One of the reasons economists and politicians have been struggling to even say whether or not the U.S. is or soon will be in a recession is because there are so many mixed signals.
This article was first published on November 17, 2022, by HR Daily Advisor, a sibling publication to HealthLeaders.
The past couple of years have been quite chaotic for HR teams as well as managers and executives trying to keep their teams staffed with qualified employees.
First, the COVID-19 pandemic triggered a widespread shift to remote work, not to mention high volumes of illnesses and even deaths that kept employees off the job.
As the pandemic began to subside, the next challenge to face employers was the Great Resignation, which saw large numbers of workers choose early retirement or simply opt to sit out of the workforce for a variety of reasons. This phenomenon has left employers scrambling to hold onto employees as the remaining workforce has taken advantage of its newfound labor market leverage to look for more attractive jobs and greater compensation.
A Looming Recession
As the COVID-19 pandemic seems increasingly distant in the rearview mirror and companies have started to adjust to the tight labor market, the next major challenge seems to be laying in wait just over the horizon: recession.
While economists have had mixed predictions and many are cautiously optimistic, there’s a growing consensus that the United States will experience some level of recession in the next year or so.
With companies bouncing from one employment challenge to another, we reached out to industry experts and employers to get a sense of their predictions for the near future of the labor market and what challenges and strategies they foresee with respect to employee recruitment and retention.
Don’t Pop the Champagne Just Yet
A potential recession could seem like a mixed blessing to some employers or at least to the staff members tasked with hiring and retaining workers. After all, it was a red-hot and sizzling stock market and housing market that padded the finances of older workers well enough to convince so many they could afford to retire early. While a recession is rarely good news for any business, might pouring some cold water on the red-hot economy make it easier to find workers?
Don’t be too optimistic, says Kathleen Quinn Votaw, CEO of TalenTrust. Recently, Votaw attended a conference and sat in a on an economic update where Wells Fargo predicted a very soft recession early 2023, she says. “Employees should prepare for their employers being more thoughtful about their investments and expenses leading up to the economic downturn but the employers will not ‘gain an upper hand’ since there is a supply and demand issue and not enough qualified employees who want to work.”
Leslie Aument, head of people at construction startup Kojo agrees that a recession (if one does materialize) doesn’t necessarily mean recruiters will be able to pick and choose whichever candidates they want. “I was a recruiter through the Great Recession from 2008 through 2011, and high-demand positions were still hard to recruit for,” Aument says. “I do think there’s a perception that the strongest performers at any company are likely not experiencing layoffs or joblessness, so some leaders still prefer to attract passive candidates rather than active candidates.”
But, Aument says, she doesn’t think that’s necessarily true. “It’s up to each company to have strong interviewing and assessment practices to ensure they’re hiring the right person, for the right role, at the right time, with the right set of core values, abilities and skills to be successful.”
A Strange Kind of Recession
One of the reasons economists and politicians have been struggling to even say whether or not the U.S. is or soon will be in a recession is because there are so many mixed signals. In particular, the job market isn’t acting like a recessionary job market.
“Some key points that make this economic downtown a tad unique is that employers keep creating new jobs, and 1.5M jobs were created since June 2022,” says Votaw. “Next, there are 10.1M open jobs and only 6M people that want to work: virtually or onsite. It will continue to be critical for employers to work hard to retain their employees as they will continue to have choice now and for the foreseeable future. There is always a demand for employees who can make a difference and drive growth. Make sure to distinguish yourself and stand out to your employer.”
Avoiding Change Fatigue
It’s important for employers to remember that they’re not the only ones struggling with the whiplash of global economic changes. Employees themselves are already stressed out by the pandemic, wars and talk of potential recessions. Whatever employers think they need to do to cope with a potential recession, they should strive to minimize the impact on their already frazzled employees, says Jason Medley, Chief People Officer at Codility.
“One thing companies can do is try to minimize the significant change in the organization as much as possible,” Medley says. “Talent is becoming extremely change-fatigued from the last few years. While I know many companies will have to restructure, the fewer times you do this will help efforts in the long run for 2023. Prepare well and remember that the world will feel unstable, so the more we can do to create stability inside our organizations, the less employees will have to deal with.”
Communicate, Communicate, Communicate
As companies ponder and even implement major workplace changes, far too often they leave their valuable human assets out of the loop. This can add to employee anxiety and create unnecessary feelings of dread and mistrust.
“Whenever there’s uncertainty, you have to step up your communications,” says Mary Stern of AI-powered employee experience platform Simplr. “If you don’t, employees will create their own reality. Whether you have changes internally or you’re responding to external factors, I guarantee you will have problems if employees don’t hear from you often. It’s essential to help employees dim the noise—and there’s a lot of it—to determine what’s relevant, what’s not and how it relates to their job security.” There are, she points out, “a variety of channels from intranets and all-hands meetings to strong employee communities and 1:1 personal communications with managers. No matter the channel, open communication is the piece that builds employee trust and retention.”
The modern global economy is certainly dynamic, something few businesses are ignorant about. However, the scale and frequency of major economic and labor market disruptions over the past few years has been quite remarkable. As companies look ahead to the next major challenge— a potential recession—it’s essential for companies to consider the impacts of an economic downturn on their operations and recruitment and retention needs.
Lin Grensing-Pophal is a Contributing Editor at HR Daily Advisor.
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