Discussions of a recession and widespread layoffs across industries present significant challenges for small businesses. Therefore, both employers and workers face increased job insecurity as openings go unfilled. A recent survey by Insight Global found that 77 percent of employed Americans intended to remain in their current positions. In addition, according to a recent Skynova survey, 57% of small businesses, 21% of medium-sized enterprises, and 21% of large enterprises all admit to labour hoarding.
That means they are increasing spending on staff to maintain operations and forestall a shortage of workers. During an economic downturn or recession, labour hoarding can occur when companies try to avoid laying off workers and when employees stay put out of fear of losing their jobs. Innovative Employee Solutions’ v.p. of growth and strategy, Sara Jensen, thinks this is a perfect match. Jensen told me that “this strategy can be a win-win for both companies and talent.” According to the report, “it is extremely beneficial for companies because it provides a strategic way to continue to meet business objectives in a financially sound way by providing new growth opportunities for their current employee base, increasing retention and engagement.”
Skynova’s research highlights some of the ways in which labour hoarding may impact small businesses and their employees in the coming year:
- To keep their employees from leaving, half of small business owners have increased pay.
- Almost half of all small businesses (46%) have tried to improve employee morale and retention through increased openness of communication with staff.
- In 2023, 48% of business owners believe their teams are strong, which may explain why 41% of small businesses are holding back on hiring.
- In 2023, 89% of small businesses expect to maintain their current levels of labour hoarding.
- Forty percent of entrepreneurs say they are holding back workers to lower their hiring and training expenses.
- The average cost to a small business of replacing an employee is $4,541, so preventing turnover can yield significant savings.
- Seventy percent of business owners worry about having to lay off workers because of inflation and economic downturn.
- Sixty percent of business owners have halted hiring for the time being.
- To avoid laying off workers, 67% of small business owners say they would take a pay cut themselves.
Businesses of all sizes are coping with inflation and making plans for a possible economic downturn, the Skynova report states. Most large-business owners (99 percent) still practise employee hoarding. The percentage of small businesses that actively work to keep compassionate workers is 106% higher than that of large corporations. Finance managers (36%), marketing managers (36%), and business analysts (36%), followed by project managers (35%) and human resources managers (35%), are the most sought-after positions by small businesses. The most common measure taken by small businesses to keep their best employees and prevent layoffs is a hiring freeze (at 60%). Reducing benefits (58%), working from home to save on rent (53%), switching to a four-day workweek (48%), and laying off temporary or contract employees (28%). They also take measures to reduce turnover rates. The majority of people favour increasing employer-employee compensation (50%), establishing personal connections with workers (47%), fostering open lines of communication (46%), enhancing the quality of the workplace (44%), and allowing for more flexible work schedules (43%). The report claims that as the digital world expands, the demand for people with technical skills increases. Information technology (IT) automation knowledge (38%) and data literacy skills (42%) are the most sought after by small businesses. Time management skills are among the most sought after intangibles (at 39%). Next came kindness (35%), followed by leadership (36%), creativity (36%), and critical thinking (36%).
Symba co-founder and current CEO Ahva Sadeghi warns against keeping quiet about labour hoarding. Sadeghi told me via email that if a company is changing the roles and responsibilities of their employees, it should be because of a larger strategy that is clearly articulated and the organisation is aligned on. The need for employees to move into other departments should be communicated clearly to them. They too should be given the option to express their approval of this shift in roles. There has been a shift in responsibilities, and the company needs you to help with a pressing matter at hand, so they must inform you of this. Then, it’s up to the workers to decide if they want to stay with the company and help it fulfil its new role.
According to Jensen of Innovative Employee Solutions, talent hoarding isn’t for everyone. In some cases, it fails to address businesses’ needs for filling vacancies or acquiring scarce but valuable expertise. “Another facet of quiet hiring,” as suggested by Jensen, “can take the form of leveraging different types of talent into the workforce through contingent workers, providing an alternative that companies can look to for supplementing their current workforce.” “These workers may be contractors or independent contractors; they may also be retirees who have been coaxed out of retirement (a trend known as “The Great Un-retirement”) to fill skill gaps, or even former employees who have been lured back to the workforce. There is no need for businesses to struggle with hiring roadblocks if they can find and work with the right talent to get the job done in a way that suits their needs.
According to Skynova’s poll, labour shortages will persist through the year 2023. The report suggests that workers “should make an effort to acquire new technical skills that their employers will value.” The ability to communicate effectively and solve problems is just two examples of “soft skills” that could benefit from development. The research acknowledges that there is some variability in the things businesses can do to keep their employees happy. However, it suggests that successful methods used by other companies be tried out. In theory, they’re a perfect match for one another.