Hiring During A Recession: What It Means for the Employers and the Employees

So, you’ve finally decided to scale your business this quarter. Your recruiters have curated the perfect set of listings, and the HR department even has the orientation planned—everything seems set. 

Suddenly, news about the recession tears it all apart. Qualified candidates back out of interviews, and it seems like you may not have the revenue for new hires after all. Oh, what will you do now?

First, sit down, relax and understand this: hiring during a recession is easy.

Now, let’s walk you through some statistics. In June ’21, the unemployment rate in the US sat at 5.9%. A year later, that number fell to 3.6%. Meanwhile, the projected recession probability for ‘23 only climbed upwards. 

So, companies are still managing to hire people despite the looming threat of an economic slump. And the way they’ve been able to do that is simple—they understood the associated challenges and worked to implement the right tools into their recruitment processes. 

You can do it too. Let’s get into it, shall we?

The challenges of hiring during recession

To recruit better, you must grasp how recessions change the hiring landscape. That will enable you to improve your internal processes and avoid some basic mistakes. 

So, here are the four most common challenges associated with recession hiring.

1. Increased hiring requirements with reduced training resources

Currently, most organizations demand experienced and qualified candidates for higher corporate positions. And while there are plenty of applicants, few seem to fit the bill. Recessions exacerbate this problem. 

Essentially, companies want to hire, and candidates want to fill the vacancies—the issue lies in an organization’s unwillingness to train inexperienced applicants during a recession. Consequently, applicants miss out on the position by inches, and companies return to announcing the job again.

While organizations cannot be blamed entirely for the lack of resources during a financial crisis, the issue still adds to the overall problem. 

2. A lengthy and tedious application process

Here’s what a step-by-step conventional hiring process looks like during a recession:

• An organization with a downsized HR department announces a new position
• Candidates apply in droves
• That same downsized HR department now manages existing responsibilities while also sifting through hundreds of applications

What does that do? It makes the entire process tedious. And, despite the HR department’s best intentions, bias may seep in during such drawn-out procedures. For instance, an HR manager may be so exhausted that they reject an application based on a cursory glance. 

3. Stabilization over business growth

Most organizations tackle recessions by implementing budget cuts. The basic idea is this: Let’s stabilize the business and look toward expansion later. 

While that isn’t technically wrong, it negatively impacts every aspect of recruitment and organizational growth. To elaborate, here’s how all of this plays out:

• A recession limits an organization’s earning potential
• Companies implement hiring freezes or streamline the workforce to stabilize the current revenue stream
• Without injecting new employees into the reduced workforce, organizations cannot tackle existing projects or maintain pre-recession revenue numbers

The concept behind stabilizing financial output is not the issue here. Instead, it’s the execution that’s flawed.

4. The lack of automation

The most notable drawback to contemporary recruitment processes is the lack of automation and data-driven hiring. Regardless of scale, most companies still manually examine applications, leading to:

• A lack of standardized evaluation for candidates
• Lengthy recruitment processes, causing several applicants to pull out due to the prolonged wait period
• A chaotic onboarding process owing to the unstructured initial hiring process

Structure and organization are crucial in a financial crisis. These things can only come when companies realize the importance of integrating automated applicant tracking tools into their recruitment process.

How do you effectively navigate recession hiring? 

Overcoming the challenges of recession hiring requires you to ditch some of your previous assumptions about workforce training and recruitment. To put it briefly, the trick lies in approaching the issue while accounting for the broader economic situation.

Here are five simple tips on how to do just that.

1. Review organizational status to understand resource allocation and hiring requirements

Before announcing a new position, organizations must take stock of their current workforce and financial state. So, this is what you need to look at:

• The cost of training new employees
• The number of outgoing employees, including retirees and layoffs
• The current financial output of the organization

Consistently reviewing these factors will pinpoint precisely where you need to improve.

For example, your new employees may not need extensive training, thereby reducing the drain on company expenses. However, there’s a significant number of workers leaving soon. In that case, you can allocate a portion of the training resources for hiring new candidates. 

2. Implement collaborative programs based on the changing employment market

A recession shifts the balance towards highly skilled individuals, with organizations looking to hire the most qualified candidates to reduce training expenses. That means your existing workforce has to play catch-up or get laid off. However, a better alternative would be to build collaborative training programs.

Take this example: In 2019, the cost of providing employees with Learning & Development courses was approximately $1300. Meanwhile, the cost of hiring a new employee was around $2,400 in 2018. Even after accounting for inflation, the former is cheaper than the latter. 

The idea is simple: You hire someone qualified and team them up with an older employee. That way, both individuals learn from each other—the current worker gains new skills, while the new hire gets familiar with the operational flow.

3. Save on additional recruitment costs through automated referral platforms

Your employees have vast social and professional networks you can tap into without much effort. Referral hiring is essentially that—Managers announce a position and then ask their existing employees to refer suitable candidates. That removes the need for external hiring firms.

So, setting up a referral hiring program will let you reduce expenses and create faster turnarounds by decreasing the time spent reviewing irrelevant applications. The ideal way to do this is to use automated tools such as Suitable AI. 

Suitable helps in creating engaging and intelligent referral programs with exciting incentives for employees. Essentially, employees get rewards at every stage of the hiring process based on how far their referred candidate reaches. 

What’s more, you can also incentivize employees to integrate their digital network and create a bigger talent pool for the recruiters. You can pick and choose who you want now.

It’s a win-win situation for all involved parties—employees receive benefits, managers get access to vast candidate pools, and qualified applicants get the job.

4. Look toward digital avenues to attract better candidates

Digital platforms and social media sites host an extensive candidate pool. While referral hiring targets this base, organizations must also seek to do this independently. 

What does that mean? Simple—use open forums and integrated referral tools to make people aware of a vacancy. You could even reach out to industry figures to build better relationships and interact with potential candidates. The best part about all this? It’s free.

However, before you start giving shout-outs on every platform, understand this: There are two types of applicants. The first kind seeks you out, while the second doesn’t know of you because they’re already thriving in their respective fields. 

Often, you’ll find that the second type is more in line with what you want. Still, it would be best if you marketed your organization to attract both.

5. Refine the process 

An unstructured and prolonged screening process will cause qualified applicants to leave. Why would they wait? Several other organizations are willing to offer them the same position. 

So, take a few steps to consolidate the initial part of the hiring process, including:

• Removing redundant questions from an interview questionnaire 
• Establishing a consistent line of communication between recruiters and the final applicant pool
• Integrating automated tracking systems to review the final candidates
• Ensuring a streamlined and smooth onboarding process

In a 2018 study, 79% of respondents claimed that a positive onboarding experience helped them integrate into the organization faster. Consequently, quicker adoption of company culture and workflow will directly translate to faster training periods.

Taking recession into stride

A significant portion of the challenges related to recession hiring comes from a general lack of organization. This is also the case for referral recruitment. While internal improvements can structure the training and onboarding of new employees, companies must make most of the enhancements in the recruitment process itself.

So, streamline your screening efforts, allocate resources better and, most importantly, utilize all the available networking avenues. It’s really not that difficult. One single platform can offer you all three of those things. But then again, if you’ve made it this far, you already know the name of that tool.