Hiring Hurdles: Unpacking the Dismal State of Recruitment in 2023

Introduction

Navigating the unfolding landscape of 2023, talent professionals found themselves grappling with the ominous possibility of an economic recession. This prompted contemplation among some professionals about scaling back on hiring initiatives. Concurrently, employers facing a skills shortage redirected their focus toward retention strategies and prioritized candidate-centric elements, such as flexibility and career development. The discourse surrounding skills-based hiring continued to gain momentum.

The Cooling Labor Market

As the year progressed, a consensus among economists indicated a notable deceleration in hiring, following the economic turbulence of preceding years. Karin Kimbrough, Chief Economist at LinkedIn, remarked on the slower pace of growth in 2023, signaling a return to a more stable state after the meteoric rise observed the previous year. Despite expectations of a gradual decline in job openings, the labor market dynamics remained tight. In January, the unemployment rate dropped to 3.4 percent, alleviating some concerns about a recession.

Jay Denton, Chief Analytics Officer at LaborIQ, presented an optimistic scenario, forecasting the addition of approximately 1.2 million jobs in the year, buoyed by January's robust jobs report. However, a more pessimistic outlook, entailing a potential loss of half a million jobs, remained plausible. Certain sectors, notably healthcare, and leisure and hospitality, exhibited resilience. Talent shortages persisted, sustaining the competition for skilled individuals. Johnny Campbell, CEO of SocialTalent, noted challenges in the technology industry due to layoffs but emphasized that hiring remained challenging with numerous job vacancies globally.

Despite these challenges, experts underscored the importance of maintaining robust recruiting operations, even in the face of a contracting labor market and hiring freezes. Neil Costa, CEO of HireClix, observed instances of recruiter layoffs and clients scaling back on hiring. However, he noted a sustained enthusiasm for recruiting and advised TA teams to focus on areas like revamping career sites and employer brands in anticipation of potential talent shortages.

Amy Schultz, Global Head of Talent Acquisition at Canva, expressed a more pessimistic outlook, anticipating a departure of individuals from the recruiting industry due to layoffs, potentially exacerbating talent shortages in the market rebound. Nicola Hancock, Managing Director for the Americas at AMS, acknowledged the immense pressure on HR and recruiting over the last two years, leading some to rethink their careers in the short term. Despite burnout, she highlighted recruiters' passion for their work and the critical role they played in helping individuals secure jobs and advance in their careers.

Candidates Continued to Value Flexibility

Job candidates and employees maintained their preference for employers prioritizing flexibility and work/life balance, values that gained prominence during the pandemic. Jennifer Shappley, Vice President of Global Talent Acquisition at LinkedIn, anticipated that work/life balance and flexible work arrangements would persist as top talent drivers. Candidates sought companies valuing their holistic well-being and providing support for achieving work/life balance.

Jeanne Meister, Executive Vice President at Executive Networks, noted a shift in the meaning of flexibility, extending beyond remote work to include flexibility in when work was performed. This could involve condensed workweeks or asynchronous work schedules, necessitating a cultural shift where work/life boundaries were respected. Front-line workers also stood to benefit from flexible schedules, exemplified by Chick-fil-A allowing longer work hours over fewer days.

Jeanne McDonald, President of Global RPO Solutions at Korn Ferry, predicted a continued emphasis on work/life integration, with candidates favoring fluid schedules over traditional 9-to-5 workdays. Managers were expected to assess success based on output rather than adherence to a specific time frame.

Internal Mobility Strengthened

Growing interest in internal mobility led more employers to consider it as a viable strategy, facilitated by technological advancements. Candidates expressed a strong desire for career development, with Linda Jingfang Cai, Vice President of Talent Development at LinkedIn, emphasizing the importance of helping employees transform their careers as their interests evolved. Internal mobility not only made a company more attractive to candidates but also addressed open roles and critical skill gaps amid hiring slowdowns.

LinkedIn data indicated that employees who had moved internally had a 64 percent chance of staying with the organization after three years, compared to 45 percent for those who hadn't made a move. Effective internal mobility programs posed challenges, requiring HR to distinguish between talent and skills mobility and build a framework for understanding existing skills and facilitating effective employee movement.

Companies increasingly turned to talent analytics to identify needed roles and potential candidates. Artificial intelligence platforms, leveraging predictive analytics, were employed to shortlist internal candidates and offer tailored career development content. Despite the role of technology, creating a culture that celebrated and recognized internal mobility remained crucial.

Skills-Based Hiring Gathered Momentum

A notable shift toward a skills-first mindset in hiring gained momentum in 2023, emphasizing candidates' competencies over traditional criteria like college degrees and work experience. This shift, driven in part by labor shortages, garnered bipartisan support, with lawmakers proposing skills-based hiring measures.

Eric Sydell, Executive Vice President of Innovation at Modern Hire, acknowledged the ongoing disruption in skills, with a focus on soft skills such as communication, customer service, and collaboration. He emphasized the importance of using a hiring process designed to measure not only skills but also job fit, work style, potential to learn and grow, and other attributes contributing to a holistic hiring decision.

While the adoption of skills-based hiring was on the rise, experts noted the complexity of operationalizing it. Recruiters faced the challenge of educating and influencing hiring managers, and HR technology vendors worked on innovations to simplify the process.

Conclusion

In conclusion, as 2023 unfolded, the talent acquisition landscape witnessed shifts influenced by economic conditions, skills shortages, and evolving candidate preferences. The emphasis on flexibility, internal mobility, and skills-based hiring reflected a dynamic environment where organizations adapted their strategies to navigate the challenges of the time.