Third Thursday Thoughts, 16th Edition
Combating Stagflation for the New Year
Much has improved since the pandemic struck and changed the face of the corporate world.
Businesses have reopened, events are going ahead as usual and social distancing measures are no longer enforced. For many people, COVID-19 is slowly fading from the forefront of their minds. Nevertheless, the recruitment industry is still reeling from the impacts of economic uncertainty. With geopolitical turmoil, the rising cost of living and the warning of a recession around the corner, finding and recruiting new talent is not getting easier.
Experts warn that the job market could begin stagnating very soon as it becomes increasingly difficult to keep pace with rising inflation and expectations for better pay and benefits. It is crucial for hiring managers to think ahead and assess budgets and future recruitment needs to prevent falling behind. In recruitment, market stagnation refers to a situation where job growth slows, output plateaus and wage increases flatten, leaving candidates demanding more than employers can offer.
Stagnation often follows a period of stunted economic growth, which we have experienced since the first coronavirus lockdown in 2020. Although the economy showed signs of recovery after the government eased restrictions, hiring activity is now declining again. Recruiters are concerned that the job market is heading for stagnation because many employers may not have included adequate budgets for staff increases at the start of the financial year, focusing on short-term recovery rather than longer-term forecasts.
In addition, people are less likely to change jobs for the same or less than what they are currently earning, with candidates that are going to market achieving anything from a 9% to a 30% increase on their current salaries. Equally, in today’s turbulent market, they may stay put rather than move in anticipation of further economic instability.
As a result, employers must assess their hiring needs sooner rather than later to avoid facing a scenario where they are desperate to fill a role but lack the funding and resources to present their top candidate with an enticing job offer. It is easy to grow complacent when things seem to be going temporarily smoothly. But if we have learnt anything from recent disruptions, it is just how fast things can change.
We remain in a candidate-driven market, which means employers have their work cut out to attract and retain workers in a highly competitive recruitment landscape. Business moves fast in the modern world, and employers must always stay one step ahead of their staffing needs. We at Marcum Search recommend focusing on a few critical areas of the recruitment process to help navigate existing and upcoming hiring challenges.
Before embarking on a hiring drive, which can often prove expensive and time-consuming, companies must assess market trends to ensure they can make a competitive offer and fulfill regular pay raises in line with industry expectations. The same goes for existing employees, too. By investing in reward programs, training, and bonuses, hiring managers can fill skill gaps from the inside and boost retention, reducing the pressure to keep recruiting more staff.
Diversity and inclusion policies (or lack thereof) hold great sway over today’s workforce, playing an integral role in progressive employee value propositions, important for attracting and engaging desirable employees. Highlighting issues and opportunities within this business area is a vital part of social responsibility for modern organizations. Plus, nurturing an inclusive, culture-focused workplace will invite interest from a wider pool of candidates, increasing the likelihood of hiring success and retention.
Meeting candidate expectations for salary, bonuses and benefits has always been important. It is now non-negotiable, as market stagnation threatens to impact companies’ bottom lines. Enlisting the support of a third-party recruitment team like Marcum Search ensures someone is continuously monitoring the job market, conducting accurate budget assessments, and overseeing the entire recruitment process. With these tasks being managed, business leaders can turn their focus from merely staying afloat to generating long-term growth amidst economic uncertainty.
Here at Marcum, we take pride in our retention and recruitment efforts.
On behalf of everyone at Marcum Search, Happy Holidays and a very Happy New Year!