The last few years have been full of firsts for the HR, talent acquisition and outsourcing sectors. Firms are now managing five generations of the workforce at once, we’ve had record-breaking job numbers, the contingent workforce has grown significantly and hybrid working has been normalised. The next new normal now, is this concept of an employed recession.

Those of us who have worked through recessions and downturns before are acutely aware that it is the labour market that usually feels the impact first. The 2008 financial crash saw mass job losses that remained a top news item for the following years. Now, though, we’re facing a tough and uncertain economy, without this pre-cursor.

Much of this is largely being driven by the incredibly unique circumstances we have found ourselves in post-Covid. The sheer scale of demand for talent last year has meant that the economic contraction hasn’t been reflected in the job market, because there are still so many roles yet to be filled.

The challenge for the HR and talent outsourcing community in this environment, though, is that there’s no clear guidance on what strategy will work, because we’re in completely unchartered waters.

A collective approach
Given that there is no guidebook for this climate, I brought together some of the talent and outsourcing community’s leaders to share insights and knowledge, including representatives from Adecco UK&I, Allegis Global Solutions, AMS, LinkedIn, Page Outsourcing, Magnit and Resource Solutions.

While these brands may be competitors on the one hand, they’re also allies on the other. The knowledge and experience that we were all able to share collectively proved significantly valuable in being able to steer what good could – and should – look like, not in the new normal, but rather the new ‘different’ that is more reflective of the world we are operating in. And the general consensus was that a rebalance of the workforce is needed.

Businesses are facing financial scrutiny and are looking at how they can streamline costs. But with skills shortages still rife, a savvy approach to workforce solutions is needed. We’re seeing the contingent workforce being more heavily relied on as a result. Aligned with this, broader flexibility is being driven across outsourcing solutions.

The ability to pivot and flex at a moment’s notice is crucial and being able to reduce RPO solutions (but not completely eliminate them) while increasing managed services programmes to fill immediate demands is the most realistic and efficient approach in this economy. We also expect that RPO on Demand or Project RPO usage will increase as a result.

There’s also a general recognition by employers and HR leaders alike that the power still very much sits with candidates. As PwC Chairman, Tim Ryan, said, “The war for talent is over and talent has won.” People are commanding more from companies, whether that’s a competitive ESG strategy or better flexibility.

How to rebalance the focus
It’s a complex time for the talent outsourcing community, but it’s also an exciting one for those able to adapt and adjust to the constantly fluctuating climate. The community that I brought together to discuss and share ideas – a group that has now become the APSCo OutSource Knowledge Hub – agreed that while a tailored approach to workforce rebalancing is required, there were five over-arching messages and actions that firms need to focus on:

• Stop ignoring what candidates are saying: Listening to what your talent pools are saying has always been crucial, but now more than ever, taking heed of what they are saying and implementing real action as a result is critical. People value an authentic employer and those that listen to the wants and needs of the workforce will be the ones to exit a recession in a better place to attract the skilled resources they need.

• Accept that flexibility isn’t going away: In a similar vein, the flexibility of the workforce – or at least the demand from workers – isn’t going to dissipate any time soon. The power is still very much in the hands of talent and attempts to force a return to pre-Covid ways of working will be met by challenges from the workforce and could potentially damage employer brands.

• Evolve leadership styles to match the workforce rebalancing: Today’s leaders are facing a difficult challenge but always having the right answers or knowing everything is no longer expected. There needs to be greater collaboration across the C-Suite to ensure a people-centric approach to efficiency is achieved in 2023. Businesses need to have more of a trust contract with their staff where they let their people decide when and where they work and mange through outcome rather than output.

• Avoid the knee-jerk reaction: It may sound controversial, but taking a procurement-led approach to hiring rather than a skills-led one will have a detrimental impact on bounce-back prospects. A knee-jerk approach to hiring freezes or slowdowns may have made sense in the 2008 financial crash, but in an employed recession, it will hinder corporate stability. A truly informed, data-driven approach will provide a more strategic and longer-term solution.

• Focus on the skills agenda: Skills shortages have become increasingly prevalent in a Post-Brexit, IR35 and Covid landscape and they aren’t going to be resolved any time soon. Even in a tough economy, maintaining a clear focus on the skills agenda is necessary. Identifying where staff can be redeployed or retrained will be critical in the coming year. Perhaps more importantly, though, a commitment to digital and tech skills development is needed across all sectors if the UK is to build back strong after the recession.

Focusing on these five crucial areas in current talent strategies will create solid foundations for workforce solutions in the year ahead, but as we know all too well, change happens with little notice. We can’t predict what will happen in a month from now, but we can work together as a collective talent knowledge community to share our own learnings as the talent economy continues to change.