When you think about a recession in 2023, which category do you fall in?
2022 presented a tough hiring market—especially hiring technical personnel (but not exclusively).
There is almost always a high demand for technical personnel, but 2022 was unique. Many people got used to working from home. When told they would need to return to the office some or all days of the week, many were motivated to find new employment.
And when you are seeking remote work, the entire nation is open to you.
Cost of living differences can skew wages. A candidate gets an offer from a company in Detroit and one from San Jose. The offer from San Jose is 1.5X the offer from Detroit. If the candidate would be required to relocate to San Jose, the offer is terrible since the cost of living is 2X that of Detroit. But if the candidate could continue to live in Detroit and get 1.5X the salary, the decision is simple. San Jose offer wins.
If lay-offs become widespread in 2023, does that mean the talent pool will grow and the competition for personnel will ease?
Some economists say that certain industries are probably already in recession. Home building in the U.S. is plummeting in response to surging mortgage interest rates. The National Associate of Home Builders believes that the housing market has been in recession since the summer.
So economists are forecasting an uneven recession. In other words, some industries will be hard hit and will have large lay-offs. Other industries will not be hit and will not have large lay-offs.
Depending upon your industry, the talent pool might very well remain tight.
Hiring in a Tight Labor Market
Rather than wait for a recession that may not come, we recommend adopting a strategy that includes the following points.
(1) Allow much more time to fill openings.
Attracting qualified candidates takes more time in a tight labor market. Budget additional time for the offer negotiation stage. Candidates are likely to have multiple irons in the fire, and they may ask for additional time to consider your offer (while they compare all offers or wait for that last one to come in). Recognize that some of the offers you extend won’t be accepted. Or worse, an offer will be accepted, but then the candidate will reverse course.
(2) Do your salary research.
On the one hand, you have to keep your salaries competitive in your local market. On the other hand, you need to understand when a candidate’s salary expectations are reasonable—or ridiculous. When entering into a salary negotiation with a candidate, be sure to understand the details of the other offers the candidate has in hand. Especially the location of the companies extending the offers.
(3) Consider giving your current team raises.
Minimally consider giving your current team cost of living raises. Offering higher wages to new recruits than what the current team is getting is a recipe for disaster. If it will take more money to attract new candidates, it will take more money to retain your current team.
(4) Hire great candidates whether you are ready to or not.
If a great candidate comes along in Q1 for a role you weren’t planning to open until Q2, nab them!
This is a technical/business article catered to developers, hiring/project managers, and other technical staff looking to improve their skills. Sign up to receive our articles in your email inbox.
Stout Systems is the software consulting and staffing company Fueled by the Most Powerful Technology Available: Human Intelligence®. We were founded in 1993 and are based in Ann Arbor, Michigan. We have clients across the U.S. in domains including engineering, scientific, manufacturing, education, marketing, entertainment, small business and robotics. We provide expert level software, Web and embedded systems development consulting and staffing services along with direct-hire technical recruiting and placements.