Amid high inflation, everything—from the price of goods and raw materials to employee wages to interest rates—is going up, up, up. More and more economic indicators hint that a recession is coming. To keep your business healthy, you’ll need to be more efficient when it comes to hiring during a recession.
Monster’s economist Giacomo Santangelo summed up what employers can expect when a recession hits: “What happens during a recession is the economy slows down, production slows down, unemployment increases, which slows down production even further. And that’s where we see GDP falling,” he says.
Santangelo says employers will need to find ways to cut costs and be more efficient to stay afloat. Below, we outlined some strategic efficiencies employers can consider when managing a workforce and hiring during a recession.
Upskill Employees to Better Meet Market Demand
When a recession hits, Santangelo says the effects are often felt among different industries, companies, or even within organizational departments. Instead of hiring during a recession, companies should consider reskilling or upskilling their existing workforce to meet today’s economic demands as business needs and priorities shift.
Monster’s Work Watch report found that one of the top ways companies plan to stay competitive over the next three years is by offering skills training. After all, it’s cheaper to reskill or upskill a current employee than it is to hire and onboard a new one.
“When firms need to hire someone new, that’s a new salary, that’s more benefits, and that’s more money you have to spend,” Santangelo says. “But if you have someone on staff already who you can train to do the job, you can expand their responsibilities. If you can do that, you do that.”
So, if you must make cuts in one area, consider training workers in other departments where you can use good employees who know your business.
Hire Part-Time or Contract Workers
When it comes to hiring during a recession, employers may have to pivot from hiring one full-time worker to fill a role to hiring multiple part-time workers for the same job as a cost-saving measure. “Firms can hire part-time workers, freelancers, who are per diem, or gig economy workers during a recession,” Santangelo says. “They’re a lot cheaper to employ than a full-time worker to whom you have to give benefits.”
Despite the ongoing labor shortages, the barriers for companies tapping into the gig economy could be minimal as we approach a recession. Candidates are more likely to be less picky about the types of jobs they choose. Some workers may even be looking for a side hustle to supplement their income amid high inflation. In fact, a recent survey shows that workers are already moving in this direction. According to the study, 85% of workers said they have increased or plan to increase their amount of gig work, with 58% citing inflation as the reason behind this change.
Switch to Remote Work
If the COVID-19 pandemic taught us anything, select job sectors, especially those in white-collar industries like business, finance, and tech, proved they can be successful when working remotely. “Companies have lots of costs they can cut because they can switch their labor force,” Santangelo says. “We learned they can move a lot of their workforce to work remotely.”
When planning your hiring strategy for a downturn, consider remote work rather than bringing workers back on-site, where costs like rent and building maintenance can eat away at your bottom line. Remote work saves on overhead costs and can also provide money-saving benefits when it comes to hiring. For instance, remote work can open up your talent pool to workers in other, possibly cheaper locations. With COVID cases on the rise yet again, working from home can help keep your workforce healthy and prevent costly shutdowns in production.
Layoffs May Be Unavoidable for Some
Even when applying the tactics listed above, layoffs are sometimes an inevitable reality of a recession. We saw this during the economic crisis of the 1970s and 80s, and we are seeing it again today with layoffs already announced at companies like Netflix, Carvana, Wells Fargo, and more.
“Right now, we are experiencing an economy that we have not experienced since the 1970s,” Santangelo says. “With increases in gas prices, with increases in food prices, with rationing of certain food items at grocery stores, and a general increase in price levels across the board, employers may be forced to lay off people. Whether you are Walmart or a small mom-and-pop pizzeria around the corner, when the price of your products goes up, and you have bills to pay, you have to lay off people.”
Stay Informed During a Recession
When it comes to hiring during a recession, there are different approaches to take. Depending on your business, some will work better than others, but the key is having current economic information and analysis at your fingertips. That’s where we can help. Stay connected with Monster, and you’ll get free access to expert insights, from the latest in economic trends and news to recruiting advice and strategies.