisition. Offer to develop the existing talent within a company to fit into roles that require certain specific skill sets. This would open up career growth opportunities for existing employees, allowing for retention in the long run.
In their 2016 Global Human Capital Trends report, leading global audit provider Deloitte noted that learning and growth opportunities are among the newest and biggest drivers of talent engagement. Recruitment is a dynamic industry, and adapting human resource services to meet new and upcoming needs is its latest form of adaptation to the changing times.
Where do we go from here?
While a recession may very well be on the way, the future of talent acquisition remains hopeful. The U.S. Bureau of Labor Statistics notes an increase of 261,000 jobs as of October 2022, meaning companies are still hiring despite the high inflation rates. Recruiters face challenging times up ahead, but only those who adapt to the changing employment landscape are poised to seize the day. Recruiting in a recession may all boil down to a more candidate-facing approach to recruiting, an open-minded approach to skillsets in a growing talent pool, and a transformation of services offered.