Hiring has taken a backseat to budget concerns among some HR pros, according to HR Dive’s Identity of HR survey results. The finding may hardly be surprising, given the economic landscape; just 24% of respondents said hiring was their top priority in 2023, compared with 36% last year.
While the focus on hiring has become less frenzied, however, it remains the top priority for a plurality of respondents, with culture and “maximizing value within budgetary constraints” close behind.
Budget woes are back, while hiring takes a backseat
This aligns with recent survey data, such as that from ManpowerGroup in March, which found that the hiring outlook remains strong, despite choppy economic waters and a rash of headlines about layoffs.
Some companies ‘got out over their skis’
The survey results are an indication of a cyclical pattern for HR, Nathan Peirson, SVP of talent and employee experiences at Paycor, told HR Dive: “When the times are good and the economy looks good, then you keep your foot on the gas, and you see increased hiring and wages and budget expansion and those things. When you start to have some pressures from that, you see that start to contract.”
Some organizations “got out over their skis” during the 2021 hiring boom, Peirson noted, pointing to companies in industries like tech that pursued aggressive growth and have dealt with a bit of a hangover as the economy slowed down.
Meta CEO Mark Zuckerberg admitted as much in a November layoff announcement from the company, in which he said he thought the “outsized revenue growth” related to e-commerce would continue post-pandemic. “I made the decision to significantly increase our investments,” Zuckerberg wrote. “Unfortunately, this did not play out the way I expected.”
Most companies are not conducting layoffs, however; the phenomenon seems largely confined to the tech sector, as the unemployment rate remains relatively steady. Still, HR departments that became lax about their budgets or have been told they need to rein it in are taking another look at their spending, as the Identity of HR survey indicates. Twenty-one percent of respondents said maximizing value within budgetary constraints was their top priority, nearly double the 12% that answered the same way in 2022.
Where’s the money going?
If companies are focusing on efficiency and cutting back on hiring, where might the streamlined budget be going? Smart investments in talent may be the main emphasis, Trevor Bogan, regional director of the Americas for Top Employers Institute USA, told HR Dive.
“Companies are getting very smart [about] working with the current staff that they have,” Bogan said, pointing to strategies that include bonuses and salary increases, investments in upskilling and increased reliance on contract workers.
Retention remains a constant concern, as a March survey of HR professionals from isolved revealed.
“When it comes to key talent, critical roles, critical skills — retention is always important,” Peirson said. “Even in a hot market, those roles are even more attractive, they’re easier to pick off, there’s more competition for labor.”
Both Peirson and Bogan pointed to upskilling and reskilling, as well as compensation and benefit investments, as key budgetary opportunities to address retention. The former can be a good way of improving employee engagement, Bogan pointed out, as workers can see their own development, improve their performance and see their value as team members.
Bogan also noted that relying on contractual workers when needed is an important piece of the puzzle — not only in reducing costs for the employer, but in helping existing employees with potential work overload.
On the other hand, Peirson pointed out that some organizations might benefit from a trickle of workers leaving, as they may have been contemplating layoffs anyway and voluntary employee resignation both reduces separation costs and potentially dulls what could be an organizational hit to morale.
Culture stays steady
While hiring has dropped in importance and budgetary strategizing has increased, one priority for HR pros has remained fairly consistent over the past three years: culture.
“Culture is always going to be a very important topic or initiative for HR,” Bogan said, pointing out that the workplace is ever-shifting. Culture is tied up with hiring and retention as well, as remote and hybrid options become increasingly deal-breaking requirements for many workers and more applicants, especially those in Generation Z, prioritize DEI commitments and other signs of a healthy workplace culture.
Culture may be an ever-perplexing riddle for HR teams, too, as employees strongly indicate different preferences about work arrangements, benefits and other aspects of the workplace. “You now really have to be more person-centric than people-centric, because not everyone’s the same, not everyone’s looking for the same things anymore,” Bogan said.
And while hiring may be down and employees may be nervous about a potential recession, employee preference on workplace culture is still likely to prevail, Peirson predicted. Employers are going to have to adapt to virtual and hybrid work environments, he said, because employees have seen that it can work. As for those pushing a return to the worksite? “I think they’ve got a bigger uphill battle than other organizations that maintain that flexibility,” Peirson said.
As far as where HR priorities might lie in the future, both Bogan and Peirson said artificial intelligence and technology is a space to watch. That answer — “automation, updating technology” — saw just a small uptick in 2023, from 7% to 8%, as new tools like ChatGPT came on the scene and agencies like the U.S. Equal Employment Opportunity Commission have increasingly focused on AI implications for hiring.
DEI, listed on HR Dive’s survey for the first time this year and selected as the top priority by 5% of respondents, also isn’t going away anytime soon, both sources said. Organizations will continue refining their DEI commitments and learning how to become more effective in achieving workplace inclusivity, Bogan said.
“I think you’re just going to see the importance of that continue to grow,” Peirson agreed.