By the Sevenstep Team, February/March 2023
Welcome to the Roundup, where we share news and views from the evolving workforce landscape. The headlines show that 2023 is a year of challenge and opportunity for companies and workers alike. The demand for high-value talent remains strong, even as many workers are part of the recent spate of layoffs in the news.
A challenging economic environment does not translate to a wait-and-see talent strategy. Instead, a thoughtful approach to the uncertain road ahead should inform every aspect of workforce planning and talent acquisition. With that in mind, companies are putting a premium on better intelligence, more robust access to talent, and flexibility.
1. "Quiet hiring" makes noise as companies adapt to a downturn.
2. Demand for tech workers continues despite layoffs.
3. Companies raise expectations for project RPO.
4. Employers look to labor market data to sharpen their TA guidance.
5. UK employers see workers on the move in 2023.
6. Healthcare organizations adjust to worker shortages.
First, there was "quiet firing." Then came quiet quitting. Now a new term is making the rounds: "Quiet Hiring." The term refers to the use of alternative resources when companies do not choose to hire new employees. Those resources typically fall into two categories: current employees or contractors.
Securing people to get work done without recruiting new employees is not new. What draws more attention are the latest workforce and economic trends at play. Today, companies are looking beyond permanent employee hiring for two primary reasons:
Hedging Against Economic Uncertainty.
Economists predict a 70% chance of an economic downturn in 2023, but they do not know when or how long the slump will last. Filling a vacancy by drawing talent from within the organization allows for an agile and cost-effective adjustment to changing business conditions.
Expanding the Talent Supply.
Even as layoffs became part of the news, the US experienced 1.7 job openings for every available worker, according to the January Bureau of Labor Statistics report. Opening an opportunity to flexible labor or contingent workers increases the supply of available talent, mitigating the cost and time otherwise associated with recruiting permanent employees.
Quiet hiring is an extension of what has become known as the total workforce (or total talent) model of talent acquisition, leveraging both contingent and perm employees to fill critical roles. Our experience has shown us that when clients embrace total talent acquisition, they can gain a distinct advantage in navigating challenging business conditions while creating a positive experience for the worker.
Establish visibility into all available talent
Total talent acquisition starts by putting meaningful information about employees and contractors into a single view. For example, our Sevayo® Insights technology aggregates and analyzes data from systems covering internal employees, permanent employee recruiting, and the contingent workforce, as well as external information on talent supply, demand,costs and locations.
Create employee trust and opportunity
Quiet hiring may entail giving employees new work or stretch assignments. Such opportunities do not necessarily come with immediate raises or promotions, but employees must believe that earnings and advancement would follow. Abuse the practice, and workers will look for the exits. When executed thoughtfully, the practice can enhance the employee experience by opening new career paths.
Get intentional about expanding the talent acquisition process
In the past, companies often added to employee workloads or hired contractors on an ad hoc basis, driven by siloed departments or hiring managers. With a transparent total talent process in place, companies can not only enhance internal employee experience but also manage costs and performance on an enterprise basis.
Despite the spate of recent layoffs in the tech sector, companies still struggle to fill critical roles. The market is competitive. Workers may be difficult to find and attract, and wages remain high. Although they remain uncertain about the economic conditions, talent decision-makers are still accountable for moving the organization forward and meeting workforce needs.
Why the contradiction between layoffs and demand? The answer can be attributed to the movement of talent that occurs behind the headlines. Many tech workers are experiencing the initial shock of unemployment, but significant numbers are getting hired quickly into new organizations. The overall balance of layoffs and job openings in the economy underscores that story:
Job Postings in Larger Numbers
Despite the layoffs throughout 2022, total job postings for tech workers in December stood at roughly 246,000. Many of those laid off have since found employment, and the picture is one of continued demand for workers.
Layoffs influence the talent supply, but they have not yet redefined the job market. Competition remains tight, and employers are adjusting to new conditions.
Embrace contingent and perm recruiting.
Not only does drawing from the flexible workforce open your options for high-value talent, but many recently unemployed workers may seek contractor work as they determine their next career steps.
Stay current on costs for skills.
Layoffs in the news do not translate to lower costs. Our Saveyo® Insights platform integrates external talent supply and pay rate data to provide accurate views into costs, and clients are finding this to be a vital ingredient in their efforts to secure skilled workers.
Sharpen your focus on high-value talent.
The priorities for recruiting workers with high-value skills have not changed. Streamline role definitions to support core job requirements. Focus on the employer brand to attract talent. Apply technology to deliver visibility into the workforce and create a positive candidate experience. In these and other areas, a talent partner can provide vital support to stay ahead in a competitive market.
The start of a new year brings new budgets and business goals, and with it comes a push for new talent. In some cases, this push may increase the pace of hiring. Combine that hiring surge with the continued worker scarcity, and the results can be seen in the surprising January US jobs report (a shocking increase of 517,000 jobs).
Given these conditions, many companies will likely seek external help to hit hiring targets quickly in 2023, and project-based recruitment process outsourcing (RPO) provides a ready-made solution. This outsourced recruitment model fills a specific set of roles in a pre-determined timeframe. Two factors will influence the use of project RPO over the next year:
Lean recruitment teams.
One study of layoffs among startups in the tech industry suggested that 50% of recent job cuts were on recruiting teams, compared to roughly 10% comprising software engineers. The figures represent similar trends across organizations of all sizes, meaning that today companies have limited resources available to scale up their recruiting capability.
High demand for talent acquisition expertise.
With the increase in job outlook in the US, the talent supply remains tight. As mentioned previously, employers continue to compete for high-value skills, requiring an established recruiting function that is difficult to expand internally for near-term hiring needs.
Project RPO is an effective option for scaling recruitment to meet new talent needs, but not all solutions are the same. Before engaging a recruiting partner, an organization should consider several factors influencing the results.
A consultative edge accelerates outcomes
Planning and targeting your project RPO effort is essential in a volatile economy. An effective project RPO starts with an established consulting component that assesses the client's markets, goals and infrastructure to support the TA effort. The outcome will be a right-sized RPO team supported by a recruiting process optimized for timely results and quality talent. Experience has shown that a rapid assessment and planning effort up front enables reliable, cost-effective engagements. It is time well spent.
Provider experience and technology
The practices associated with full-scale enterprise RPO still apply to project RPO. The RPO provider is expected to deploy recruiting talent with experience and specialization in the roles being filled. Supporting technology is also essential, including advanced analytics to provide visibility into the market and create a transparent process. Finally, look for the provider to invest in developing a relationship needed to steer the recruiting effort and keep all stakeholders engaged with the process.
A leading labor market analytics provider, LightCast, projects that the workforce supply will decline in most developed economies annually through 2040. A combination of workers dropping out of the market and rising demands for critical skills will likely impact talent acquisition for the foreseeable future.
The continued labor shortage means companies will feel more pressure than ever to make the right decisions on where and how they acquire talent and grow their organizations. Several trends in LightCast's recent 2023 Global Talent Playbook underscore the market complexity and evolving practices among employers vying for high-value talent and scarce skills. The following are just a few takeaways from the report:
Remote Jobs Remain Strong
Despite headlines about companies bringing employees back to onsite locations, the remote work trend is not going away. Jobs requiring key skills for remote work, including telecommuting and virtual collaboration, grew 200% in the US during 2022.
Skills are Changing Fast
Between 2016 and the present, 76% of the top 20 skills requested by employers have changed. Growing areas of demand included machine learning, skills related to net zero (for green jobs), and competencies around innovation and adaptability.
Wage Transparency Continues to Grow
Roughly 25% of Job postings for degree positions include salaries. In non-degree roles, advertised salaries now appear in 40% of posted jobs. Being transparent about the potential pay for a role is rapidly becoming a must-have for attracting talent in certain roles.
Skills Define the Markets
Companies are engaging larger numbers of workers based strictly on skills. The report predicts up to 1.4 million new jobs will be available for skilled workers without traditional degrees in the next five years.
The trends in the report provide a unique look at the dynamics of today's economic conditions. But labor market analysis also offers TA teams even more useful information to support recruiting for every individual role.
Look for answers in the details
Analytics technologies such as LightCast are increasingly integrated into our client engagements. Armed with market intelligence, the organization can determine the best paths to the talent it needs, based on location, pay and available workforce supply.
Expect more data to support decisions.
If you depend on guesses, past rates, or broad averages to estimate the compensation for your open roles, current fluctuations and uncertainty may leave you at a disadvantage in competing for talent. The addition of labor market analytics can significantly improve confidence and reliability in attracting and retaining the workers you need.
For UK employers, 2023 will continue to present challenges as companies recruit from a limited workforce supply and face changing worker priorities. The overall economic uncertainty, worker discontent and wage pressures will likely remain in force as companies and employers gain footing through fluctuating market conditions. Recent findings highlight the challenges:
Higher Salary and Changing Focus
Among surveyed job seekers, 55% say salary is a top priority, compared to 20% who say work-life balance.
Movement Across Industries
Despite the low participation rate, many workers are highly active and looking for their next career opportunity. One survey found 71% were looking for new work, and 9% sought work in a new industry.
Talent decision-makers must revisit every aspect of their workforce strategy throughout the year. Continuous monitoring and reviewing processes, talent markets and costs is particularly important when economic conditions rapidly change.
Data will be essential for talent decisions.
A close watch on compensation will be essential for securing talent in 2023. Our Sevayo® Insights platform has proven effective for bringing current internal and external workforce data to bear when targeting talent and determining timelines, expectations, and costs.
Align job requirements to transferrable skills.
Workers are moving across industries, and many companies are competing for the same limited supply of high-value skills. By paring down job requirements to focus on those skills, employers can attract qualified candidates who might be turned away by demands or industry experience or educational degrees.
Move with the talent, regardless of flex or perm work models. As workers make career moves, they will likely switch between contractor roles and traditional permanent employee positions. Companies are improving their access to talent by opening their opportunities to all worker types. This total talent acquisition model offers a great advantage to companies as they compete for a limited supply of workers.
Healthcare organizations continue to wrestle with skills shortages and workers leaving the industry. Following the initial challenges of the pandemic, nurses remain in high demand, burnout in the workforce is high, and the use of contractors to fill in the gaps creates additional pressures on the talent supply.
The extreme need for workers has pushed wages higher. For example, one report noted that the average travel nurse's weekly pay in December 2022 was $3,173, compared to $1,894 in January 2020. At the same time, contract labor costs are predicted to settle at 60% above 2019 levels. These pressures are forcing a renewed focus on internal skills development and the use of technology to automate many aspects of work.
Upskilling and Internal Mobility
One path to secure high-value skills is to develop internal employees to acquire them. One survey found that 53% of healthcare workers are interested in upskilling and the internal mobility that goes with it. Meanwhile, another study shows that 43% of front-line clinicians say internal mobility at their organizations is difficult, and 33% say it is impossible.
Technology and Automation to Mitigate Resource Needs
Healthcare organizations are mitigating some of the pressures of a limited workforce by applying technological advances. New technologies can automate access to care for patients, reduce the burden of administrative staff, and make training accessible across locations. However, such uses for technology also add to the pressure to upskill current employees and put those innovations to work.
Skills development and internal mobility are a high priority for our healthcare clients. Keys to success include:
Give workers career path options.
Expanding career opportunities is one of the most challenging aspects of upskilling. Hiring managers must be empowered and motivated to allow workers to move. Technology must enable workers to see new career paths, and the workforce culture must support internal mobility.
The talent solutions partner plays a role in success.
Our work with healthcare clients has shown the value of a talent solutions partner when connecting skilled internal talent to new work opportunities. Third-party objectivity, technology expertise and a talent acquisition perspective are vital in helping companies leverage the current employee base as a vital source of new skills.
Our next Roundup in Q2 will follow the progress of innovation in workforce technology, developments in the economy and the workforce, and best practices in engaging permanent talent and the flexible workforce. We look forward to sharing insight on these issues and more. If you have questions or input, we would love to hear from you.
Please contact us at: Roundup@Sevensteprpo.com