HR Market Update
Macroeconomic forces continued to take centre stage in C-Suites and HR leaders across the country. The latest unemployment number held steady at 4.9% in July, the lowest reading since 1976. At the same time, job vacancies hit also new highs. As of May, there are over one million unfilled positions across Canada, 42% higher than a year ago. A large number of vacancies signals significant demand in the economy, one of the major factors driving inflation.
Rising interest rates, supply-chain challenges and the reversal of pandemic trends, including remote/hybrid work and e-commerce shopping, have cooled what was once a red-hot tech sector.
In speaking with HR leaders across the GTA, these are the major themes we are seeing this month:
The Uncertain Economy
Inflation may or may not have peaked, we may or may not be in a recession, yet the employment rate is still robust despite a number of high-profile layoffs in the technology sector. A macro-economic environment like this has not been seen for at least 40 years, and we are seeing this play out in the HR space as well.
In short, companies are laying off but they are hiring as well. Quality candidates are still in demand, which our Recruitment Team has been able to help our clients fulfill, and there is surging interest in Career Transition & Outplacement services, as companies proactively prepare for the unknown. There are mixed signals being sent everywhere and we are helping our clients separate the signal from the noise.
Prior to inflation and this interest rate hike cycle, C-suites were primarily focused on top line revenue growth. But in this uncertain economy, top line performance is no longer enough. Profitability matters. Margins matter. This is why we are seeing layoffs in the tech sector, a space that traditionally focuses more on top line hyper-growth. Tech companies are now being told by their investors to mind their margins and become profitable, something they are not necessarily used to doing.
Compensation strategy has never been more important this year, as salary increases are expected to trail inflation on average. That being said, employers are continuing to recognize their high-performing employees with significantly larger pay raises than average-performing employees.
Along with this, one of the major themes we continually hear is organizations continue to struggle in hiring for high volume hourly positions they had no problem filling prior to the pandemic. With many of these organizations laying off much of this part of their workforce during COVID, these workers aren’t willing to return to the hourly paid roles, which is forcing organizations to re-evaluate all aspects of the role including pay rates and incentives.
The bottom line: Companies are playing smarter, not harder with their budgets as they look to stay afloat and HR departments are being challenged to be more deliberate and strategic in their hiring and overall workforce strategy.
Taking Care of Your People
Now more than ever, companies are looking at how to take care of their people. We have been busy advising many of our clients on this, whether it’s in retaining key talent through training and development programs, strategically re-aligning compensation plans and in some cases, helping to transition and land their people into new roles.
For the most part, the high-profile companies that recently conducted layoffs were able to do so with less media criticism than expected due to having a solid plan in place. A strong communication strategy and demonstrating that they are taking care of the people affected through reasonable packages and outplacement support programs are key elements of an overall plan.
Do you have a plan to navigate this uncertain economy? How are you handling the challenge of a margin-focused environment? How are you taking care of your people? We’re here to help. I invite you to book a quick 15-minute chat and let’s have a sounding-board conversation.
Greg Vertelman, Chief Growth Officer and Career Transition Practice Leader