If you’ve had any experience with hiring, you’re likely quite familiar with the volatile nature of the recruitment industry. But despite its ups and downs, it remains our task to find and retain top talent. So, how can your organisation adapt to the changing market landscape and successfully hire in an economic downturn? Read on to see how and why recession recruitment is worthwhile.
First, it’s important to understand how the market outlook could affect us.
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How does a recessive economy affect hiring?
Before diving into how you recruit in an economic downturn, we should first cover what the current economic outlook means for the world of talent acquisition.
When the economy is down, talent acquisition is often one of the first things that pause. From the employer’s perspective, this can seem like a smart move. Hiring new team members can be risky when purse strings are tight.
Talent acquisition becomes less important than employee retention. If the state of the economy warrants it, businesses can start letting go of existing staff. While we aren’t in a recession yet, and there’s no guarantee we will be, many people are concerned about the economy. If it does happen, we would start to see lower business profits, rising unemployment, more layoffs, and hiring freezes.
And we aren’t looking at the situation with rose-tinted glasses. We understand that if your organisation is susceptible to downturns and doesn’t have the cash flow to enable continued recruitment then the priority needs to be the survival of the business.
But we’re not quite there. Despite a slowing economy, job openings still outnumber unemployed workers. However, that could change, and a steady jump in recent hires means that many employers aren’t as desperate to find new employees. It never hurts anyone to be prepared for a recession, recruitment teams especially.
Challenges of recession recruitment
Hiring in economic downturn, or any recession recruitment activities, are no easy task. Here are some of the top challenges to be prepared for:
If you must lay off employees, it’s best to handle it as kindly as possible. Not only is this for the sake of the affected people and your employer brand, but you also don’t want to burn any bridges for when things start to turn around. Being insensitive or callous during layoffs can severely damage your hiring efforts now and in the future. There were some employers at the start of Covid that were ruthless with their redundancies. When the market bounced back, people remembered this and the employers struggled more than most to rehire from a sceptical employee market. The market (and people) don’t forget!
Layoffs can also be turned around, as recruiting laid-off talent from competitors is an effective strategy if the organisation can afford it. Don’t let the stigma fool you. In times like these, many layoffs are a case of business necessity, not employee performance. Use this as your opportunity to poach quality talent while they’re available.
Employers sometimes have a tendency to implement a hiring freeze as a knee-jerk reaction. It’s important to keep in mind, however, that this can hinder the organisation’s adaptability. Having nuanced conversations about which roles to freeze and which high-value roles to keep open can be a huge bonus. Plus, once things turn around, it will be much easier to build momentum from a slower pace than a complete standstill. Also remember that a hiring freeze is not a recruitment freeze, and there are many other initiatives in the process you could take in the meantime.
As organisations look to cut down on costs, there is a risk of recruitment technology and budget being cut. These reduced resources can make it even harder to source the talent you need. While recruitment fees are also something that might be on the chopping block, it can be important to remember that, if your organisation needs to hire, leaving that seat empty for the shortest possible time will save you the most money.
Organisations also shouldn’t be so quick to start cutting down TA teams. When the market readjusts and new hires need to be made, a smaller TA team would likely mean a bigger reliance on outsourced recruitment. If you need to quickly hire 10 new staff members, that’s $100,000 to $200,000 in recruitment fees. That’s a significant cost in comparison to a salaried team member that could have continuously been adding value to the candidate pipeline over the year.
When things look rocky, many top candidates will be hesitant about the risks associated with relocating for a job – even more so in today’s dire rental market. This can cut down your available talent pool. You’ve got two options to combat this – either focus on local talent or offer remote work options.
Thankfully, remote work is becoming more and more common in offices around Australia. If you’re able to facilitate a hybrid team, this is a great option. Otherwise, your best bet is to contact a specialist recruiter to access more of the local talent pool.
Applicant rich, candidate poor
In an economic downturn, there is a tendency for the talent pool to have a larger variation in quality. There will still be excellent candidates out there, but you’ll be sifting through many more CVs to find them. This is called being applicant rich, candidate poor. Couple that with reduced TA teams and budget cuts to technologies such as an ATS, and your organisation may find it a lot more laborious to identify top performers from a large talent pool.
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Advantages of recession recruitment
While this can be a challenging time, it’s also a window for well-prepared hiring teams to capitalise on some rare opportunities.
Here are some of the advantages of economic downturn or recession recruitment:
The opportunity to overtake competitors
In a challenging economic environment, the unfortunate losses of other organisations can become your important recruits. There will inevitably be some good catches on the job market during this time. It’s also possible that exceptional talent who were previously passive candidates become active job-seekers overnight.
Things will move quickly, so it’s important to keep a finger on the pulse of the talent pool during this time. An increased focus on finding experienced and specialised candidates can also help you snag these rare diamonds.
An ability to refocus on strategy
A slowdown in recruitment is a perfect opportunity to step back and assess your strategic approach to recruitment. Maybe you’ve realised that you get too many applicants and need better screening questions. Maybe you can improve retention by better communicating the employer brand in job ads. Could the referral program be revamped with better incentives?
All of those tasks that you haven’t had time for in the past year now get their chance to shine, and you can ensure the TA team is prepared for when hiring ramps back up again.
The chance to stand out
With more time on your hands, an economic downturn also provides you with the chance to stand out above other employers. If you can, keeping your hiring efforts going during times like this signals to the market that you are an industry leader; confident, resilient and stable.
And this image isn’t only reflected onto potential applicants. Clients, customers, partners, investors, and buyers will all see this. Most will prefer to support an organisation that is stable, so showcasing your organisation’s resilience by undertaking recession recruitment can also help with sales and business development.
An environment to spark innovation
Innovation comes in challenging times. An increased focus on cost-saving and results can help you and your team find groundbreaking solutions. Whether it’s a new technology, new procedures, or even just a new mindset, tough times can help bring your team together and make everyone stronger. If you’re bringing new people in during this time, you’ll get the added benefit of diverse thinking, and someone else to help you work through the challenging market together.
Yes, You Should Be Recruiting in an Economic Downturn
The main point of this article is that even if the economy is not going strong, organisations should try to avoid a hiring freeze. It’s much easier to ramp things up when the market shifts than to restart from a complete stop. Even if hiring teams don’t have full control over the organisation’s recruitment strategy, they can still influence the thoughts and decisions of those who do. While an economic downturn or recession can be hard for everyone, it’s also one of the best windows you’ll get to find and recruit top-quality hires.
Here’s a quick case study – during the dot com crash in the early 2000s, Apple was one company that continually improved its products and team. “We believe in investing through downturns — we’ve always done that. We’ve always found out that it made us stronger on the other side,” said their CEO Tim Cook. And it’s brought them success. The iPod was an enormous hit even in a post-9/11 market, and the iPhone broke sales records during the Great Recession.
The Harvard Business Review published similar findings, learning that companies with a ‘progressive focus’ during the last three recessions were able to come out on top. That meant cutting costs where they could, but also investing strategically in key hires while they knew the talent was there. Survey respondents rated the selective hiring of high-performing employees from competitors as one of the three most effective responses to the crises and the best for employee commitment.
As we’ve seen, the key to success is to maintain a long-term, big-picture mindset. Work with management to monitor the company’s financial health, and the market, so you can determine when to step up hiring and when to scale it back. A flexible recruitment plan will get you the distance in these sorts of economic environments. There will be a need for constant reassessment and readjustment, but having a solid foundation to work from will save you a heap in the long run. And that’s what it’s all about – the long run.
It’s not all doom and gloom. Yes, there can be unique challenges that come with recruiting during an economic downturn. However, if you are able to implement recession recruitment successfully, you will find your organisation with a head start against your competitors. Being proactive while others are in panic mode will ensure you get through the tough times with a leg up.
So, ready to find and hire some top talent?