As organizations enter the year hoping to roll out people strategies that will help them bounce back from the Great Resignation—but with optimism tempered by predictions of an economic downturn—many are being faced with a dilemma: Build or buy?
The question of whether it’s better to invest people dollars in hiring new talent, or in keeping the current workforce from leaving, is certainly not a new challenge for HR leaders, experts say. But it is one that is getting a fresh look, given the ongoing uncertainties fueled by the economy, the pandemic and the tectonic shifts both are bringing to workforce trends around the world.
“As we enter a phase where a potential economic slowdown means organizations face hiring slowdowns and freezes—but still have to contend with the talent shortage in their existing workforce—organizations are going to have to rethink their approach to talent,” says Emily Rose McRae, senior director in the Gartner HR practice.
It’s a topic that’s definitely on the minds of HR professionals. According to HRE’s recent What’s Keeping HR Up at Night? survey, hiring and retaining key talent ranked as the top challenge facing HR leaders today, with nearly half of respondents citing this as their main focus (followed by improving company culture and learning and development). Recruiting and retention were recurrent themes throughout the research. Nearly 72% of respondents, for instance, said they were somewhat or extremely concerned about losing talent over the next 12 months.
Deciding whether the focus (and money) should be on recruitment or retention comes down to aligning the people strategy with the business strategy, says Peter Fasolo, CHRO of Johnson & Johnson and HRE’s 2022 HR Executive of the Year.
“The key is balance, which comes from having a deep understanding of both your internal and external talent marketplace,” he says. “The focus should be on identifying a capability gap and then determining the best way to address based on evaluating talent that is in high demand versus talent that is in high supply.”
That supply and demand equation should then dictate the proportion of emphasis on building versus buying—or, in some cases, borrowing talent, such as through contract and freelance arrangements.
J&J, Fasolo says, is planning to both bring in new talent and invest more in the current workforce this year, building on last year’s record number of external and internal fills, and volume of applicants—with a particular focus on health science, health economics, data/digital and market access spaces.
“These are areas where we are not only focused on hiring new talent but also in upskilling our current workforce with the critical capabilities needed to lead in any future,” he says.
The rise of ‘quiet hiring’
As organizations seek a workforce with the skills they need for the future, the potential economic slowdown and talent market squeeze are going to prompt some to turn to “quiet hiring,” McRae says.
Gartner defines this strategy as “the process when organizations acquire new skills and capabilities without acquiring new full-time people.” How does it manifest?
According to McRae, quiet hiring can show up as an increased emphasis on internal talent mobility, with particular focus on deploying employees based on business priorities—and with an eye toward reducing fluctuations in headcount.
“What makes this different from the past, when organizations might have embraced a culture of internal talent mobility as part of their employee value proposition, is that control of the movement is in the hands of the organization, and the employees, but not the managers,” she says.
Whereas previously, managers may have tried to hoard high-po talent, through quiet hiring, business leaders are now offering opportunities proactively—and directly—to employees, with the buy-in of the C-suite. This leaves managers in a position, she says, to execute, but with no power to block new assignments.
Another avenue for investment in the current workforce is growth opportunities like rotational programs, apprenticeships, educational courses and more—offered during work hours to entice employees to actively pursue development.
Quiet hiring starts with an internal look, McRae says, but also can involve an external component, as employers may experiment with new sourcing models like using gig and contract workers, and tapping into alumni networks—to bring in new talent, but not on an exclusive, full-time basis.
“This approach can help keep payroll costs low, assist with retention and cultivate home-grown skills,” she says. “Fighting for new full-time external talent will be a much less attractive option for many organizations in 2023, and we expect many organizations will turn to ‘quiet hiring’ as an alternative solution to skills gaps.”
Retention rooted in culture, strategy
Organizations that are prioritizing retention in 2023 are tackling the issue on a number of fronts, according to HRE’s survey. For instance, many are zeroing in on employee experience, enhancing talent management processes and examining compensation.
At J&J, the company is emphasizing employee development, offering competitive pay and benefits, and enhancing flexibility, Fasolo says, noting the company’s retention strategy is anchored in its Credo, its comprehensive mission statement.
“Re-recruiting your employees is a personal endeavor rooted in your company values and purpose,” he says.
And, as it needs to be one that is closely aligned to the overall business strategy, McRae adds, HR leaders must be intimately familiar with the organization’s future direction.
For instance, while technology can play a significant role in helping organizations identify skills gaps and find new pools of talent, “to know which skills will be most important in the future, you don’t need a particular software or service; you need to understand your organization’s short- and long-term business strategy and what that strategy will mean for your organization’s talent needs,” she says.
That’s a tall order, she concedes, and HR leaders and their teams need to work closely with business leaders across the organization to help them identify the strategic and operational needs of all of the business units.
“And,” she adds, “what those changing needs mean for the business unit’s talent strategy, including identifying opportunities for upskilling and/or reskilling and redeploying current employees.”