50%

Of executives thought a recession could hit as soon as this quarter or next quarter. 

21k+

More than 21,000 employees at US-based tech companies have been laid off this year. 

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Experts are currently predicting that many of the world’s leading economies could be headed for a recession in 2023. And a recent survey by McKinsey found that more than 50% of executives thought a recession could hit as soon as this quarter or next quarter. 

This puts businesses that need to make new hires in a difficult position. Should you freeze hiring altogether and focus your resources on keeping your current operations going — or is an economic downturn the perfect time to invest in recruitment? 

In this article, we’ll explore how you can use this time of uncertainty to take a step back and develop your recruitment processes so you’re set up for success when the economy recovers. 

Let’s jump in.

What would a recession mean for businesses?

As of 2022, economists are not all agreed that a recession is inevitable. But the possibility is still a very real one, and smart businesses need to be prepared.

During times of economic uncertainty, consumers and companies are less likely to spend money, meaning many businesses will see decreased revenue. Lenders also tighten their belts, meaning companies may struggle to get loans and financing. 

This means a recession is usually a time for companies to cut costs. Investment in new product lines slows, overheads are slashed, and some companies will need to make layoffs. And, crucially, hiring usually slows down too.

Should you stop hiring during an economic downturn?

Hiring is expensive, and companies often don’t want to spend money recruiting and onboarding new employees when layoffs and cuts might be around the corner. For many business leaders, the instinct is to freeze hiring altogether during an economic downturn.

But the fact is that the economy will eventually recover, and businesses that haven’t continued to drive growth will be left behind those who planned ahead. Instead of freezing hiring, we recommend being strategic and thoughtful about your recruitment efforts. 

By using this time as an opportunity to develop and invest in your processes, you can make sure you’re ready to ramp up your hiring again when the time is right.

How to build your recruitment strategy during a recession

1

Slow down to speed up

In times of economic uncertainty, you may need to slow down your recruiting efforts — but that doesn’t mean you should stop altogether. Instead, take the time to step back and assess the processes you have in place. 

This means actively searching for inefficiencies, bottlenecks, and wasted time in your processes and taking steps to eliminate them. Diving into key metrics like T2H, CPH, and acceptance rate can help you figure out where your biggest problems are and where some strategic investment could help you optimize your processes for the future. 

Also, think about the key areas you could focus on improving while your hiring efforts are slower. For example, putting time and investment into really nailing your candidate experience can give you a better chance of landing top candidates for the roles you are hiring for. 

2

Focus on key roles & investments to outmanoeuvre the competition

An economic slowdown could also be the perfect time to run some deep analysis of your competitors and spot any opportunities to get ahead.

For example, consider whether you’re missing any key roles in areas that your competitors have covered. Is there a crucial part of the hiring process that they seem to be doing better than you? 

In a time of economic uncertainty, you might not be able to make all of the hires or investments you’d like to — so the key is to be strategic in determining where your best investment opportunities are.

3

Go for quality over quantity

When you have limited resources to work with,  you might not be able to hire at your usual pace. Seeking out quality candidates who can fill multiple needs can be a valuable alternative to spreading these roles across several hires. 

Keep in mind that skilled all-rounder candidates often have a lot of opportunities to choose from, which means they come with a higher price tag. But even when you increase your compensation and benefits package, this can still be less costly than making multiple hires.

4

Don’t lose focus on your current workforce

If making new hires is really not feasible, look for opportunities to leverage and build on the skills you already have in-house by upskilling your current employees. Investing in training and development can also help you avoid layoffs down the line by increasing the value each employee brings to your organization. 

And employee retention is another big consideration: while history suggests that people tend to stay in their jobs during times of economic uncertainty, things may be different this time. Data shows that the job market is still incredibly strong, and a recent survey found that 30% of American workers plan to quit their jobs in the next 6–12 months, despite the potential recession. 

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What the experts say: tips from our team

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Kathryne Snowdon,
Group Talent Director, London

“When hiring slows down, I recommend viewing it as an opportunity to take stock. Having the time to understand your processes and implement improvements enables you to optimise ramp-up time when hiring demand peaks in the future. Look at your candidate and hiring manager survey data: are there opportunities to improve their experience when working with your talent team and make the experience more efficient? 

Deep-diving into historic hiring data can also help identify common themes to mitigate with future hiring, such as high candidate dropout rates at particular hiring stages, or interview processes in certain business areas that take longer than average. These are pain points that may have previously contributed to your business losing top talent to a competitor at the height of hiring need.

Undertaking a talent audit and understanding the strengths and areas for improvement within your talent function should be a top priority during quieter periods to help increase your competitive edge when hiring booms again.”


"Identify major strengths and areas for development"

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Malte Fenger,
VP of Germany

“In a hiring slowdown, it’s a good exercise to understand that markets work in an ebb and flow motion. Off the back of the first COVID year, talent acquisition teams needed to ramp up quickly — literally instantly — without any warning.

Time to do an introspective. When you look at your teams, identify major strengths and areas for development. Leverage knowledge between team members and think about building a skill matrix for effectively assigning the right person to the best project. Also, many companies that slowed down in hiring are still hiring for senior leaders or even execs. It’s a good time to become experts in your market/business area and, crucially, train where needed in this very different type of hiring.

But most importantly: Stay close to your business leaders to get as much lead time as possible for when things pick up again to rally your teams for this event and to engage with external partners.”


"Transition your team to a place of strategic thinking"

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Jamie Cross,
VP of East Coast

“Talent teams too often find themselves being reactive due to huge hiring demands, lack of planning, and under-resourced teams. Times of reduced hiring demand present a great opportunity to zoom out and transition your talent team to a place of strategic forward thinking.

Let’s be optimistic and assume you’re going to start hiring again at some stage in the near future. How can you set your talent team and hiring community up for success once the hiring floodgates are opened again? Using data from your ATS and feedback from candidates and hiring managers can help you to identify areas for improvement. 

It’s also a good idea to identify your evergreen roles. What are the skillsets and roles you’ll absolutely be hiring for again? Create candidate pools and develop nurture campaigns so that when you’re ready to hire again, you have a warm pool of candidates ready to interview who are already interested in your company. 

Another thing you could focus on is your ATS. This represents a big cost, but it often gets neglected when hiring demands are high. So when hiring slows, it’s a great opportunity to ensure your ATS will effectively support your hiring processes when you’re ready to start hiring again. 

You could also take the opportunity to upskill your talent team, either through formal class training or informal lunch-and-learns. This ensures your talent team are armed with all the skills they need to be successful when hiring kicks back in again.  Also, consider upskilling your hiring managers and interviewing community. Being a good interviewer doesn’t come naturally to everyone, so providing training around interviewing skills, how to fairly assess candidates and unconscious bias will help your interviewing community to confidently make hiring decisions when they’re ready to start hiring again.”


Layoffs & hiring freezes could help you fill hard-to-fill roles

In these uncertain times, we’re seeing more companies announce layoffs and hiring freezes every week, and tech firms seem to be getting the worst of it. More than 21,000 employees at US-based tech companies have been laid off this year, with Microsoft, Shopify, Twitter and Meta among the big names that have made headlines. 

But it’s not a simple picture: other big firms like Reddit, Canva and Roblox have announced that they’ll continue to hire through 2022. 

Leaders who are willing to take risks during this period will have access to large pools of previously unavailable talent since other big players have cooled off their hiring efforts. This could present an opportunity to fill those hard-to-fill roles that have sat empty for a while. 

There are even tech solutions like Parachute and Layoff.fyi that allow recruiters to browse companies that have recently made layoffs and find quality candidates who may be open to new opportunities.

Talentful: your strategic recruitment partner

Even in an economic downturn, most companies still have a certain number of hires to make. But when times are lean, you need to ensure your processes are as efficient as they can be and that you’re focusing your resources in the right places. 

While it might be tempting to rely on short-term, sticking-plaster solutions like ad hoc agency support, now is the time to be strategic. That means focusing on your long-term strategy so that you can not only make the hires you need now, but also ensure you have the right resources and processes in place to step up hiring in the future.

At Talentful, we’re experienced in helping ambitious tech businesses to overcome obstacles and achieve their goals. From sourcing to full-cycle recruiting, leadership search, coordination and recruitment operations, we help high-growth tech brands scale efficiently, including Alphabet, Microsoft, Atlassian, Asana, Adobe and many more.

Using our decades of collective experience, we help our partners build sustainable, efficient processes that set their teams up for future success.

Want to learn more? Find out how we can help you achieve your hiring goals.

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