Talent acquisition (TA) professionals are staring a possible economic recession in the face as 2023 advances, causing some to consider pulling back on hiring. At the same time, employers that are experiencing a skills shortage will be focusing on retention and candidate priorities, like flexibility and career development. And the buzz about skills-based hiring will only get louder.
“This year we are seeing a slower pace of growth, as the economy comes back down to earth after a meteoric rise last year in one of the fastest recoveries we have ever seen,” said Karin Kimbrough, chief economist at LinkedIn. “Nevertheless, labor-market dynamics remain tight. So in many ways, employees still hold the power to demand more from their employers when it comes to salary, flexibility, and benefits. But this power balance is likely to start leveling out in the coming months.”
The number of job openings, which reached its highest level in 21 years last year, is predicted to slowly decline in 2023. The Great Resignation started to lose steam last year, and although recession fears are still present, the unemployment rate fell to 3.4 percent in January.
“Our best-case forecast is that we will gain about 1.2 million jobs this year,” said Jay Denton, chief analytics officer at LaborIQ, a compensation and labor market analytics software company based in Dallas. “That may have seemed optimistic but is more plausible after January’s blockbuster jobs report. A more pessimistic case, which could still be in play, is that we lose half a million jobs overall. There are still plenty of question marks out there.”
added that certain sectors will remain very strong, such as health care, leisure, and hospitality. “Talent shortages will also remain,” Denton said. “The competition for talent is not easing, even with a slowdown in hiring. There is more than enough new job creation to cover any layoffs.”
Johnny Campbell, CEO of Dublin-based SocialTalent, a learning platform for recruiters, said the technology industry is already experiencing the brunt of layoffs as the year begins. “But don’t be fooled,” he said. “Hiring will still be incredibly difficult. As big as the recent number of layoffs seems, this is only a fraction of the total current vacancies. Combine this with global workforce shrinkage, and it only adds to the challenge of recruiting.”
Experts agreed that even when labor market contracts and hiring freezes spread, recruiting operations should not be slashed. Given how hard it will be to find talent in the coming years, you need to ensure your hiring machine remains solid, enabled, and ready to fire once we get back to business as usual,” Campbell said. “When COVID hit, the talent acquisition function was drastically reduced, only for there to be a scramble to reform these teams when the function was needed most.”
Neil Costa, CEO of Boston-based HireClix, a digital recruitment marketing agency, said he’s seeing some recruiters already being laid off and some clients pulling back on hiring, but he’s still also seeing a lot of enthusiasm for recruiting. If there is a slowdown in hiring, TA teams can put their focus elsewhere, like revamping their career site and employer brand. Many companies still need a refresh on different aspects of recruiting strategy.”
Amy Schultz, global head of talent acquisition at Canva, a desktop publishing design software firm based in Sydney, senses a more pessimistic shift in the recruiting industry. “With more recruiting teams being laid off again, I predict we will see people leave recruiting for good, which will cause a further talent shortage when the market picks back up and recruiters are in high demand. Since the pandemic began in early 2020, some recruiters have been laid off three or more times. I don’t blame folks for not wanting to return to this kind of ongoing turbulence.”
The last two years have put exceptional pressure on HR and recruiting, said Nicola Hancock, managing director for the Americas at AMS, a recruitment services and advisory firm based in London. “With all the burnout, I could see people rethinking their careers in the short term. But recruiters love recruiting. It’s a real passion. Ultimately, it is very rewarding—you help people find jobs and move up in their careers. And the recruiting role has never been more critical. For many business leaders, attaining the right skills during a talent shortage is a top concern.”
Candidates Still Value Flexibility
Job candidates and employees will continue to seek out employers that value flexibility and work/life balance, two priorities that spiked to prominence during the pandemic and will remain core to an employer’s value proposition. As an added benefit, supporting flexibility will improve retention.
“I expect work/life balance and flexible work arrangements to remain top talent drivers for years to come,” said Jennifer Shappley, vice president of global talent acquisition at LinkedIn. “These days, candidates are looking for companies that will value their whole selves and provide support in achieving work/life balance.”
Hancock said remote roles have been reduced since the height of the pandemic, but some flexibility is what candidates are looking for consistently, after compensation and benefits. “Organizations must try to balance their goals with what’s important to candidates, especially in such a competitive market
Flexibility no longer means just working remotely, said Jeanne Meister, executive vice president with Executive Networks, a San Francisco-based resource group for HR leaders. “More workers want flexibility in when work gets done over flexibility in where work happens. It can mean working four or even three days a week while working longer hours each day. For knowledge workers, working asynchronously requires an employer to make a cultural shift where work/life boundaries are respected, workers are trusted to do their jobs outside of a traditional 9 to 5 workday and employers set guardrails on where live synchronous work can take place.”
Flexibility in work schedules is also possible for front-line workers, Meister said. “For example, Chick-fil-A allows workers the ability to work 13 to 14 hours on three consecutive days with full-time pay, which has resulted in increased employee retention.”
Jeanne McDonald, president of global RPO solutions at HR and management consulting firm Korn Ferry, agreed that in 2023, more candidates will look for companies that promote work/life integration—foregoing the traditional 9 to 5 workday in favor of a more fluid schedule. That means being able to put in hours when it’s most convenient to take care of personal responsibilities when needed,” she said. “Watching the clock will become less important as managers assess success by the output of employees and not the time frame of their workday.”
Meister added that the hybrid work model will continue to be shaped. “HR and business leaders will need to set clear principles for success rather than mandate policies. That starts with defining what hybrid means in the organization, defining the workspaces where work will happen, the technology tools needed, the team norms, core collaboration hours, and rituals for success.”
Employees got a taste of what autonomy, empathy, and trust in the workplace could mean during the pandemic, Campbell said. “While it was an imperfect experiment, it showed how important these elements are for sustaining a positive impact on engagement and well-being. We need to stop pretending that life outside work isn’t important. Having the breathing room to alter your start time for example, or pop out midday for an appointment, could be game-changing for some employees.”
