How & Why TA teams should be preparing now for the next economic downturn

a Recruiting Headlines Email Q&A

By: Darren Simons, President Americas, Cielo

Why should TA teams be preparing now for the next economic downturn – despite the tight labor market and low unemployment rates?

An economic downturn will bring different challenges to the talent acquisition function. Failing to prepare could compromise an organization’s ability to serve customers and to innovate, which can bring down enterprise value due to talent challenges.

The best time to prepare for an economic downturn is prior to the beginning of a cycle. C-suite executives will appreciate talent acquisition (TA) leaders that present them with agile strategies to internal and external factors before symptoms of an event become apparent. 

During the last economic downturn, we saw organizations scale back their investments in TA personnel, employment brand, talent initiatives, and technology. These cuts were often disproportionate to the need to serve the business and TA teams became stretched to deliver. Because of these decisions, organizations were unable to service the business during the downturn and kept them from capitalizing as quickly as they could have once the economy recovered. TA teams should prepare now so they are not in a situation where they lack the resources to find, recruit, and hire the talent they need when the economy gets better. 

What are a few best practices TA teams can implement to ensure they’re prepared in the case of a future economic downturn?

Strategy and planning

Creating a smart, comprehensive and future-looking talent acquisition strategy that builds in flex and scale can help reduce the need for drastic measures in response to challenging times. Some things TA leaders should consider include:

Capitalizing on opportunities – playing offense

An economic downturn makes key talent more susceptible to recruitment outreach. Strategic TA leaders should have a plan to aggressively pursue and acquire top talent in key roles and functions for their business.  

Creating variable costs structures creating options and scalability 

To create the best value model for their business and preserve cash for investment, TA leaders should create more flexible and variable spending models with their cost structure. This can be achieved through partnering to outsource their people cost as well as using leveraged or bundled buying platforms for recruitment marketing, technology, and search services.

Create opportunities to invest through the cycle

Automation strategies that lead to lower cost and faster throughput must be maintained during a cycle to maximize every dollar spent. In addition to technology, TA leaders should invest in employment brand. With the potential for negative workforce events during a downturn, it’s more critical than ever for companies to maintain and strengthen their employment brand.

What economic downturn warning signs should TA teams be aware of?

First, TA leaders should be locked in on the current health and outlook of their own organizations and industries and adapt their strategies accordingly. While many economic forecasts for the next two years remain positive, we are seeing some signs in the economy and job market that indicate a change could be coming. While the unemployment rate has remained at or below 4% for 16 straight months, it’s hard to imagine it can stay on that historic run much longer. We are seeing companies making cost-conscious decisions like decreasing the number of temporary hires. Additionally, stock market volatility, continuous talks of trade wars and uncertain geopolitical situations like Brexit could start to have a significant impact on hiring globally. 

There are well publicized indicators of a potential downturn, and TA leaders should pay attention to macro-economic indicators like the yield curve on bonds, confidence indicators, GDP, manufacturing sectors output, the leading economic index (LEI). They should also pay attention to employment indicators like month over month change in non-farm payrolls, number of jobs posted on the internet and jobless claims. 

What should they do to prepare for layoffs if that becomes necessary?

TA leaders must understand whether an economic downturn they’re facing is a temporary setback or a permanent change to their business or industry. If they decide it is a temporary setback, they should try alternatives such as retention programs, slowing hiring efforts or buyouts. If layoffs become necessary, TA leaders should do their best to communicate honestly as much as possible with employees, have a strong focus on doing what’s right for the affected employees, involve them in finding next opportunities and recognize what skill sets and positions are vital to maintain during a downturn. Managing the employment brand through a reduction is a critical item and engagement with remaining employees is critical to ensure retention. Another tactic TA leaders should employ is the creation of an internal gig economy to maximize the remaining resources and to provide career project opportunities for the talent.

Are there things TA teams do to mitigate layoffs in an economic downturn?

TA leaders should segment their talent needs and identify essential and flexible roles as part of their strategic workforce plan. While economic conditions fluctuate, and organizations adjust to operate accordingly, some roles always will be essential. TA leaders should work closely with their partners in the business to identify those essential roles. Doing so will ensure they are prepared to staff positions in a non-traditional way in advance of and during recession – such as using contractors or temp workers – to mitigate the need for layoffs. The creation of an in internal gig economy and total talent program will give TA leaders the most flexible approach to prepare and manage through an economic downturn


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