Are we in a recession?
If recent news articles are to be believed, all signs point to an impending recession—or maybe we already are in the midst of one. Tackling stressful events such as a recession requires conscious thought and careful planning. Companies that implement the right policies now will come out stronger and more competitive when the market settles down.
In 2010, Harvard Business School experts conducted a study analysing 4,700 companies across three recessions. 17% of them didn’t survive it. About 80% of them had a painfully slow recovery. But around 9% of them were able to come out much stronger than they were before.
How did they do this?
By mastering the delicate balance between cutting costs to survive today and investing to grow tomorrow. These companies did cut back costs, but were extremely selective about when and where, and continued to make strategic investments. They realised that in a recession, you don’t need to hire or downsize. You can do both.
Here are four hiring strategies that you can adopt to cut costs and be an employer of choice:
Don’t freeze hiring
During a recession, most companies have knee jerk reactions to cut costs fast. Hiring freezes are all too common and seem like a good idea. However, this can often work against you. While it may save money in the short term, stopping new hires means putting a stop to your progress and growth entirely. You can run the risk of low or no growth, employee burnout and reduced quality of your services.
Instead, if you continue to focus on recruiting talent for key roles, you’ll be able to draw from a larger pool of people who may be looking for opportunities. These would be candidates that were recently laid off or would like to change jobs for better security. The key is to focus on long-term strategic goals. Hire employees for critical roles and retain employees in important positions.
Avoid mass layoffs
During a recession, there are many things you should do to save costs, but letting people go should be the last item on your list. Not investing in people and not keeping the pipeline filled can lead to grave consequences later. It’s easy to let people go but once the tide turns and the economy recovers, it’s expensive and an enormous effort to hire people back and fill open positions.
Moreover, the effects of layoffs on surviving employees affects productivity and morale. After a layoff, survivors experienced a 20% decline in job performance, a 41% decline in job satisfaction and a 31% increase in voluntary turnover.
Talent shortage is always going to remain a reality, so letting go of people is not a great idea. Avoid laying off your employees and discuss other methods to cut costs. If unavoidable, identify employees who are not in key positions and who do not directly contribute to strategic business goals. Handle terminations with kindness, sensitivity and extend a helping hand in every way possible. It’s crucial to empathise while being transparent at the same time.
Hire abroad
There are several reasons why you should hire talent abroad. Chief among them are having a bigger pool of skilled workers, having local experts in far-off locations and increasing the diversity of your team. But let’s address the elephant in the room. Hiring talent abroad also makes sense for your business because it’s cheaper. The cost advantage is a very real factor that we don’t have to discard. In terms of numbers, hiring remotely gives you access to a larger number of candidates to choose from. In a classic case of demand vs supply, higher supply leads to lower rates of hiring and running teams. Let’s acknowledge its benefits and use it to our advantage during the recession where cutting costs is crucial.
Each year, around 5 million STEM graduates finish college in India, China and Brazil. This is 16 times the number in the UK and Germany, who have 300,000 annual STEM graduates combined. Since these skills are in high demand and can often be done remotely, this opens many doors and opportunities for both companies and candidates.
Offer flexibility as a benefit
Usually benefits like gym subscriptions are expensive, but using a solution like WorkFlex and offering a temporary work-from-abroad benefit is virtually free. By offering greater flexibility to employees and teams, and empowering them to decide for themselves whether a remote approach is fitting, you might not only improve your company brand but also processes, efficiency and employee satisfaction.
So consider replacing your old unused benefits such as transport allowances and offer flexibility instead—which is the benefit of the century. Make your employees happier while saving costs. You can retain your talent by having them work from anywhere through an Employer of Record—both temporarily or permanently.
If history has taught us anything, it’s that halting hiring completely is never a good idea. Don’t wait for “brighter” days to fill your talent pipeline. Take advantage of hiring during a recession and come out of it stronger and better prepared.
Think about how you can build resilient teams and keep your employees happy. At WorkMotion, we fervently believe in the power of global employment and remote work. If you’d like to know more about how you can thrive during a recession, talk to our specialist today.
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