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Companies across industries are preparing for the possible looming recession, including through re-evaluating their strategies around talent and hiring. Some companies are putting a pause on projects, and turning to automation or limiting hiring in response to the economic downturn.
According to Matt Campbell, managing director with Alvarez & Marsal Corporate Performance Improvement and Leader of the group's Talent, Organization and People management practice, recession and growth are natural features of an economic cycle, so organizations should build agile talent strategies that are fit for both. This includes planning that incorporates testing against multiple scenarios.
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How should companies be re-evaluating their talent and hiring strategies considering the uncertain economic environment?
Focus and flexibility.
There has been a renewed focus on talent and hiring strategies that are adaptable, efficient, and aligned to business needs, especially in an uncertain economic environment. Business leaders, HR, and Finance are spending significant time building flexible talent strategies that can accommodate volatility, guarding a recession and gearing for growth.
Organizations need to emphasize all the talent plays to create flexibility, rather than just filling jobs. Consider the merits of buy-build-borrow-bot alternatives to determine the best avenue(s) for building a resilient workforce based on the relative risk and cost in delivering the business strategy and the need to pivot. This cannot be one size fits all and must be tailored to each functional and business group based on how the business environment is impacting their talent demand.
What should be the focus of the talent strategy in these times — cost consciousness or building for future growth?
Successful navigation of economic conditions needs a nuanced talent strategy that balances cost consciousness with growth investments. It is no longer just an HR question, but a business strategy question, and organizations need to start viewing it that way. HR and Finance need to work together to provide these insights to business leaders.
Talent strategy is driven based on the capabilities required to run the current business operations and identifying capabilities needed to build new revenue streams. The newer capabilities need to have planned talent investment, even in times of economic uncertainty while existing capabilities should adopt a cost-conscious mindset to not only decrease costs but also increase productivity, efficiency, and automation that can generate value eventually.
How can employers build an agile workforce plan to accommodate the cycles of economic growth and recession?
Recession and growth are natural features of our economy and to withstand these economic cycles an agile workforce plan is being adopted these days. Organizations are getting more disciplined around workforce planning and evaluating that plan against multiple internal and external scenarios. There is a rigor in aligning business plans with future scale, considering direct and indirect talent competition, and recognizing the importance of social media reputation and brand in attracting talent.
Rather than indiscriminately laying off employees or hiring in bulk, successful organizations are focusing on future requirements, weighing the cost of accessing labor against holding costs if the scenarios change. Another trend we're seeing is planning for efficiency to accomplish more with less. The workforce plan must be financially viable while also delivering on the business requirements.
How must employers alter their skilling strategies based on the shifting job market?
Skills are becoming the new currency of planning in organizations from a workforce perspective given how work has evolved in the last few years due to the pandemic and the use of AI. By analyzing and connecting key roles within the organization to requisite skills, a new approach to acquiring the necessary skills internally and externally rather than working towards a headcount plan is emerging. This approach also guides the identification and development of reskilling programs and addresses the evolving needs of the workforce.
What impact will AI have on the talent and hiring processes going forward? How will it benefit organizations?
AI will redefine the skills needed for many jobs rather than just the elimination of jobs.
It will play a pivotal role in improving predictions related to repetitive, volume-based tasks, such as screening, shortlisting, skill forecasting for success, constructing success profiles, and matching CVs to profiles. It will also facilitate clearer guidance on career trajectories based on experience and skill sets.
Nonetheless, in the near future, AI is unlikely to replace the personalized, nuanced talent development provided by coaching and mentoring, which remain crucial for individual growth and development and hence there will be stronger impetus to have well-rounded leaders in the organization who can do that.
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