Senior Client Partner, Assessment and Succession
Mass Hirings: Going, Gone
More than 10 million job openings. More than 250,000 new hires.
At nearly any other time in US history, those statistics would look great. But the most recent labor statistics, combined with what talent professionals are seeing on the ground, show that a multitude of companies are leery of adding significantly more people to their payrolls. “Right now, hiring managers are being told by their bosses, ‘We won’t let you fill these five positions, but what’s the one you really need?” says Miriam Nelson, Korn Ferry senior client partner in the firm’s Assessment and Succession Solutions business.
Job openings in August totaled nearly 10.1 million, which would have been a record number just a year ago. But it’s a noticeable 10% drop from the 11.2 million reported in July, and more than a million less than analysts expected. Meanwhile, nonfarm payrolls increased by 263,000 in September, a drop from the 315,000 jobs added in August and the lowest number since April.
At least so far, no one is saying the job market has fallen off a cliff. Layoffs have been sporadic, and the people who are being hired are still coming in at higher salaries than their predecessors because they retain some of the leverage they acquired during the Great Resignation
But there are plenty of indications that companies aren’t as focused as they were even six months ago on bringing in as many people as possible. “We just got used to this mass hiring.” Says Jeanne MacDonald, Korn Ferry’s president of Global RPO Solutions. “We’re back to a normalization mode, and companies are becoming more thoughtful about who they bring in.” She says “the frost” began about 60 days ago. Many firms are now in the process of reevaluating how many people they want to employ as a potential recession looms.
Another strategy is “trading out.” Many organizations don’t want to create new job openings, but will pounce on high-quality candidate to replace an average employee who’s leaving, says John Long, Korn Ferry’s sector leader for its North American Retail practice.
Experts say companies also are lengthening the approval process for new recruits. Instead of just one or two people having to give a thumbs-up to a new person, now it’s three or four. At smaller firms, even the CFO is getting involved in hiring individual recruits or, at the least, signing off on specific head counts for smaller teams. “It slows things down while not saying, ‘We are slowing things down,’” says David Vied, global sector leader for Korn Ferry’s Medical Devices and Diagnostics practice.
Besides slowing down external hires, more companies are looking to fill open spots internally. Jacob Zabkowitz, Korn Ferry’s vice president and general manager of global RPO, says that a year ago clients would wonder why they were filling 20% or more of their open positions with existing employees rather than just going out and hiring someone new. Now, he says, clients are looking for 40% of their hires to be internal. “There’s a push for internal mobility, which can help improve an employee’s career progression, enhance the firm’s brand, and lower overall costs,” Zabkowitz says. Experts say developing talent internally is often cheaper than hiring and training new people, but it’s not always easy, particularly for companies that don’t have a culture of doing it.
At least for some firms, however, the job slowdown might have come and gone already. MacDonald says some organizations slowed or froze their hiring over the summer, reviewed their projections, and are now ramping up hiring again. “I’m more optimistic than I was thirty days ago,” she says.