In times of economic uncertainty, hiring strategies shift from the recruitment of new staff to the retaining of existing staff. Companies typically put the brakes on hiring as a short-term precaution to preserve cash flow, often forgetting how crucial it is to expand your team’s knowledge and skillset to achieve longer-term goals.
A hiring freeze is typically a knee-jerk reaction to uncertain economic environments but despite good intentions, many founders can become short-sighted due to their anxiety about the future. Yet, research has shown that “companies that rely solely on cutting the workforce have only an 11% probability of achieving breakaway performance after a downturn.”
Experts at Harvard Business Review have identified a common trend among companies that were able to adjust their recruiting processes during tough economic times. An analysis of 4,700 companies across the last three recessions found that 9% came out of the crises by employing a “progressive focus”.
Progressive focus refers to looking at the longer-term goals of the business and strategically allocating resources to the areas that will move the business forward instead of waiting for the storm to blow over. In summary, these companies did cut back but in a strategic and selective manner.
Viewing uncertainty as an opportunity
Throughout history, we have seen uncertainty within markets as a catalyst for innovation. Back in its start-up days, Microsoft built resilience in the 1970s by hiring during one of the worst 16-month economic periods in US history ready to launch its market-changing technology suite.
Likewise, Netflix launched in 1997 just before the dot-com crash of the early 2000s, and was able to weather the storm and harness its innovation and creativity from its people to transform itself into a pioneer in streaming on-demand consumer video.
Apple also pivoted during the dot-com crash of the early 2000s and Tim Cook, the current CEO of Apple, has recently stated “we believe in investing during downturns.”
Thinking of the bigger picture
During the 2008 global financial crisis, a survey of 3,400 executives found that the most common reaction to the crisis was to scale back recruiting. At the same time, survey participants rated the selective hiring of high-performing employees from competitors as one of the three most effective responses to the crisis and the one with the best impact on employee commitment.
Many of these choices will reflect our loss aversion — a bias that makes us resistant to change because we’re more concerned by what we may lose than what we might gain. It’s also the reason we tend to laser in on avoiding bad outcomes rather than focusing on progress.
Pragmatic leaders recognize the importance of keeping the momentum going when it comes to business growth. Investing in the right talent to support your longer-term goals in times of uncertainty can ensure that no previous progress is loss.
Handling your hiring in uncertain market conditions
Using the progressive focus framework as a guide, we would recommend considering the following elements before deciding how to proceed with your hiring plans:
- Your company’s long-term goals: Where do you want your company to be in 5 years’ time? What skills and expertise are your current team lacking to achieve this?
- Your company’s immediate hiring needs: What positions do you have open? Are they a low, medium or high priority to achieving long-term goals?
- What are my competitors doing? Taking a step back and looking at your competitors can provide you with a sense of direction. Are your competitors freezing their hiring or making lay-offs? This could be a great opportunity to get one step ahead.
How Engtal can help
Whether you’re on a hiring freeze or ramping up your hiring in 2023, our team is here to provide invaluable market insight, employer branding support, and access to top candidates in the technology and engineering markets. Reach out to us today to discuss your current or future hiring needs.