Hiring during a recession is a challenging feat. Company resources become constrained, top talent less available, and wrong hires much more costly.
Considering the current interest rates and inflationary environment, hiring right now can feel extremely unstable.
Here’s everything you need to know about the current economic climate and how you can prepare for recession hiring
Are We In a Recession?
The short answer: no. Recessions are defined as two consecutive quarters of slowing economic conditions. In 2022, data showed an economic annual growth rate of 2.9%, despite a very slow first six months of the year.
However, The Fed issued seven interest rate increases in 2022 and one in 2023 (as of this writing) with no plans of slowing. While they aren’t necessarily trying to force a recession, they are looking to slow economic growth.
The goal of interest rate hikes is to slow consumer demand to help bring prices down and slow inflation. It’s a tricky game of cat and mouse, and triggering a recession is a possible side effect.
Hiring during a recession is a different predicament than hiring in “normal” times. While we aren’t currently in recession, one tends to occur every 10 to 12 years, with or without warning. The current timeline, interest rate hikes, and stagflationary environment allude to a recession, so it’s best to prepare.
Is It Easier to Hire During a Recession?
Companies can always hire good talent, and good talent can always find jobs. Hiring during a recession just requires a different approach.
Let’s contextualize a bit first. In February 2023, unemployment fell to 3.4%, its lowest since 1969. Jobs are forecasted to grow through 2023. This is further evidence that we aren’t in a recession yet
There have been layoffs, though. As we saw towards the end of 2022 into the beginning of 2023, the tech industry got hit particularly hard with freezes and layoffs. Google laid off 12,000 workers – 12% of its workforce – and Meta cut around 11,000 jobs – two of many examples.
If we look at the last recession of 2007, we see a 4% loss of economic growth worldwide and an unemployment rate of 10% at its worst. Should an actual recession come around, the numbers may look closer to 2007. But, currently, we aren’t in a recession, and unemployment rates are staying low, with mass layoffs remaining exclusive to tech.
Now, is recession hiring easier if all those people are unemployed? Not necessarily.
When companies stop hiring regularly, they often fall out of touch with the labor market and where to find good talent. They may also let their hiring process become stale, not updating it to reflect current candidates’ interests.
Further, when economic times are tough, companies may have fewer resources and time to devote to hiring, making efficiently sourcing talent challenging. Candidates are also more scared, meaning if they are employed, they’re far less likely to leave their current company if their position feels secure.
Hiring during a recession can be done; it just takes more intentionality. We’ll go over some tips for successful hiring in downturns next.
7 Tips For Hiring During a Recession
Here are some tips companies can use for hiring during a recession.
Tip 1: Analyze Skill Gaps
Where is your company now, and where does it need to go? A deep understanding of this allows leaders to identify skill gaps in the current workforce. Knowing these skill gaps shapes hiring priorities and shows companies where to allocate funding for new technology or talent.
Identifying skill gaps should produce the following outcomes:
- Search the passive job market for qualified candidates
- Train current employees in certain areas to fill some gaps
- Write accurate job descriptions that reflect the skills your company is missing
- Allocate funding appropriately to fill gaps
Tip 2: Look At Current Employees First
Sometimes, hiring during a recession isn’t the right answer. Before looking externally, evaluate your current workforce.
One significant benefit to using internal talent is your ability to gauge their performance and fit within the organization. If they already work for you, you already know.
Consider the responsibilities each new hire would take on, and see if you can divvy those across qualified, current employees. Check in with employees to see if they’re open to this.
You may also need to be open to compensation discussions if the current employee begins taking on significantly more work. Still, this should be cheaper than hiring an entirely new employee.
Tip 3: Be Extra Efficient
In recessionary environments, the top candidates will likely be fielding multiple offers. Thus, your hiring process must be highly respectful of their time and as quick as possible.
Evaluate your hiring process holistically, and tweak it to reflect hiring during a recession. Limit interview quantity and length, consider skipping skills tests, and respond to candidates within one business day. Never leave them hanging.
Tip 4: Focus on Quality
Hiring during a recession means doing everything possible to ensure a candidate will fit well in your organization. The average cost of a poor hire is 30% of their annual salary; this is not something companies can afford during recessions.
Focus on high-quality candidates who:
- Ask great questions
- Are innately curious
- Have shown patterns of adaptability
- Are team players
- Admit openly to mistakes and reflect on what they learned
- Genuinely enjoy learning
Skip out on candidates that don’t meet these – or more – requirements. It’s better to wait for the best fit.
Tip 5: Be Open to Remote Workers
Companies can consider remote workers when excellent talent is more challenging to source. Doing so significantly expands the talent pool.
Plus, since Covid-19, the desire for remote work has increased considerably; you’re more likely to find top talent if you’re open to remote work. Leading talent is likely to stick to their guns and not acquiesce to in-office positions if they don’t want them.
Tip 6: Retain, Retain, Retain
Hiring during a recession is only part of the battle. As is true for existing talent, do everything you can to retain new hires. The following are ways to boost employee retention:
- Create an effective onboarding process
- Offer flexible working options
- Give employees recognition for a job well done, including performance bonuses where financially feasible
- Hire for culture fit (know your company values to do so)
- Foster employee engagement at work through a culture of feedback and professional development
Tip 7: Outsource to Experts
During recessions when companies have fewer internal resources to devote, consider outsourcing hiring to the experts. This is especially critical for executive- and senior-level positions where the cost of a bad hire is staggering.
Hiring during a recession requires more experience and precision. Jennings Executive has over two decades of combined experience and is highly in touch with the senior-level and executive labor market. Let us help you find the perfect fit. Learn more today!
Related: What is an Executive Search Firm? Here’s Everything You Need to Know