With the ongoing news of global tech startups laying off thousands of employees, such as Stripe last week, markets are recalibrating what makes an organisation valuable. At NewCampus, we’ve studied, partnered and worked with companies over the past eight years. We are continually observing how mature their talent management strategies are.
My two cents? The best-developed talent management strategies are often companies that are going through a horrible economy or bad business cycle. With maximum attrition and an economic recession crashing into each other, companies can have trouble assessing how they can balance their talent needs.
HR leaders need to balance the competing realities of the Great Resignation and an economic slowdown, which could necessitate furloughs and cost-saving measures, that would impact employees. Rather than hiring before the demand, leaders looking for future employment must balance current needs against the talent available, while trying to avoid overcorrection in an environment in which a talent shortfall continues to threaten operations.
Also Read: Why a recession is a good time to start hiring globally
As such, they keep hiring focused on critical skills and jobs. Today’s job seekers know that companies are struggling to hire and retain employees, believe that they have a chance to show off their qualifications, and they expect more dedication than ever before in terms of personal well-being and career advancement.
Different strokes for different industries
Leaders looking for the future are understanding and taking into account the ways that the downturn will affect their industries, customers, and employees, including implications for sales, manufacturing, distribution, and hiring.
Crypto and fintech companies scaled quickly in the bull market; now it seems education and health care are thriving in the bear. Every company and organisation is different and should react with a variety of strategies to a recession.
If the general economic decline is impacting your customers, it is important that you know about it early on so that you can adjust your company’s operations in different directions. Consider the downturn of your company as an opportunity to focus on your core competencies, reinforce your talent programmes, uncover weaknesses, and reimagine your business.
The good news is there are strategies, tested and proven, that can help an organisation cope with the economic realities of the recession, maintain its employer brand, and respond to the skilled workforce shortage.
Those employers who had one before the downturn struck would be much better placed to tackle the challenges of managing talent. The future of talent management will depend on being able to be more tactical about downsizing and be more selective about hiring.
With the looming downturn, the technology talent market could go from crazy to rolling, but this is no time to retreat from best practices firms have built up to build more adaptable organisations to the demands of the business.
Downturn mindset
To maintain their talent strategies intact in the face of economic slowdowns (or even perceived ones), hiring organisations need the right technologies.
In times of economic upheaval, effective recruitment and retention strategies will make companies much more attractive to candidates than their competitors and will ensure they have the necessary human capital to sustain a high-performance level during future upheavals and recessions.
Companies will want to have optimised, fair, transparent hiring processes that instil trust in candidates and accurately forecast future performance. Indeed, although it is increasingly difficult to recruit quality employees, demand continues to grow, and this is particularly true in the tech sector.
More importantly, companies are now in a position to recruit those engineers and computer science professionals that have been laid off by the technology industry because they are starting to seek stable job opportunities.
While it is true we are still in a labour shortage, we are starting to see large-scale layoffs across tech sectors. While we are seeing some companies experiencing layoffs and hiring freezes, this does not necessarily mean the talent shortage is going to go away right away.
In fact, it is not like startups, and tech companies are going to completely stop hiring in this period. They will have to be extra careful about hiring the right candidates for the right roles.
More importantly, startups and technology companies will not throw money and unlimited benefits at candidates, nor can they afford to retain poor candidates whose mediocrity goes undetected during times of economic success.
Back to fundamentals
Leading tech organisations will instead be putting high-skilled technical talent to work, with an emphasis on creating differentiated value for customers and shareholders. What is critical here is that companies must not be less invested in developing their critical core talent.
Such tools would allow companies to recruit the best technical talent on predetermined timelines or for particular projects, meaning companies could affordably ramp up, then back down, when needed in times of economic uncertainty.
Also Read: Hiring made easy: How to survive the talent war against tech behemoths?
These tools include complex assessments of employees, guidelines requiring hiring managers to look in-house before going outwards in search of talent, and opportunities to perform retraining/upskilling specific to the position.
Again, leading employers are showing us the way toward these new kinds of mindsets, embedding a series of key strategies at the heart of their talent management functions. Increasingly, top companies around the globe, the ones who have managed to retain strong employer brands irrespective of economic conditions, have begun demonstrating an entirely different, future-oriented strategy to manage the economic downturn.
Final thoughts
One thing’s for sure; while talent strategy is a perennial theme, deliberate, strong human resources initiatives are frequently pushed to the back burner during times of economic upheaval. In HR, uncertainty seems to be one of the biggest challenges sapping our judgements in the area of talent management: recruiting, succession, etc.
Having a plan tied to the needs of your business, revising that plan, and working from a plan is the best way HR leaders can make sure that they are recruiting, using, and retaining top talent that will help them weather economic storms.
Leaders, HR, line managers, and talent managers must lead their people leaders with eyes toward the future, ensuring they have the skillsets the organisation needs tomorrow, protecting the intellectual capital, keeping its key talent, and developing them to meet the aspirational needs as soon as the economic downturn ends.
While protecting your organisation from the unknown is essential, you must also fill the ranks of your staff with bright minds who will sustain your business during the economic instability.
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