This year has seen interesting shifts and indicators that signal change in our economy is looming. While many fear a recession, there are conflicting messages about what’s happening in the market.
One of the metrics closest to our industry, unemployment, has yet to see an increase as talent continues to be in demand across many skill sets. Despite the numerous layoffs across the first two quarters of the year, we still see companies hiring but with less volume. Perhaps this is a right-sizing from previous overhiring in response to Covid-19 backlogs and delayed work, with organizations now looking to find more sustainable operating levels. While inflation seems to be slowing, many organizations are also faced with finding stabilized rates for their contingent workforces — just one of the initiatives companies are exploring to prepare for the shifting economy. Here are other trends to watch.
Importance of supplier partnerships. With many organizations seeking to shift their focus to cost savings, talent availability and quality remain an important driver for most. Many programs are looking to their supply chain partners for opportunities to identify the partners that can help them plan for the future. Several factors become important when partnering with a staffing provider. Reviewing an organization’s financial stability and ability to deliver across multiple service lines helps buyer organizations select partners that are better positioned to weather economic uncertainty. Having a global presence also helps to ensure your providers are scalable across geographies as your program looks for creative staffing solutions such as nearshoring or offshoring. Consider your partners’ positioning and look to them for creative ways to find cost savings. These partners play a critical role in finding and delivering the talent your organization needs and may see opportunities you don’t.
Evolving rate strategies. A renewed focus on cost requires re-evaluating the ways your organization has saved money in the past and rethinking how to adjust those strategies for the current market. Reducing the number of supply chain partners can help by creating more opportunity for your remaining suppliers and leveraging volume discounts on the new opportunity you have helped to create for those suppliers. Given the current interest rate, you may also want to consider seeking early-pay discounts in exchange for shorter payment terms. Regardless of your discount strategy, there also needs to be a focus on price; however, while it may seem straightforward to reduce pay or margins, this strategy will likely not work across the board. It is important to keep an eye on market rates, evaluate them frequently and know what good talent is worth.
What initiatives get prioritized? Even with a refocus on cost, it is important to know what initiatives to prioritize and where to focus your efforts. With many organizations having a close tie between contingent and full-time hiring, it is no surprise that initiatives like diversity, equity and inclusion are still a high priority. The need for diversity does not change regardless of the economic climate around us. This continued focus on talent will further drive many organizations toward a total talent strategy. Doubling down on concepts like direct sourcing may help organizations find both cost and talent value for their business. Understanding what the business needs most will often guide conversations on which initiatives are important — and this means starting with a strong customer satisfaction and feedback program.
As your company plans for the possibilities ahead, just know that the answers may not always be certain. Be aware of the market indicators around us and plan to be agile in responding to whatever comes next.