The Economy and Your Workforce: Why It Matters Now
July 14, 2020
The global economy will continue to experience its ups and downs, but most economists seem to agree that we have recovered from the recession of 2008-2010 and the U.S. economy, in particular, has made a strong comeback. From a labor perspective, unemployment is down, job openings are up, and consumer confidence has increased. That’s all good news, right?
A closer look tells us that there are some interesting trends that are worth watching. Companies should be aware of how these economic factors are impacting the retention of their current workforce and the availability of new employees.
- As unemployment declines, survival rates also decline.
Based on research by Cornerstone/Evolv, a 5% drop in unemployment translates into a 15-10% decline in new hire tenure in the first 6 months. These results indicate new hires are not sticking around as long in their jobs. A stronger economy means more opportunities in the job market, and correspondingly, there is a heightened confidence among workers to look at and consider those options.
- As consumer confidence increases, so does the number of people voluntarily leaving their jobs.
Since 2010, there has been a 60% increase in the number of quits, versus layoffs and discharges, according to the US Bureau of Labor Statistics July 2015 report. As the economy improves, workers who have felt locked in during the recession will now consider making a career move.
- The unemployment rate remains higher than pre-2007 recession levels for the same level of job openings.
A key driver for this gap could be a mis-match in skills of the workforce with the skills and knowledge required in the jobs that have been created. Slow U.S. labor productivity growth also may reflect the erosion of skills of available workers. Business leaders are concerned about the availability of key skills, and are looking for a broader set of skills today than in the past. (source: PWC Global CEO Survey, 2015)
Why It Matters
These economic trends are important for your organization to consider, as they could be a significant external force impacting your new hire tenure, overall employee retention, and the ability to identify and hire qualified workers in a timely manner.
Forward thinking companies must address and mitigate these impacts by taking the following proactive steps:
- Utilizing predictive, behavioral assessments to ensure the best match between an applicant’s skills and behavioral ’fit’ for a job, in comparison to what’s required to be successful in the position .
- Adopting advanced and predictive analytics to better enable the company to anticipate trends and identify risk factors driving productivity and retention.
- Development of internal expertise to ensure the proper business application of talent analytics results.
As is generally the case, there is never a ’silver bullet’ to addressing macro-economic impacts on your business. That said, Companies can absolutely bolster how they insulate themselves from the impacts of external influences on the workforce by adopting and applying predictive analytics in their people management processes. Doing so helps empower organizations to proactively identify, monitor, and act accordingly to internal and external triggers, and prescriptively adjust their talent strategies to the ebbs and flows of the global economic forces.