Many nations are staring down the barrel of economic recession. In the US, we’ve seen ‘rolling recessions’ since early 2022 as various sectors show significant signs of contracting. Despite the labor market remaining tighter than pre-pandemic levels, economists note that labor rates will continue to slow while the Federal Reserve noted tighter credit conditions that indicate a slowdown across the financial sector.
According to the US Bureau of Labor, total nonfarm payroll employment rose by 517,000 in January, which was the largest increase in the last six months and almost triple economists’ projections. The number of employed persons changed little since early 2022, remaining at 5.7 million, respectively. However, unemployment fell to a 50+ year low of 3.4%, and wages increased by 0.3% for an average year-over-year rise of 4.4%.
Reports show some signs of reduced tension in labor markets, with an average of 1.9 job openings for every unemployed person in the nation. Furthermore, the number of job openings increased by 6.7% to 11 million in December, indicating companies had even more unfilled positions than before. However, LinkedIn’s “labor market tightness” metric showed that the ratio of job openings to unemployed people is closer to 1-to-1 as recession fears continue shaping labor movements.
Technology’s Ongoing Reshuffle
Of the many sectors impacted by the ‘great reshuffle’, technology ended last year and began 2023 with industrywide downsizing. In total, more than 55,000 tech professional lost their jobs in January, while over 150,000 tech employees were downsized in 2022.
Twitter has conducted rolling layoffs under Elon Musk’s ownership, reducing headcount by 75% since the platform’s IPO. Meanwhile, Microsoft CEO Satya Nadella confirmed in a January blog that the company would be eliminating 5% of its workforce, impacting 10,000 employees.
Google also saw significant layoffs across a variety of its subsidiaries and start-ups backed by its parent company, Alphabet. Both an India-based social media start-up backed by Google, as well as Alphabet’s robotics subsidiary Intrinsic AI reduced their workforces by 20% in January this year. Verily — a life sciences firm also owned by Alphabet — also downsized its workforce in January by 15% despite its recent raising of $1 billion in funding.
Customer spend pull back and inflation rate are one of the primary drivers for the many layoffs that we see, more so in big tech. Self-reported layoff tracker Layoffs.fyi found 485 companies let more than 138,000 workers go so far in 2023. This is much higher than what we have seen during DotCom boom and in any of the the previous years.
Reflect and Reconnect
The ongoing changes we see in work environments mean business leaders must analyze their current systems and processes, ensuring there’s real clarity around people’s roles and responsibilities.
Once there’s a clear understanding of organizational needs and capabilities, the view must sharpen on the individual employees, understanding their skills, experiences, and goals to ensure alignment between business and talent.
This process of reflection and assessment also serves as a useful opportunity to connect directly with staff to openly discuss their values, challenges, and daily workflows. This helps determine how each role contributes to the greater company purpose, particularly in terms of eliminating silos and operational redundancies.
Retain and Reassure
A common mistake managers made in adapting to hybrid work was holding onto their same managerial approaches that simply don’t translate to hybrid or remote workspaces. Considering how rapidly things change, this type of inflexible leadership commonly leads to staff dissatisfaction, which could result in increased turnover and poorer performance.
To ensure staff feels valued and a part of something bigger, learning and development need to be better tailored to learners’ experiences rather than learning outcomes, which promotes autonomy and self-determination around employees’ skill and career development.
Regular communication with employees will help determine how their roles are evolving, ensuring you can address any uncertainty or confusion before it stems into discontent. This means actively listening to employees’ needs and actioning their feedback, which not only helps build a culture of open communication and trust but plays a pivotal role in improving internal processes.
The increasing popularity of hybrid work has created an unhealthy hustle mentality and culture where people are ‘always on,’ always available, and never completely away from work. This must be replaced with more sustainable principles and practices whereby people feel personally motivated to go above and beyond rather than fearful of falling behind.
This means embedding a larger purpose into work, giving people a reason (beyond salary) to love where they work. The key is helping employees believe in the company’s overarching vision. Staff who feel a part of the business are more likely to step up during challenging periods and feel more connected with others, which helps establish common goals alongside a greater sense of well-being and community.
Employees everywhere face the prospect of national and global recession, which can motivate some to stay put while adding further economic pressure on employers to offer competitive salaries. Attracting and retaining top talent means remaining abreast of people’s needs and expectations – going beyond salary to deliver a reassuring employee experience complete with ongoing support, development, and career progression.
Reskill and Redeploy
Reskilling means integrating learning and development in an impactful way, understanding what motivates the individual, what skill or field of study interests them, and then offering the capacity to personalize their learning experience.
Since people learn more when they see the value in what they’re learning, the onus is on employers to prioritize learning and development, ensuring it’s more than an optional service–learning must be an integral part of the business culture. After all, providing an online coaching service is nice but not entirely useful if people aren’t allocated time and support to leverage it.
Digital learning has made education and training more accessible, convenient, and engaging than ever before. No university or course provider can offer the same personalization and flexibility we see in online learning. And consumers have come to expect seamless and customizable digital experiences with most of their service providers – including education and training.
Furthermore, by addressing both individual and business needs, businesses can help fill talent gaps, future-proofing their workforce, and ensure the retention of top performers. Learning is a never-ending process that is about enriching people’s lives through the process, helping them discover solutions rather than giving them answers. We all learn and grow through different means, so learning should be as intuitive, engaging, and accessible as possible, integrating seamlessly into people’s daily workflows – ready to be deployed in a more streamlined and efficient workforce.
LinkedIn’s ‘2022 Global Talent Trends’ noted that employees ranked ‘upskilling’ as a top five most valued priority when it comes to feeling secure and supported. Furthermore, 74% of people said they’re willing to learn new skills or retrain to remain employable, further demonstrating skill development’s role in attracting and retaining top talent.
Reimagine and Recreate
To stave off recession, organizations everywhere are cutting costs, and often it's payroll first that’s first assessed and restructured. While downsizing can be a quick fix for profitability, it’s a short-term solution that can create more costs in terms of lost talent, company culture, and organizational knowledge that departs with some legacy employees and isn’t subsequently passed onto new hires.
When trying to reduce costs, it can often be helpful to enlist an outside auditor to find potential savings through recurring costs, such as software licenses, subscriptions, and utilities. A top-down and bottom-up assessment of costs and drivers can help organizations distinguish necessities from luxuries, eliminating any unnecessary costs that don’t deliver value to staff or customers.
Rather than downsizing to reduce costs, it’s more strategic and long-term to try ‘rightsizing,’ i.e., reimagining your team to better meet company objectives and needs. This may involve letting some people go, hiring new talent, or shifting staff around to make better use of their capabilities. However, rightsizing is a continuous process rather than downsizing’s ‘one-hit’ solution.
Rightsizing also means optimizing and streamlining processes by eliminating any duplication of work. Reducing redundancies of people and processes ensures an organization isn’t wasting time and resources on non-value-adding tasks. Instead, rightsizing ensures an organization has the structure and resources it needs to maximize potential and more effectively plan for uncertainty.
Redefining Employee Experience
Today’s workforces face several challenges, from impending recession to post-pandemic exhaustion and an increasingly competitive talent market. This means businesses place much greater focus on employee experience from end to end, understanding people’s needs from hire to retire. Business leaders must look beyond competitive salaries to provide a healthy work-life balance alongside engaging company culture and environment.
Employee ‘satisfaction’ is no longer adequate; businesses must strive to address employee happiness and well-being, particularly as hybrid work blurs the line between ‘at home’ and ‘at work.’ Businesses unwilling or incapable of providing flexible work arrangements may find their employees taking part in the ‘quiet quitting’ movement whereby they do the bare minimum to ensure job security or even start ‘rage applying’ in reaction to demanding bosses, unreasonable deadlines, and rigid work arrangements.
Employee experience has become paramount to how employers distinguish themselves from others. With businesses reimaging roles and responsibilities with the assistance of digital technology, it can be easy to lose sight of the team’s human nature. However, experience is a fundamentally human thing that requires human input and understanding. Any investment in intelligent technologies should first address a simple question – how will this improve the way users currently operate?
We’re seeing drastic changes in how employees work, communicate, and connect with one another. This has brought their well-being and experience to the forefront, which means businesses must be more holistic in how they attract, retain, and upskill talent.