October 20, 2022
In the world of Human Resources, recruiter layoffs are a trending topic as several tech companies have announced significant reductions in their recruitment organizations. Back in August, Apple made headlines when they laid off 100 contract recruiters. Deep cuts were made at Twitter as well. The Wall Street Journal reported that Twitter was reducing their talent acquisition team by 30% (approximately 100 workers) because of shifting business needs. Apple and Twitter were not the only tech companies to make such drastic changes. Microsoft, Meta, Tesla, Oracle, Amazon, Lyft, Substack, RobinHood and several others, put in hiring freezes, rescinded offers and slowed recruiting efforts overall. And while these actions are newsworthy, none of what is happening is new. The recruiting industry operates in cycles and that has been quite evident over the past few years. Consider the following…
- From 2019 to Q1 2020, the market was on fire.
- Then, things took a dramatic turn for the worst in 2020.
- Only to rebound again between 2021 and Q1 2022
The irony of the circular nature of recruiting is that companies make layoffs as a reflex to bad markets without realizing, or considering, the long-term consequences; primarily, time and money. For example, costs related to severance and benefits packages, accrued vacation and outplacement service fees. There are also expenses associated with unemployment insurance. Of course, it takes time for a manager to inform all those concerned, and time to train the remaining employees on the new work they are expected to perform, which eats up time and, therefore, money. Let us not overlook the intangible costs with layoffs - low morale, which leads to the fear of more layoffs, all ending in reduced work output. As a result, angry customers are likely and lost market share becomes inevitable. Another consequence is the damage to your employer brand.
When Tesla laid off its recruiters, Tesla recruiters began venting online. This is a quote from Business Insider.
I also feel for current Tesla employees who are still at the company. Their workload just doubled, and they may feel pressured to perform and do their jobs effectively, with so many reductions in headcount across the board.
And it's especially disheartening to see so many people on LinkedIn who have been affected by layoffs but then to also see that Tesla is still hiring in so many areas at this moment.
And here is another comment contributed from a recently laid off Microsoft recruiter.
You can be a great employee with exemplary performance, and you can still be affected. I think companies are trying to prepare for the worst: a possible upcoming recession.
After the pandemic, many companies didn't recover the way they wanted to, and one way to adjust for that is to perform layoffs. Just look at how many high-profile tech layoffs there have been this year: from Better to Tesla to Robinhood to Microsoft. It's becoming common in our industry to get laid off.
When I first realized that I may be laid off, I immediately called my mom and we prayed together. After an unfortunate health incident last year, I'm largely responsible for taking care of my mother and I wanted her to know that no matter what happened, she would be taken care of.
Now, is this to imply that layoffs should never happen? Of course not, there are times when such decisions cannot be avoided. That being said, there are companies who recognize the risks associated with layoffs and strive to delay laying off their employees for as long as they possibly can. This is especially true with recruiting organizations. For instance, rather than layoff their recruiters, some companies are reallocating them to other departments. This was reported in The New York Times.
Pitch, a software start-up based in Berlin, froze hiring for new roles in the spring. The company’s four recruiters suddenly had little to do, so Pitch directed them to take rotations on other teams, including sales and research.
By keeping the recruiters on staff, Pitch will be ready to start growing quickly again if the market rebounds, said Nicholas Mills, the start-up’s president.
“Recruiters have a lot of transferable skills,” he said.
Lucille Lam, 38, has been a recruiter her entire career. But after her employer, the crypto security start-up Immunefi, slowed its recruiting efforts in the spring, she switched to work in human resources. Instead of managing job listings and sourcing recruits, she began setting up performance review systems and “accountability frameworks” for Immunefi’s employees.
“My job morphed heavily,” she said.
Ms. Lam said she appreciated the chance to learn new skills. “Now I understand how to do terminations,” she said. “In a market where nobody’s hiring, I’ll still have a valuable skill set.”
When the pendulum swings back towards hiring recruiters en masse, how much more difficult would it be to recruit more recruiters for tech companies like Tesla and Microsoft, when there are negative employee reviews from hundreds of recruiters who were recently laid off? The most likely solution these companies will pursue are contingency recruiting firms who charge a hiring fee of 25%-35% of a hire’s annual salary. Fortunately, there is a scalable, cost-effective solution – Proactive Talent.
Our OnDemand Recruiting service offers competitive rates, team integration and experienced recruiters, when you need to quickly fill hiring gaps. Short staffed? Hard to fill roles? Experiencing growth? We are your one-stop recruitment shop. Need more reason that that? Here are 4 more compelling arguments:
- Pay for productivity: We pay our recruiters competitively and incentivize them to drive productivity and hit hiring goals rather than forcing them to work in a commission only environment which can instead incentivize poor behaviors that ultimate hurt the client.
- Expert Recruiters: With Proactive Talent, our recruiters are expert consultants and have an average of 10 years recruiting experience with industry-specific knowledge. They’re able to project manage, coach your recruiting team, conduct workshops, and offer insight into new recruiting strategies, techniques, and philosophies.
- Saves money: OnDemand Recruiting can cost 50% to 66% less than contingent search fees for the same positions filled over a three-to-six-month period.
- Transparency: A third-party agency recruiter can work for you and several other clients at once. With Proactive Talent, we are 100% dedicated to you. OnDemand recruiters become a part of your team. They’re able to provide strategy, quality control, and team performance management. We develop relationships with your hiring managers, understand your company culture and then become champions for your mission and values. Unlike a traditional agency, we use your applicant tracking system (ATS) and are transparent with you by providing you with weekly metric and KPI tracking. All the candidates we source and data we acquire becomes data that your company owns. If you turn off your OnDemand recruiters, you can still use the pipeline we created, benefiting your company for months or even years after our engagement ends.
If you would like to learn more about how Proactive Talent can help you attract, recruit and retain top talent, click here and book time on our calendar. We would appreciate having a conversation with you today.
