THIS or THAT? Layoffs and Recession Prepping OR Companies Hanging on to Workers?
In a new twist on the “THIS or THAT?” game, we’re noticing conflicting views regarding the workforce based on economic indicators. On the one hand, pundits are predicting imminent layoffs looming on the horizon. On the other hand, sources are advocating that companies hang on to workers.
Which is correct? Let’s take a look.
Ironically, job growth is strong, and unemployment is at a 50-year low, yet analysts are predicting layoffs.
According to a survey by The Conference Board, 98% of CEOs are prepping for a recession in the U.S. over the next twelve to eighteen months. While most (85%) said they’re preparing for a brief and shallow recession with limited global repercussions, a small minority (13%) are bracing for a deep recession with global implications.
In a survey by Stifel Financial Corporation, 53% of respondents believe that inflation will be an issue for the next two quarters to a year, with another 43% expecting elevated prices to persist for even longer. Half (50%) of respondents are “very concerned” about inflation, compared to just 33% who felt the same way one year ago.
Executives cite acquiring and retaining talent as a serious risk. Findings from PwC’s Pulse Survey of 2022 note that 50% of respondents are taking steps to streamline their workforce by reducing their overall headcount in the next six to 12 months, even as they are concerned about the need for human capital.
As the fear of falling deeper into a recession remains high, companies are cutting costs – and some of those costs involve headcount. Large corporations from Argo AI to Zillow have already announced layoffs including Best Buy, FedEx, Ford Motor, Google, HBO Max, Meta, Netflix, Peloton, Re/Max, Shopify, Twitter, Walmart, Wayfair, and more. LinkedIn reported layoffs from startups to tech giants.
Please don’t go
The flip side of the equation are those companies that are hanging on to their employees.
Some say that employees don’t need to worry about layoffs as much as the news reports. Workers, they say, have the upper hand. In fact, Fortune reports that companies are hanging on to employees “for dear life” in the wake of unprecedented unplanned attrition rates.
Managers realize the benefits of keeping seasoned workers around, and retaining workers in the wake of inflation, the great resignation, and other factors is still possible. Resignation rates are the highest among mid-career employees; and turnover is highest among younger employees, according to Harvard Business Review.
Recent polls have found that:
- One in four managers have personally begged their tenured employees to stay upon receiving their resignations.
- More than 50% of long-term employees stayed at their current job due to a counteroffer of more money.
- On average, long-term employees said they would leave their jobs for a salary increase of 52%.
In the face of fierce competition, companies have been diligently working on retention programs, creating incentives, and coming up with interesting perks to keep their workers.
Could both sides be true? Are layoffs imminent and managers begging their employees to stay?
The answer is a resounding yes.
In researching both sides, nextSource has concluded that there will be layoffs, and unfortunately thousands of them. Twitter alone laid off approximately 3,700 workers, or about half of the workforce, a Reuters brief stated.
Conversely, managers are devising ways to keep the workers that they have, when possible. Employee retention is important, and employers are working diligently to reimagine retention programs, according to an article in Harvard Business Review.
The article goes on to say, “Reimagining retention is not a quick-fix solution to the challenge many organizations and managers are currently facing, but the sooner they start, the sooner their people will see the opportunities to squiggle and stay instead of looking to leave in order to grow.”
While most view layoffs as a direct consequence of an uncertain economy, nextSource research indicates that many companies are rebalancing their workforce to reflect needed skills. For example, many high-tech companies are shifting their IT focus from IT project-centric personnel to those who have the needed IT skills but demonstrate greater customer and business acumen. They are seeking and retaining individuals with IT skills that are complemented by competencies such as growth mindset, collaboration and synergy, diversity, risk taking, and political savviness.