Kimo Kippen is the former chief learning officer for Hilton. Views are the author’s own.
Rumors of a second round of layoffs at Meta are spreading as the 2023 tech layoffs continue, following Zoom’s announcement in early February and layoff announcements by Google (12,000 jobs) and Microsoft (10,000 jobs) in January.
That might seem like welcome news to companies that have been struggling with a seemingly endemic talent shortage as we teeter toward the first full employment recession. After all, competing against the nation’s largest employers hasn’t been easy, and an influx of experienced talent could be a boon to companies grappling with skills gaps. Right?
But while the 100,000 individuals impacted by layoffs garner headlines, they’re not going to be a panacea for employers. The most recent jobs data show 11 million open jobs, with two open jobs for every job seeker. Those laid off would fill only 0.1% of open jobs.
Putting too much stake in perceived near-term opportunities to scoop up talent threatens to distract employers from tried-and-true approaches to talent acquisition, among them recruiting and hiring recent college graduates.
Employers have worked to cultivate and deepen pipelines to recent college graduates in recent years, and should be wary of cutting off those talent pipelines. Now is not the time to walk back apprenticeships and other models that have opened the door to early talent.
Rather than turn their back on young workers, savvy employers should consider doubling down on recruiting early talent. Here are five reasons why:
A recent study of Gen Z workers by Handshake found that while on average, these young workers stay at a company for three years, many say they plan to stay up to 6.5 years if presented with career development and advancement opportunities. Decreasing churn is hugely valuable: It is expensive, costing companies one trillion dollars every year.
And in addition to the replacement cost for hiring and retraining (which can be as high as three to four times an individual’s salary) higher turnover is also correlated with poor performance in the workplace. It’s no wonder employers are worried about retention. At a moment when Gartner estimates that voluntary turnover will increase 20% in 2023, smart companies should tap Gen Z talent to help keep their quit rate from rising.
In many cases, it is much more affordable to hire recent graduates and invest in their development than to hire young workers with several years of experience. Often, recent graduates require the same amount of time and effort to train as workers with a few years of work experience. TD Synnex CFO David Jordan recently said he estimates that the cost is as much as 50% lower to acquire and pay recent grads than other early career hires. They’re seeing ROI in students coming right out of college.
By 2030, 75 million baby boomers are expected to retire, leaving large holes in corporate leadership. Employers that will win the next war for talent recognize that now is the time to start building the next generation of leaders.
It is often more effective for companies to promote internally than to look externally for management-level positions, and developing leadership pathways can also be an effective retention strategy. In a recent Handshake survey, 67% of Gen Z workers said that they prioritize advancement opportunities when evaluating a potential employer, and 71% said that they expect a promotion within no more than 18 months.
As a result, developing younger employees into leaders can be a win for employers in both the short and long terms.
When employers pull out of recruiting, colleges take note. It impacts an employer’s reputation with career services personnel who have a profound impact on the perspectives of early talent. College collaboration takes years to cultivate. Of course, today’s graduates are also tomorrow’s consumers. Employers that turn their backs today will face the ramifications for years to come.
The class of 2023 is the most diverse in our nation’s history. Forty-six percent are first-generation collegegoers, and 42% of college students are people of color. Ignore today’s college graduates, and employers miss out on an opportunity to diversify their workforce. This is particularly important for the tech sector, which has struggled to hire and promote women and people of color. Research from McKinsey & Co. shows that both groups are underrepresented in technical roles. Black workers, in particular, make up 13% of the labor force but hold only 4.5% of software development jobs.
Companies understand the value of early talent: before the tech layoffs started, a survey from the National Association of Colleges and Employers found that employers planned to hire 14.7% more recent graduates from the Class of 2023 than they did from the Class of 2022. Recent headlines shouldn’t dissuade companies from keeping their eye on the recent graduate ball.