How we work looks dramatically different in the post-COVID era with the pandemic accelerating and solidifying changes long anticipated, but once seemed too far off to plan for. Now, companies are looking to shift their hiring strategies and reimagine how their workforce will operate ahead. At the same time, unpredictable economic pressure continues to push companies — especially scaling startups — to be more mindful about how, when, and who they hire.
When you have critical talent gaps, it can be hard to meet the moment and reach business goals. Here’s a few key trends and shifts in hiring strategies – they present opportunities and challenges for hiring companies and employees nationwide.
What’s Happening Now?
This year, companies are looking to slim down operations by outsourcing non-core functions and cutting back on monetary compensation, not only to cut costs but to inject speed and flexibility into their operations.
Tech’s 2023 business mantra ‘do more with less’ comes at a time when employee burnout and fatigue are headlining issues. It’s translating to workforce reduction, skills-based hiring, operational automation, and a realization that the future of work is here whether we’re ready or not. As return-to-office mandates roll out— attrition is rolling out with equal rigor. Despite the return-to-office movement, some companies are holding out – AirBnB, Okta, and Twilio, to name a few, are well-positioned to capitalize on the talent available.
When it comes to hiring and workforce readiness, there’s an undeniable shift in talent acquisition, and keeping your team sharp means focusing on more cost-effective, holistic employee perks and investing in long-term hires.
Talent Acquisition is Being Outsourced
Current layoffs and hiring slowdowns suggest there’s much slower job growth ahead. Last year, businesses spent over $700 billion on outsourcing in pursuit of a leaner operational strategy, using freelancers or outside firms to augment in-house skills — especially in the HR department. Talent acquisition is cyclical and, for many, hiring doesn’t maintain a velocity to justify an in-house team, let alone all the tools needed to reach, engage, and secure top talent.
Startups and smaller organizations have a key advantage when it comes to these challenges. With a tendency to outsource and automate non-core functions (often out of necessity), startups are well-positioned to tap into external experts for activities like recruiting. In its place, they can focus on securing a few in-house teammates while allocating the budget to invest in technology and core teams like engineering, sales, product, analytics, and customer support.
Smaller organizations and many startups are leading the way in automating and outsourcing non-core functions. Core functions are those that uphold critical people development (Head of People), generate revenue (Sales), invent new products or services (R&D, Engineering), or deeply touch customers (Product Marketing, Customer Success, etc). Non-core functions are everything else. In an attempt to gain this same level of agility, some of the biggest companies have been cutting their hiring teams, including Amazon and Google.
Retention and Inclusion Resources Get Smaller
As budgets tighten, employers are recasting priorities when it comes to employee compensation, retention, and DEI programs. For example, Payscale, a compensation research tool, shows that 80% of US tech companies are deploying hiring freezes, postponing promotions and providing smaller pay increases at or below 5% in 2023.
Meanwhile, slightly fewer companies named DEI as a priority for this year, down nearly 10%. Forbes also reports that only one-third of companies have set diversity recruiting goals for 2023. This is unfortunate considering the importance of diverse and inclusive work environments, especially in the eyes of top talent.
Companies who need to close bandwidth gaps are hiring urgently, and still stumbling to define their future of work. Improving remote and autonomous work productivity and elevating employee engagement is required to recourse companies post-covid era. Consider how inclusivity, team camaraderie and employee development will evolve for your company and cement these facets as a top priority – your retention, employee productivity, and motivation depend on it.
Holistic Employee Benefits Increase
While compensation may be scaling back, companies are investing in benefits and advancing workforce policies that attract talent through holistic employee care. The continued push for a whole-person experience in spite of the current economic uncertainty is a good sign, and something startups are uniquely poised to take advantage of.
Tech startups have long been a sandbox for experimenting with new ways of working, and they’ve often tapped into unorthodox employee benefits to engage top talent, like pet-friendly workplaces, gym memberships, and on-site massages. While these have a place in company offerings, they are mismatched to current workforce needs. When it comes to what’s attracting candidates today, we’re seeing fairly predictable shifts:
- Flexible work: Nearly two-thirds of companies have already adopted some form of remote work, helping to reduce monthly overhead, material costs, and emissions.
- Employee development: 48% of companies now offer learning and development options to all employees, up from 33% in 2021.
- Paid time off: 68% now offer at least 11 paid holidays annually, and more companies are adopting unlimited PTO, especially in states like California where accrued PTO would otherwise have to be paid out at the end of the year.
- Retirement Savings: Members of Gen Z are saving for retirement at much higher rates than young workers did in 2006, according to Vanguard. Back then, only 30% of employees ages 18 to 24 participated in their company’s 401(k) plan, versus 62% in 2021, making for a very attractive perk.
How Can Your Team Adapt to The Current Landscape?
Building and maintaining a highly engaged team means keeping your finger on the pulse of what candidates are searching for and balancing the demands of your business and your workforce. Here’s an overview of the hiring and workforce strategies that can help you meet your moments in this climate.
Build Out More Agile Teams
Outsourcing non-core functions like recruiting can help you keep your costs low while ultimately resulting in better quality hires, which has a trickle-down effect for your bottomline. If you’re looking to make your operations leaner, consider if keeping just one or two in-house recruiters is a better option, with a shortlist of external recruiting providers that you can call on to help staff up and down as needed.
As you strive to maintain a more agile team, you also need to think through each hiring decision carefully. Staff planning will help you determine who you need to hire and what value each hire will deliver for your company strategy. In practice, this means emphasizing transferable and cross-industry experts while also considering soft-skills and motivational factors.
For startups, financial and job security is often ambiguous for workers, especially during the early stages of growth. The work environment also tends to be high-pressure and fast-paced, and all of these aspects call for workers that are resilient and adaptive. Before the hiring process begins, build a Minimum Viable Persona for the role. What problems will they solve and what problem-solving approach does your company need? What will success look like and what types of traits beyond on-paper skills will empower someone best?
- Choose employees who are willing and able to perform in multiple capacities, which is key for thriving through times where financial resources are right. Choose self-aware employees who know how to learn. In doing so, you’ll have more skill-based employees who can flex to various company pivots and goals ahead. You still need niche experts, but be diligent in balancing where they are placed in the company as there is criticality in those positions.
- Give preference to candidates who demonstrate a range of interests and a track record of eagerness, curiosity, and adaptability — all characteristics that will make them more apt to take calculated risks that move the team forward.
- Create a culture manifesto if you don’t already have one and lead by example. Prioritize hiring for cultural alignment (not fit), with a focus on those who think differently than your current team. If you’re embedding structured and unstructured team bonding into your workflows, your multi-perspective team will become faster and stronger at solving problems and designing solutions.
Read more about interviewing in our article “How to Hire for Your Future: Skill-based hiring“.
Tap Into Creative Hiring Resources
Relying on one or two job channels is doing your team a disservice. With DEI investment decreasing, it’s on recruitment to ensure that your company reaches talent equitably, and mainstream soundboards alone won’t cut it. In all likelihood, the best candidates aren’t even actively searching for open roles. Thinking outside the box when it comes to sourcing talent can help minimize hiring expenses, reduce complexities, and help you unlock a wider talent pool.
- Use data to your advantage, especially when it comes to your current employees. Looking at education, soft skills, and career progression goals can help you model requirements for roles and match jobs with current employees where possible.
- Reduce turnover and boost employee engagement by investing in learning and development opportunities. 93% of employees say they would stay at a company longer if it invested in their careers. Plus, these programs help inform internal recruitment and succession planning.
- Set up an employee referral program and make it simple. Distribute a success description for the open role, share the reward fee for a successful hire, and set the expectation that all viable referrals will be explored; but no preferential treatment will be given. Referred employees cost less to source and stay an average of 45% longer than those hired through job boards.
You may also need to take a look inward and yourself, is your technology serving your recruiting needs?
Invest in Employee Perks
Especially when hiring budgets are tight, consider what you can offer beyond monetary benefits. Startups standout for unique compensation packages and for being catalysts of change in how people approach work. But, before you set up a game room or another quirky perk, consider what your target talent expects of you. What’s compelling to your ideal candidate? Current trends point to the following.
- Offer flexible work. 81% of employees do not want to go back to the office at all or prefer a hybrid work model where they can work from home at least a few days out of the week. But if that’s not an option for your team, consider reducing structure in other ways, like by offering flexible scheduling where employees can pick their own hours.
- Foster a culture of innovation and learning. Employees who see opportunities to learn and grow at their companies are 2.9 times more likely to be engaged than those who don’t. High engagement translates into 41% reduction in absenteeism, 17% increase in productivity, 24% less turnover, and a 20% increase in sales.
- Consider offering student loan and tuition assistance. According to HBR, nearly half of workers say this benefit could convince them to take a lower-paying job, yet only 3% of companies currently offer student loan assistance. While it sounds costly, you can take advantage of tax breaks to offer up to $5,250 to each employee every year, tax-free.
What’s Ahead for Your Team?
Contrary to popular belief, monetary compensation isn’t enough for top talent – these last few years have highlighted that some things are priceless. It’s time to consider the holistic value of employee packages. By strategically investing in the right programs, you can revamp your hiring strategies in a way that emphasizes long-term success for both your company and your team members — all without busting your hiring budget.
Want to learn how companies utilize staff planning to guide their hiring decisions, even when budgets get tight? Learn more about workforce planning and how an agency like Digital Knack can help you make confident additions to your team.
