Recruiting in a Recession
Over 90% of VCs expect a recession in the next 6 months. This means extending runway is the top priority for founders. With talent and people comprising the majority of many firms’ budgets, optimizing and reducing spend in this area is critical to every venture’s success in 2023.
What gives the most successful teams an advantage? We identified 3 key areas which set firms that thrive during recessions, apart from those that suffer the greatest losses.
A recession can bring unexpected challenges and opportunities, so it’s important to maintain agility. This means being open to new ideas, pivoting when necessary, and adapting to changing market conditions.
Flexible outsourcing solutions give organizations an advantage against changing market conditions. This can include using temporary or contract workers, or flexible staffing arrangements.
- RPO and Embedded Recruiting: External partners are particularly beneficial during a recession when businesses need to be strategic about hiring. RPO tends to be half the cost of traditional recruitment agencies, despite taking on additional workload and delivering higher ROI. Bringing searches in-house via a flexible RPO is a great way to reduce cost-per-hire without the risks of a permanent recruiting team.
- Nearshore Techn Talent: Hiring your team in a neighboring country can provide access to skilled labor at a lower cost. As a bonus, nearshoring can provide access to a broader range of expertise and experience, allowing companies to continue innovating despite market uncertainties. Unlike permanent teams, downscaling with nearshoring solutions is much less painful.
Data & Analytics
Data analytics is business critical during recessions. With budgets cut, teams have to make do with less, and data helps make informed decisions about how to allocate limited resources. In the context of talent acquisition, data can be used to track the effectiveness of recruitment efforts and reduce-cost-per hire.
Data and analytics can help talent acquisition teams reduce cost-per-hire in several ways:
- Identifying the most cost-effective sources of candidates: Talent acquisition teams can use data and analytics to identify the most cost-effective sources of candidates, such as employee referrals or free job boards.
- Assessing the competitiveness of job offers: Data and analytics can be used to assess the competitiveness of job offers by comparing them to market rates and other factors that may affect a candidate’s decision to accept an offer. This can help talent acquisition teams to make more informed decisions about how much to offer candidates and avoid overpaying for talent.
- Tracking the effectiveness of recruitment efforts: Talent acquisition teams can use data and analytics to track the effectiveness of their recruitment efforts and identify any bottlenecks or inefficiencies in the process. This can help them to make adjustments and improve the efficiency of their recruitment efforts over time.
- Improving the accuracy of job forecasts: Talent acquisition teams can use data and analytics to improve the accuracy of their job forecasts, which can help them to better plan and budget for their recruitment efforts.
While it may seem counterintuitive, investing in your workforce delivers big returns. Getting the most out of your team, and cutting recruiting costs through retention, sets your company up to survive difficult times.
Areas startups often overlook while optimizing budget include:
- Employer brand: Companies with a strong employer brand typically see their cost-per-hire and time-to-hire cut down by as much as 50%. While it may seem like a “nice-to-have,” for companies looking to stretch the effectiveness of every dollar, employer branding can have a tangible return on investment.
- Employee referrals: Employee referrals can be a cost-effective way to source candidates, as employees often have a good understanding of the skills and attributes needed for a particular role and are likely to refer people they know are qualified.
- Employee development: Companies can reduce their cost-per-hire by investing in the development of their current employees, and delivering an excellent onboarding experience. A structured onboarding process reduces the risk of early turnover and wasted recruitment spend, making it vitally important for companies seeking to extend runway.