Until recently, Americans were enjoying the fruits of a steady economy. Now, the American economy has contracted and is struggling to recover and the unemployment rate remains at more than 10%. According to the National Bureau of Economic Research, the country officially entered a recession in February 2020.
This begs the question—how long until the economy bounces back? It could be weeks or months until we see steady improvement. The economy may not fully recover until well into next year, as many experts anticipate.
As it relates to your business, talent remains your greatest asset, which makes the process of hiring as important as ever. With many job seekers searching for their next employment opportunities, there is an unprecedented opportunity to tap into rarely available talent. Securing your next wave of strong hires now will allow your business to gain a competitive advantage when the economy improves—whenever that may be.
Hiring the right employee is always difficult
No matter the current economy, hiring the right talent is challenging.
You don’t know where to find the right talent
When hiring isn’t a part of your everyday job duties, it’s difficult to dive headfirst into hiring and recruitment methods. Lack of expertise in this area might leave you racking your brain on where to look for candidates and where to start.
If you don’t have existing networks to pull from or connections you can leverage, you will struggle to be proactive in your search for the right talent.
You don’t know how to identify the right candidate
When you have a pool of applicants, how do you narrow it down to find the candidate that is right for your role? Not only do you need to interview for skills and qualifications, you also need to look for cultural fit, drive and other factors, which are very difficult to assess.
While you may not have a keen eye for identifying strong candidates, professional recruiters and recruiting agencies have a wealth of experience in this area and are able to work swiftly. When you may spend minutes mulling over a single application, professional recruiters scan resumes in six seconds on average.
However, this goes even beyond finding candidates with the appropriate skillset and qualifications to perform the job. These people also know how to gauge soft skills and match candidates with companies where they best fit the culture.
You don’t have time for the hiring process
Depending on your business and hiring needs, recruiting and hiring is often a full-time position. The reality is that with your focus set on other duties, there is only a limited amount of time you can commit to the recruiting process. This not only impacts how much you can get done but also how quickly you can achieve it.
Most of the time, hiring is time-sensitive. Even if you are able to give your full attention to hiring for a certain period, your everyday job responsibilities may suffer as a result.
You may not receive candidate responses
Even when you’re on top of every phase of the hiring process, receiving responses from candidates is not guaranteed. The average sourcing email alone sees response rates of just 30–50%.
Beyond active job seekers being slow to respond, it’s not uncommon for ghosting to occur—any point during the process when the candidate disappears and becomes unresponsive altogether.
In the case of passive talent, even your best attempts to woo them to your company may not be met with responses at all. This can be disheartening, disappointing, and frustrating at the very least.
Why hiring becomes even more challenging in an economic downturn
In an economic downturn, all of these issues are compounded and you have to navigate additional factors that make hiring, which is always difficult, even harder.
In-demand roles are still competitive
Many roles will always be competitive—even at times of high unemployment. Companies across industries and niches are always hiring for revenue generation and digital roles, and this remains the case in a recession.
So, while you may believe you’re reaping the benefit of more active job seekers during a downturn, know that your competitors may be actively hiring for those same positions.
Resume review fatigue compromises your decision making
An open position attracts 250 resumes on average. With more active job seekers in the market, you can expect the number of applicants to only increase.
With a high-volume of inbound applicants, it's difficult and time-consuming to effectively narrow your candidate pool. As the process becomes tedious, you may find yourself giving less attention to candidates and mishandling their applications as a result. Ultimately, this can impact your ability to make the best possible hire.
Jobs take more time to fill
With a higher volume of applications coming through, the hiring manager has a lengthier hiring process cut out for him or her. Open positions take 42 days to fill on average. This is easily extended during a recession because of the high volume of applications, yet companies may find themselves less able to absorb the financial impact of leaving a role empty.
Passive candidates are even less likely to respond
Regardless of the economic climate, passive talent is difficult to acquire. It’s reported that 75% of LinkedIn messages to passive candidates fail.
In an economic downturn, that number grows. Employees are worried about a shaky job market, and understandably so. If their current employers have shown them stability and loyalty, they will be inclined to preserve that opportunity in lieu of entertaining a job possibility with your company.
The stakes are higher
In times of economic downturn, your company is closely monitoring its financials, and a hiring freeze may be on the table as a possible cost controlling measure. This leaves an even smaller margin for error. Every hiring decision is critical—you must make the right hire the first time, while the threat of a hiring freeze looms.
Data-driven recruiting is more important than ever
With so much at stake, the need for data-driven recruiting is even more vital. Hires for which you would typically rely on gut instinct need to be replaced with calculated decisions.
During the hiring process, it’s wise to use best practices that will help you get the best possible outcome. Test outreach templates to determine what makes prospects respond, refine your job descriptions until you’re only attracting the most qualified candidates, and ask interview questions that better help you identify the candidate who is best positioned to excel in the role.
How to hire effectively during a recession
With what seemed like the flick of a switch, we shifted from a candidate’s market to an employer’s market. Initially, this might appear to be a positive shift for employers, but it comes with its own set of challenges that make hiring a difficult undertaking during these turbulent times.
Read on for best practices to improve your company’s hiring process and make the best hires for your business, even during a recession.
Refine your screening process
Only one in six candidates advance to the interview process, yet you will be required to sort through hundreds of applications. Streamlining the way you screen candidates can help speed up the front-end of the hiring process. Consider adding screening questions to the application to identify candidates who are experts in their fields.
You can also prioritize screening candidates who are referrals. By moving referrals to the top of the application pile, you can prioritize candidates who have relationships with and have been vetted by your employees or others in your network. After all, employers cite referrals as a top source of talent.
Referrals are five times more effective than other hires. Many of these prospects are more likely to engage with your brand because they have been recommended by people they know and trust. With existing relationships in place, your company is also more likely to stay top-of-mind, as referred candidates may be interested in working alongside people they already know.
If your business doesn’t already have a referral program, launch one, or tap into a recruiting agency’s network.
Build up your network
During a recession, be proactive about building your own network of connections, prospects, and candidates.
Establishing relationships with potential candidates enables you to build awareness for your company, and more effectively pique their interest when it comes time to hire for your next position. Additionally, a candidate’s relationship with you will speed up the hiring process; candidates who are familiar with you and your brand can advance through the hiring funnel faster.
Focus on active and passive prospects
Often, hiring managers prefer passive prospects to active job seekers. However, in a recession, it’s important to consider that many top candidates may be out of work, making them active job seekers. Overlooking active prospects will cause your business to miss out on important hiring opportunities.
Additionally, keep in mind that active hires tend to be more responsive, particularly in a struggling economy where job opportunities may be harder to come by. As a result, you’re likely to close an active candidate sooner than you would a passive candidate.
Don’t hinder business growth
During a recession, many companies sideline their hiring efforts. While putting all hiring on hold may seem the best option to cut costs, it may hinder your business. While some areas of your company may be contracting, others are likely growing and require new employees to support that growth.
Instead, consider selective hiring, allowing you to hire for roles that will support the success of your business, while putting nonessential roles on the backburner. This will allow you to take advantage of the unique opportunity to hire top talent, and continue to propel your business forward.
Think twice before doubling down on freelancers
Due to the uncertainty of these times, some businesses are opting for independent contractors over full-time employees. While this might be a necessary solution for some, don’t replace a full-time role with freelancers without careful consideration.
Abandoning the search for a candidate to fill a critical role could put your business at a severe disadvantage when the economy recovers. While other businesses have the industry’s top talent on staff, your business might be left to settle for less-than-ideal candidates.
You may be tempted move slowly and be extra cautious throughout the entire hiring process, for fear of making the wrong hire or raising your company’s overhead costs prematurely.
While this might seem like a wise approach, consider that passive talent is still in high demand and that missing out on the perfect hire could have greater financial ramifications than taking on the salary of a new hire.
Also keep in mind that the hiring process is already a costly one, as the average hire costs $4,129. The longer you take to fill an open position, the more time and resources you exhaust. Want to make sure you get the right hire quickly? Partner with a seasoned talent strategist who can help you identify top prospects early on and move the process forward.
Succession planning is key
An economic downturn may drive many older employees to retire. At the same time, up-and-coming talent is being set back from canceled internships.
Combined, this creates a large hole in your pipeline for new hires. Strategize for not only the coming months, but also the next several years of hiring. Build your network of fresh talent, so that you’re ready to onboard as that talent develops.
Reconsider your benefit offerings
Now more than ever, companies need to prioritize the factors that keep candidates interested and committed to their employers.
In a recession, when many companies lay off strong employees, candidates want to see security and career growth over novelties and gimmicky features. Even in a strong economy, 87% of employees consider professional career growth and developmental opportunities to be important to them.
So, it’s time to stop emphasizing culture, perks, and office environment, and start emphasizing compensation packages and professional development.
Partner with a firm that can do it all for you
Instead, consider partnering with a recruitment agency with a thorough recruiting process—one with the expertise, experience, time, and resources to pitch your organization to top talent and successfully attract those individuals to your company.