Layoffs and talent shortages make talent acquisition (TA) extremely challenging to predict in 2023. For forward-thinking employers, now is the time to stand out.
By The Editors
New year, new challenges. That’s the outlook of many TA and HR leaders as they experience the changing demands of business and talent in 2023. Coming off The Great Resignation, followed by the contradictions of mass layoffs and high worker demand, executives will have to continue to pivot this year as obstacles arise.
For companies facing an uncertain path ahead, a wait-and-see approach will not work, as the need for skilled workers to move the business forward is as strong as ever. With that in mind, what will it take for TA to deliver in a challenging environment?
According to Sevenstep President Amy Bush, the answer is a commitment to balancing the fundamentals of TA with innovations in practices and technology. “Competition for workers with high-value skills is as strong as ever,” she notes. “The company that builds a flexible and resilient TA capability can stand out and lead in a time when others are hesitating in their plans.”
That standout performance starts by recognizing the challenges and then ensuring that TA capabilities are aligned to meet them.
The challenges of 2023 are primarily a result of contradictions and uncertainty.
First, consider the layoffs in the headlines. More than 46,000 tech workers have been laid off in the US in 2023 (as of January). Add more than 150,000 layoffs throughout 2022, and the economy would appear to be in a steep downturn. Despite the layoffs throughout 2022, total job postings for tech workers in December stood at roughly 246,000. Many of those laid off have since found employment, and the picture is one of continued demand for workers.
At the same time, talent remains scarce. 2022 was a bullish year for job gains, with an addition of 4.5 million. A recent 2023 Q1 Employment Outlook Survey reports the IT sector expects the most significant hiring demand (35%), followed by the financials and real estate (28%), and energy and utilities (26%) industries.
The changing preferences of workers add to the complexity. SIA’s recent 2022 US Gig Economy report finds there were 33 million contingent workers in 2021. Workers are also more open to job fluidity, with Deloitte finding that 55% of employees have, or are open to, changing between perm and flexible job models throughout their careers.
All of this comes with a possible recession looming. The Conference Board’s C-Suite Outlook 2023 found that 60% of US CEOs are concerned about the economy and what it means to the bottom line. Bush notes, “A recession doesn’t equate to lower-priced labor, fewer job vacancies, or decreased competition for talent. TA leaders need to build for flexibility and embrace agility in these fluctuating conditions to succeed.”
Bush advises that organizations have clear visibility into their workforce in terms of talent supply and demand. This visibility can be achieved by leveraging a technology platform that integrates and analyzes people data. Armed with this insight, TA leaders can make informed and swift decisions about where hiring needs lie and anticipate where demands may arise.
Smart TA leaders will also be keeping an eye on the competition. During a tight talent market, organizations need to understand what industry competitors are offering to get ahead and retain top performers. Bush shares some best practices to leverage during this tumultuous time:
- Understand the real cost of workers for given skills. Market conditions—inflation, wage increases, labor shortages—are making hiring decisions a bit trickier than ever before. But technology plays a crucial role in making a difference. Having an AI-driven analytics capability will allow TA leaders to break down talent costs by skills and location. This deeper understanding of markets will help support and drive informed decisions.
- Ensure job requirements align with talent needs. To broaden the talent pool, organizations should rethink the essential skills and requirements needed by the role. LinkedIn has seen a 21% increase in US job postings advertising skills and responsibilities rather than qualifications and requirements. Things to consider: remove barriers to entry; review on-site versus remote work and FTE versus contingent; and hire for potential and invest in training opportunities.
- Build a responsive and flexible TA function. A 2022 Sevenstep and HRO Today report found that 69% of decision-makers believe their TA function focuses primarily on short-term projects. Only 7% rate their ability to react to changing business conditions as excellent. As organizations adjust to constant shifts in business conditions, only those that are agile will succeed. Scalability is critical. An ecosystem of recruiting talent and resources, often applied by working with an RPO partner, will allow an organization to scale and deploy TA resources to meet changing needs.
- Leverage the employer brand to attract and retain talent. Be sure to communicate the company’s mission and values to job seekers and provide an authentic view of what it’s like to work there.
- Create a measurable DEI strategy. Seventy-six percent of workers believe a diverse workforce is crucial when considering job offers. DEI must be a part of a company’s DNA and should align with specific business goals and data-driven performance.
While building for an agile TA function takes time, organizations will benefit from partnering with a solutions provider that offers access to a broad range of capabilities. These capabilities range from project recruitment resources to address specific skills and roles, technology to integrate workforce intelligence into the strategy or total talent capabilities to draw from both the employee and contingent workforce.
The remainder of 2023 promises to be challenging, but with the right strategies and partnerships, TA leaders can achieve their goals and take control of their path forward.