While the headlines will have you believe that employees barely out of their onboarding sessions are being unceremoniously tossed aside, today’s hiring and layoff landscape are not reflective of a global economy on the brink of disaster. The reality is that many companies are now calling time on grossly inflated wages. It’s a recruitment reckoning and it’s not all bad news: in fact, in many instances, this is a win-win situation stacked with opportunities for employers and candidates alike.
Far from Unexpected
It’s time to balance the great ‘irrational exuberance’ of hiring during the pandemic. For those of you not familiar with the term, it’s one that was popularized by Alan Greenspan back in the dom.com bubble when he said during a speech at the American Enterprise Institute: “But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”
Today’s contradictions are here in the form of very specific and strategic job cuts that are happening mainly at large enterprises. They are neither surprising nor unexpected. During the pandemic, many companies bet big on the peak of the unprecedented growth curb. In hiring against the peak, they are now being faced with making a few cuts to reflect the fact that pandemic-fueled sales cycles are slowing down demonstrably.
The same irrational exuberance also inflated a few salaries along the way. In what has been the strongest candidate market to date, job-hopping has become for many candidates an exercise in seeking out cumulative salary increases. Research from a July Pew Research Center analysis of U.S. government data showed that from April 2021 to March 2022, 60% of workers who had switched jobs had experienced increased earnings, with over half seeing a ‘real increase of 9.7% or more over their pay a year earlier.’
The reality is that many companies are now taking the opportunity to adjust grossly inflated wages, which is reflected in some of the job cuts we’re seeing. What is resulting, however, are some new and exciting opportunities to be had for both candidates and employers alike.
A Message to Candidates and Business Leaders: Take Some Time to Reflect
For any candidate out there that experienced a job cut recently, take heart. It’s unlikely to do with your skillset or ability or even a looming recession: the fact is that good candidates are rebounding quickly and securing multiple job offers.
The stats back this up: hiring in July was far better than expected, defying multiple other signs that the economic recovery is waning, according to the Bureau of Labor Statistics. Unemployment rates are back to pre-pandemic levels and tied for the lowest since 1969.
Maybe you were ready to take off those golden handcuffs from the overpaid job to find something more meaningful anyway. It’s a great time to reflect and reassess your priorities.
Business leaders: it’s a great time to pause and reflect. If you made it through the pandemic you’ve already proven your resilience. Perhaps the Great Resignation has added stress and strain to your business operations and hiring. So, take the opportunity to step back, audit your team, and look at your hiring processes. You may just find some of those job cuts made by bigger companies work to your advantage, adding a few new candidates to the market who are looking for something more meaningful beyond an inflated salary. Don’t be afraid to reach out proactively to some of your “A” players that may have left to pursue greener pastures - they may want their old job back and will come with a better appreciation of the culture they are missing.
It is time to put in the support to proactively pipeline and source roles. Consider implementing a flexible and experienced resource to help weather this period of economic uncertainty without adding your own HR headcount.Whether it is in-house or outsourced, getting good partners set up to be ready for whatever comes in 2023 can only help you be more competitive.
For both candidates and business leaders alike, there’s plenty to be optimistic about, and despite a bit of economic uncertainty on the horizon, both employees and business leaders are in a great position to take advantage of some of the new opportunities in the face of recession and beyond.
About the author: Jody Robie is the SVP of North America at Talent Works, a talent attraction firm focusing specifically on recruiting and employer branding. If you have questions about your current talent strategy feel free to reach out directly to her on LinkedIn.