With the rapid ups and downs of the economy over the past two years, employees feel more vulnerable than ever.
By: Sne Patel
Over the past several months, the pendulum of frantic hiring that is typical of an economic boom has swung sharply to headcount reductions, as the market appears to be moving to a slowdown. This swing is impacting startups and well-established businesses alike, across a multitude of sectors, industries, and stages of the company lifecycle – as corporate confidence and a focus on growth give way to economic uncertainty and fears of recession.
In the wake of the Great Recession of 2008-2009, the U.S. experienced sustained economic expansion throughout the decade of the 2010s. In the three years before the pandemic hit, many companies experienced a period of unprecedented growth and profits. At the beginning of the pandemic in 2020, in the face of plummeting revenue expectations, many companies laid off large segments of their staff to lower expenses and conserve financial resources. However, with the arrival of unprecedented government stimulus efforts and the COVID vaccines in early 2021, came a robust reopening of the economy and a need for companies to restaff as quickly as possible. Such massive hiring demand ushered in an environment of wage inflation even before the onslaught of resignations hit in mid-2021; companies looking to increase headcount found it equally challenging to retain top talent given the complicated employee-employer relationships created over the previous 12 years.
In the face of a spate of recent layoffs made visible by social media, many organizations – particularly startups – have found hiring in the current environment to be challenging for other reasons: candidates (and even current employees) are increasingly wary about job security and company viability. They are cautious about joining any company, let alone emerging brands that may not yet have clear market presence, streamlined internal operations, or established strong leadership. Additionally, current employees are worried the state of the economy may force their employers to consider layoffs. To succeed against this backdrop, HR leaders must partner even more closely with their C-suites to align on strategic hiring and transparent messaging moving forward.
This article will cover three tips to help leaders reassure potential candidates in the current economic environment, as well as allay concerns for their existing employee base. These tips are especially relevant to startups, but well-established companies can benefit as well.
#1: Own your seat at the executive table by coaching leaders to pivot quickly from speed hiring to strategic hiring to avoid future layoffs.
Employers have begun to ask themselves: Has the Great Resignation come to an end yet? For now, the answer is a resounding no, leaving HR leaders to reevaluate their company’s talent recruitment strategies once more.
HR leaders must understand their company’s business – operations, roadmap, and clients – to be able to knowledgeably and credibly partner with company leadership on hiring cadence and strategy. What drives revenue? What are barriers to growth? What milestones or success factors must be achieved to successfully execute the business plan? What metrics need to be analyzed and understood to ensure leaders are making the right hires at the right time?
Every company recruits differently, informed by critical factors including the state of the economy, business growth needs, and even time of year. However, it’s important that HR leaders continuously assess their company’s talent needs and talk with their C-suite and department leads to collaborate on short- and long-term hiring plans. The pandemic revealed it’s essential that HR leaders have a seat at the C-suite table to ensure an organization’s business strategy and recruiting efforts are aligned and more cohesive than ever. HR leaders are a critical asset and can provide important insights when it comes to hiring, as well as guidance and support to the rest of the C-suite as a company grows and changes.
One lesson businesses were reminded of again over the course of the pandemic is to avoid overstaffing at all costs. Over the past year, we saw many companies, especially startups, aggressively hire and scale exponentially, in an attempt to match their business’ rapid growth with a surge in recruiting new talent. Now, many organizations are pumping the breaks on hiring to avoid layoffs and cut costs in the face of an apparent economic slowdown.
As HR leaders, it is our responsibility to partner with executives to ensure our company hires talent in a way that balances today’s business needs while keeping an eye on the near and medium-term future of the economy. We’ve seen firsthand that over-hiring and overspending can be very damaging for a company’s future, especially a young company, just as excessive headcount reduction can leave a company ill-equipped to weather economic slowdown or capitalize on opportunities once business conditions improve.
In the present environment, many organizations are making adjustments to their business forecasts, re-evaluating their expenses and planned investments in human resources. With inflation continuing to be a concern, the cost of doing business continues to rise and is top of mind for leaders. In order to protect current employees, as well as candidates who might take a new job only to risk losing it months later, HR leaders and their organizations need to ask themselves: How do we do more with less?
#2: Arm your talent acquisition team with clear talking points for candidates.
Everyone at your organization must be on the same page with regard to attracting and recruiting talent. When considering hiring strategies to fulfill your company’s talent needs, it’s essential that your talent and acquisition teams be honest about the state of the business.
As HR leaders, we’re aware that the interview process can be a marathon. Often, business circumstances shift from the time someone submits an application to when they are made an offer. Prospects should have a basic understanding of your company’s business strategy in this current time of economic uncertainty throughout the interview process. These conversations can be challenging, but are critical for potential candidates to know what they may be signing up for when they take a job, which can save your company in the long-term from quick turnover or having to conduct layoffs.
It’s up to HR leaders and executives to equip their hiring managers with the tools needed to hire successfully. This includes providing thorough training, consistent messaging, and clear communications when it comes to the company’s business strategy, expectations for the future, and current financial standing. Particularly when a job applicant may be hesitant about taking the risk of joining a startup, an HR leader or hiring manager’s transparency can open the door to a more comfortable and honest conversation, while appeasing concerns.
#3: Don’t forget about your existing employees; employee retention is as important as recruiting.
While attracting talent may be top of mind, today’s HR leaders and employers can’t forget their current workforce, whether it’s addressing employees’ concerns, commending their commitment, or maintaining an open line of communication regarding the business’s current standing. Being transparent about how your organization is doing is vital. In addition, your employees require reassurance of their value – they are critical to retaining your customer base. Whether you’re scaling or maintaining your business, leadership should always be held accountable and strive for integrity through the good and the bad.
HR leaders should also keep in mind that cutting back on the time spent interviewing and onboarding new hires can allow for more investment in strategic initiatives that improve the current employee experience and reduce turnover. Doubling down on interview training, diversity and inclusion initiatives, benefits assessment, and development efforts can help employees feel valued and supported. Ultimately, employee satisfaction correlates with high engagement, which can lead to better customer service and business outcomes. All in all, retaining top talent is key to promoting organizational growth, combatting morale issues, and avoiding unnecessary costs and roadblocks to success.
With the rapid ups and downs of the economy over the past two years, employees feel more vulnerable than ever. In such a short amount of time, employees have identified reasons to leave, to return, and to fear for their jobs. Looking ahead, all eyes are on HR leaders to recognize the impact that the current state of the economy has on their business and employees. Keeping up with the unpredictable impacts such economic swings may have on a workforce will be challenging, but if leaders invest time hiring strategically and taking care of their people, they should be optimistic about the road ahead.
Sne Patel serves as Chief People Officer (CPO) at Veda. She is also a development coach helping leaders cultivate strategic approaches to grow more confident in their decision-making and communication skills. Sne serves as a trusted thought partner to executives, in service to developing high-performing, cross-functional talent as a competitive differentiator.
Sne is a passionate, authentic people and culture leader with 20+ years of strategic and tactical high-growth business experience. Prior to Veda, she led Human Resources at Lumere and the Robin Hood Foundation and was Co-Founder and Chief Operating Officer of Caiman Hotel Management Group, overseeing a staff of 100.
