Inflation is rising globally. Food and energy prices have soared to an all-time high. Central banks worldwide are increasing interest rates in response, and economists predict this is unlikely to change in the short term. Increasingly, we are seeing organisations starting to implement hiring freezes in response.
Setting aside Twitter’s widely reported layoffs, many other companies have announced hiring freezes and plans to slash significant numbers of roles. No industry appears unaffected, and in the finance sector, Credit Suisse will eliminate more than 5,500 jobs by the end of this year. In addition, many tech giants, including Meta, Salesforce, and Netflix, have also announced layoffs or hiring freezes in the wake of the current economic climate.
What does this mean for organisations?
It means talent stays at the top of the executive agenda. Talent is one of the top operational priorities for CEOs (alongside economic outlook, technology and ESG). That’s according to the KPMG 2022 CEO Outlook that found CEOs are changing how they support and attract talent, with their efforts focused on people and experimenting with ways of working.
As we consider the looming recession, businesses know they face a potential decline in revenue as customers struggle with the cost-of-living crisis. The talent market is often first to feel the effects of a downturn, and the first facet of business that needs to react when the economy improves. Workforce issues are therefore undoubtedly set to continue for businesses.
Yet, in a market where talent is hard to come by and a global world where talent can work anywhere, it is surprising that companies are focused on short-term actions. Short term, reactive and tactical actions mean that the cost of replacing this talent when the ‘grow’ button is hit again, is high. Which, given forecasts are for a two-year recession, is compounded further.
Using the Stratigens’ skills cost calculator, we can estimate that the downsizing of a software development team by 20% (assuming a team of 10 based remotely and in London) could lead to 1,350 lost productivity days at the point at which the team needs to grow again. Add in costs associated with hiring fees and time to hire and the annual cost equates to £600,000 annually. This is a huge cost to be borne given that rehiring will likely be taking place in 18 to 24 months. Plus, once the company is in growth mode again, time to hire, difficulty to hire and damage to brand all need to be considered and may hamper talent attraction efforts.
How can you weather this storm and mitigate business risk?
Critical decisions around talent attraction, workforce planning, and workplace decisions need to be at the heart of corporate business strategy. These factors must be thoughtfully balanced and considered to reduce risk and gain cost savings, while maintaining growth in a challenging economic environment.
To achieve this and make good business decisions that can be implemented quickly, cost-efficiently, and sustainably, decisions should be data led. Now is not the right climate for acting on gut feeling as the stakes are high.
When making workforce decisions, businesses need sight of key data about the locations that are being considered for expansion, consolidation or for seeking new talent. This data might include:
- The top global cities for the skills you need
- The diversity of the talent population in your shortlisted locations
- An understanding of a location’s average commute times and business travel set-up
- Connectivity including internet speed
- Business infrastructure quality
- Cost of living
- The overall ease of doing business and level of risk
As we enter another period of economic uncertainty, it is more important than ever that we base decisions on reducing or growing a workforce with data front of mind. The cost of rehiring talent, both in terms of dollars, time and employer value propositions are huge; having visibility through robust data in these areas will mitigate risk and provide a solid basis for business success.
We call this decision intelligence. Forward-thinking business leaders use Stratigens as it enables them to make smarter decisions. Pulling together millions of data points around talent supply and skills, alongside location data, Stratigens can help answer the big questions leaders have that will allow them to make future-proof decisions.
To talk to us about how data insight can make a difference to your business, book a demo of Stratigens.