Inflation is a hot topic around the world right now, and for good reason.
Between the start of 1991 and the end of 2019, year-over-year inflation averaged about 2.3% a month and only went over 5% four times during that 28-year period. But as of May 2022, the inflation rate has grown to 8.6%, with little to no signs of plateauing soon.
This stark rise in inflation affects everything from how a company operates, manages the supply chain, purchases goods, and manages their bottom line. But one aspect of inflation that tends to get glossed over is its impact on finding and keeping internal talent.
In this piece, we look at how inflation relates to the world of recruitment, what companies can do to retain their top talent during this economic time, and what job seekers can expect in this ever-changing market.
How the current economic climate affects recruiting
As you may or may not have heard, “The Great Resignation” significantly reduced the pool of available talent by a significant rate. Many workers decided to take their skills and experience elsewhere, or even leave the workforce entirely.
Just as recruiters were struggling to make up for this loss, companies began worrying about inflation. At first, their gut instinct was to drastically cut budgets, which also meant sacrificing money spent towards their recruiting efforts and decrease the salaries they were offering to new hires.
But of course, those extreme reactions made it much more difficult to propel the company forward during a time of crisis.
So now, recruiters are forced to get more creative. For example, they may be slowing down recruitment for lower priority roles (i.e. low market salary, non-remote or hybrid, higher travel), while on the other side, companies are adding new perks to compensate, and still attract great talent such as:
- Hybrid/Remote schedules
- Flexible PTO
- 401k matching
- Profit-sharing plans
- Hosting special company outings and events
- Bonus Plans
4 Ways companies can adjust their approach to recruiting in the current economic conditions
We already talked about some ways recruiters and companies are managing to create happy mediums, but it’s important to talk about what companies need to be doing on the whole. Instead of completely shutting down their recruiting efforts, they should:
- Identify top talent – Your superstars will be your secret weapon. Identify who is your top talent, then show them the appreciation they deserve. Whether through a salary increase, extra time off, flexible schedules or some other rewards to let them know you’re still in their corner and understand their value in this market, and your company.
- Don’t be cheap – Remember, you always get what you pay for. So, if you’re looking to cut costs, recruiting for and maintaining top talent is not where to do it. If you don’t pay the best talent what they are worth, another company will be more than willing to do so.
- Be willing to compromise – You know how the song goes, “you can’t always get what you want,” and that’s never been truer in a time like this. Salaries are rising everywhere, so you need to open yourself up to offering increased rates, more equity, or different titles. Even if you’re a little out of budget, it might be worth it to land the level of talent you need to carry the company forward. If that isn’t in the cards, you may then need to accept you won’t be able to get everything on your Wishlist.
- Develop and nurture internal pipelines – Once you’ve identified and taken care of your top talent, think about how you can equip them with a fantastic team. Sometimes, it’s better to promote people from within or bring in junior level candidates, then let your best talent train a team of superstars. It’s a lot easier to build a solid team around your top talent than it is to hire, maintain, and keep candidates that are already at the top of their field.
How inflation affects job seekers
As much as we are talking about the employer side of the equation, inflation affects job seekers as well. So, if you’re in the market for a new job, there are a few things you should keep in mind:
- Don’t base everything on an incredible salary. While many companies are trying to stay competitive, not all have the money to pay you what might’ve been on the high-end of the going rate last year. So, stay open to the entire package that is presented in an offer, many times the perks and benefits can make up for a difference in salary expectations.
- Salary, and then? Look deeper into an opportunity than just what is on the surface. Salary is great, but also look at the big picture. Is this role going to give you growth, development, or longevity? Take time to dig deeper into what you’re being offered.
- The grass isn’t always greener. We have seen many people take new positions to get paid $25 – 50k more but find out that it was only short term, or not what they were told it would be in the interview process. So be diligent in your research and ensure you’re not leaving a good, stable job for something that seems too good to be true and is only to fill a gap or short-term need.
- Be wary of the counteroffer. Your company needs people to stay right now that they know are going to help get them through these times. So, if you’re looking to make a move, know they will do everything they can to make you stay. However, 1 out of 10 counteroffers result in someone being at the company longer than 6 months. If your company knows your looking, counteroffer or not, they are looking too.
Rethinking your hiring practices during high inflation
It is certainly times that we are in, but if we can be strategic in the way that we manage and hire talent, there are great ways to maintain highly effective teams while also maintaining the talent to get you through these uncertain economic times.
If you’re curious about the market or unsure where to start, Planet Technology can help. As one of the world’s leading diversified professional services organizations, we provide high-value outsourced global workforce solutions that can transform your recruiting and talent workstreams.
Contact us today to learn more about our services, or if you’re looking for a new role, take a look at our open positions on our job board.
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