Labor Hoarding: 70% of Companies Fear Laying off People Due To Expected Recession

The business world has seen various workforce-related trends over the last three years. Another trend it faces during these times of economic uncertainty is labor hoarding. Skynova recently conducted a study to understand why companies are labor hoarding, their retention strategies, and the skills they prefer in these times.

For almost three years, the business world has seen a wide array of trends when it comes to the workforce, starting with mass layoffs driven by the pandemic and the Great Resignation to quiet firing and quiet quitting. However, the shortage of qualified talent organizations are witnessing has remained consistent throughout. Now, with the economic downturn and a looming recession, small and medium enterprises seem to be facing another phenomenon â€” labor hoardingOpens a new window â€” where they are avoiding layoffs at all costs during this time.Â

Skynova recently conducted a study to understand why organizations are labor hoarding, their retention strategies, and the skills they value the most. Here are a few insights from the study.

See more: Quiet Constraint: The Next Challenge Facing Organizations?

A Strong Team and Focus on Morale Are Top Reasons for Labor Hoarding

The study found that most small organizations (91%) are labor-hoarding during this economic uncertainty. Further, 89% expect to continue this trend this year.Â

There are several reasons why business owners are following this trend. According to 48% of the respondents, the current team is strong, while 47% said layoffs are bad for employee morale. This makes sense as employees look for a sense of stability in these times from their employers. As such, organizations want to keep employee spirits high. About 43% of respondents said they struggled to hire people in the past, and 42% believed it is difficult to hire people now. Many are also labor hoarding as it saves them hiring and training costs. In fact, respondents said they save an average of $4,541 per hire when they hold onto their workforce.

Why companies are labor hoarding now

Source: 2022 Skynova SurveyOpens a new window

All that said, 70% of business owners feared laying off people due to inflation and a possible recession.

Businesses are also labor hoarding for certain key positions. These include finance managers, marketing managers, business analysts, project managers, HR managers, sales representatives, marketing specialists, and product managers.

Many Companies Have Frozen Hiring To Retain Talent

Companies seem to have taken several steps to avoid layoffs, as well as employees voluntarily quitting. When it comes to the steps taken to avoid layoffs, 60% said they conducted a hiring freeze, while 58% cut various benefits and perks. About 53% also turned to remote work to cut workplace leasing costs. Interestingly, 48% implemented 4-day workweeks for a few employees, while 28% cut freelancers and contract workers from the workforce. However, larger companies were far less likely to implement this strategy. About 82% of respondents from larger businesses were likely to cut their own pay to avoid laying off employees compared to 67% of small business owners and 41% of medium-sized business owners.

Despite employers’ efforts to avoid layoffs, quitting is something employees can do. Hence, to prevent employees from leaving, organizations have implemented a few strategies. About 50% of respondents have improved compensation, 47% have connected with employees, and 46% are communicating transparently with their employees. About 44% have also invested in a suitable work environment, while 44% have provided remote work opportunities. About 43% are also attempting to foster a healthy work culture. However, only 16% of the respondents have offered more paid time off (PTO) to their employees.

Data Literacy and Time Management Are In-demand Skills

There are a few top skills employers seek to retain. These skills include both hard and soft skills. When it comes to hard skills, the top ones business owners prefer include data literacy (42%), IT automation (38%), language (36%), data analysis (34%), coding (32%), and copywriting (31%).Â

Regarding soft skills, the top preferred skills are time management (39%), leadership (37%), creativity (36%), critical thinking (36%), communication (35%), kindness (35%), and problem-solving (35%). In fact, small owners were more likely than larger businesses to retain kind employees.

See more: The Surprising Ways Gamification Can Engage Employees

Improving Employee Experience Is the Key to Retention

As we see from the study, irrespective of the size, most businesses are labor-hoarding for various reasons. But inflation and an expected recession seem to be the key drivers of labor hoarding. And this trend is likely to continue into this year.Â

Organizations have implemented several strategies to avoid layoffs and retain employees. While some are sustainable, a few strategies, like cutting down certain benefits and perks, may affect employee experience. Hence, a better approach to retaining employees would be to explore sustainable strategies, such as offering flexible work schedules, improving the work environment, investing in learning and development, and offering personalized benefits.Â

The study presents the skills employers value the most in these times of economic uncertainty. As an employee, it will be a smart move to learn these skills, especially those related to automation, data analysis, problem-solving, and leadership, to be considered a valuable asset to the organization.

Implementing the strategies mentioned above is an excellent way to not only retain talent during economic uncertainty but also to combat talent shortages.

What strategies have you implemented to retain employees during this period of economic uncertainty? Share with us on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .

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