As the year 2023 unfolds, Talent Acquisition (TA) professionals are staring into the face of a potential economic recession, which is causing some to consider reducing hiring activity, according to an insightful SHRM article by Roy Maurer. He argues that employers battling a skills shortage are refocusing their attention on retention and meeting candidate priorities such as flexibility and career development, in a labor market expected to cool down.
Drawing on insights from top industry experts, the article presents a comprehensive view of the challenges and potential shifts in the recruitment industry for the year ahead. Maurer does well to balance his narrative with data-driven insights, quotes from industry leaders, and pragmatic advice for TA professionals.
Maurer quotes LinkedIn’s chief economist Karin Kimbrough who states, “labor-market dynamics remain tight,” with employees still holding the power to demand more in terms of salary, flexibility, and benefits. This echoes recent labor market research findings, which have shown that 2022’s highest number of job openings in 21 years is predicted to gradually decline in 2023. The “Great Resignation” trend is losing steam and unemployment rates fell to 3.4 percent in January, according to the Bureau of Labor Statistics.
However, some sectors, such as health care and leisure and hospitality, remain strong, and the competition for talent is not expected to ease, despite the hiring slowdown. In line with the data, Jay Denton, Chief Analytics Officer at LaborIQ, states there is “more than enough new job creation to cover any layoffs.” This suggests a delicate balance between job creation and job reduction that could shape the future of the talent landscape.
One significant point Maurer raises is the increasing emphasis on skills-based hiring, a trend that has been garnering more support from state and federal lawmakers. Citing LinkedIn’s data, Maurer illustrates how employees who have had internal career moves have a 64% chance of staying with the organization after three years, as opposed to a 45% chance for those who haven’t. This transition from rigid career pathways to a flexible skills-first approach may not only fill critical skills gaps but also increase employee retention, both vital for companies in the midst of an economic slowdown.
The article also hones in on how candidates continue to value flexibility and work-life balance. Recent studies have shown that more workers prefer flexibility in when work gets done, over flexibility in where work happens, resonating with the views shared by Jeanne Meister of Executive Networks. This suggests that the ‘traditional’ 9 to 5 workday might be replaced by a more fluid schedule, demanding a significant cultural shift on the part of employers.
As 2023 trudges on, the article mentions that the balance of power, which heavily tilted towards the employees in the past year, might begin to level out as labor-market dynamics remain tight. The year 2022 saw the highest level of job openings in 21 years, but experts predict a slow decline in 2023. The ‘Great Resignation’ phenomenon also seems to be losing momentum. Amid the speculation of an upcoming recession, the unemployment rate has been reported to fall to 3.4% in January.
Jay Denton, chief analytics officer at LaborIQ, predicts a best-case scenario of the economy gaining 1.2 million jobs this year, but also indicates that a worst-case scenario might lead to a loss of half a million jobs overall. However, he emphasizes that certain sectors, including health care and leisure and hospitality, will continue to stay strong and that there will be new job creation, despite the potential layoffs.
The article notes that there may be a slowdown in hiring, but the competition for talent isn’t easing. Johnny Campbell, CEO of Dublin-based SocialTalent, stresses that recruiters should not back down in this situation, citing the repercussions from the COVID-19 crisis when many companies drastically reduced their talent acquisition function, only to scramble in rebuilding these teams when they were needed the most.
The article also delves into the importance of maintaining the employer brand and refreshing the recruiting strategy. Companies may focus on these aspects if there is a slowdown in hiring. There is also a hint of pessimism from Amy Schultz, global head of talent acquisition at Canva, who anticipates that more people might leave recruiting for good, leading to a potential talent shortage in the future.
Next, the article focuses on the prominence of flexibility and work/life balance in the post-pandemic world. Candidates will continue to seek out employers who value these aspects. This has been amplified due to the hybrid work model, which is expected to continue evolving. The importance of understanding and respecting work/life boundaries, trust in workers, and flexibility in work schedules is highlighted, and the successful example of Chick-fil-A’s unconventional work schedule resulting in increased employee retention is cited.
Internal mobility within organizations is another trend on the rise, according to the article. With the growth of technology, it has become easier for employees to explore different roles and acquire new skills within the same organization. LinkedIn data supports this trend, showing that employees who have moved internally are more likely to stay with the organization after three years. Experts suggest that organizations need to create a culture where mobility is encouraged and have systems in place to connect employees with opportunities.
Finally, the article outlines the shift towards skills-based hiring. This approach emphasizes candidates’ competencies over traditional criteria such as college degrees and work experience. This method of hiring is particularly prevalent in the tech sector. However, the challenge remains in defining skills and in measuring job fit, work style, potential to learn and grow, and other attributes. The rising demand for soft skills like communication, customer service, and collaboration is also noted.
In conclusion, the article is a comprehensive analysis of the changing dynamics in the labor market. It takes a well-rounded approach to discuss the potential economic slowdown, the importance of talent acquisition, the emphasis on flexibility and work/life balance, the growing trend of internal mobility, and the shift towards skills-based hiring. The views presented in the article offer an insightful look into the current state of the labor market, the challenges that lie ahead, and the strategies that can be employed by companies to navigate these challenges. It serves as a valuable resource for HR professionals, recruiters, and business leaders alike.
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