Partner, Organizational Strategy, Business Sustainability
The Great Hiring Mystery
Didn’t CEOs just say they were worried about a recession? In fact, many corner-office leaders have expressed such fears. But that doesn’t appear to be halting their hiring efforts.
Indeed, far from slowing down, US payrolls grew by a surprisingly large 339,000 in May and increases for the preceding two months were also revised higher, according to the US Department of Labor. What’s more, firms are paying a premium for additional workers. Average hourly earnings grew 4.3% in May from a year earlier, similar to annual gains in March and April.
To some degree, it’s a mystery why this is happening, given the state of the global economy, continued worries about inflation, rising interest rates, and Russia’s invasion of Ukraine. Experts say their best guess is that company executives still see potential for further growth and want to make sure they have the workforce to take advantage. “You can’t cut your way to greatness,” says Sharon Egilinsky, a partner in Korn Ferry’s Organizational Strategy business.
An economic downturn is still a worry, but no longer the worry. In a new poll of Fortune 500 CEOs, only 26% said a recession was the company’s biggest near-term threat, slightly higher than the 22% who cited cybersecurity threats (another 16% cited inflation, and 13% mentioned geopolitical tensions). At the same time last year, fully 75% of those big-firm CEOs said they expected a recession by the end of 2023.
Meanwhile 60% said they will increase the number of people they employ in 2023, while only 25% say their employee count will shrink. , Many organizations that put recruitment and development on hold to handle pandemic-era crises are trying to catch up, says Andy Holmes, a London-based Korn Ferry associate client partner. “A lot of organizations found themselves with a gap that they have to cover,” he says.
Still, experts say, there is a little anxiety behind the numbers. A lot of organizations are hedging their bets. For example, instead of adding 10 people for 10 open spots, companies are adding five or six and no longer considering the remaining jobs open.
That’s a change from last year, when it seemed like every company was bringing on as many new people as possible, says Jacob Zabkowicz, vice president and general manager for Korn Ferry’s Global Recruitment Process Outsourcing business “With the chief human resource officers I talk to, ninety-five percent of them say they’ll hire less this year than in 2022,” he says.
Companies also are gently nudging some older workers to consider voluntary buyouts or even making a limited amount of layoffs across their broader workforce, says Bradford Marion, a Korn Ferry senior client partner specializing in the automotive industry. There are a lot of older workers exhausted from the past three years of upheaval who are looking to retire. For at least some of those positions, organizations will try to find technological alternatives.