In the face of recessionary fears, many businesses have maintained staff, even though they expect an economic downturn. Going against conventional wisdom, some companies are actually hoarding labor.
According to Insight Global, many executives believe that if a recession hits, it will be shallow. Some are looking ahead to a rebound, and one way to do that is to stockpile talent.
For many months, companies have struggled to fill open positions and retain their current employees. Perhaps feeling burned by the tight labor market, organizations would now rather maintain headcounts even if a recession does set in. This way, when markets rebound, companies may not have to wade back into the tight labor market to fill positions opened by downsizing. Often, it’s more expensive to hire new workers than to retain existing ones. Not only do companies have to account for training costs, but attracting candidates from other companies often means luring them with substantially higher wages.
One way companies are trying to hoard labor is by retraining staff to work on different projects. Recessions tend to hit some industries and operations harder than others. Rather than lay off staff in softer areas of business, some firms are instead trying to shift labor to more resilient business operations.
Some bosses and owners have also proven willing to take pay cuts if it means maintaining headcounts. However, it’s not all good news. In some cases, companies may cut hours across the board so they can retain more employees while paying them less. The challenge, of course, is there’s no way to account for the “wild card” of the talent companies are trying to hold on to. The volume of data and research “out there” discussing employees and their expectations means this stagnant retention plan can always backfire.
Further, while many companies are maintaining headcounts, they aren’t always expanding them. Some organizations are still trimming workers as well. For those who do get laid off, finding a new job may prove more difficult.