June 23, 2020

Trends Analysis: The Hidden Traps of Hiring During a Recession

Negative economic news impacts how job seekers make career decisions. And this decade certainly started off with plenty of negative economic news.

For companies looking to hire, this dynamic presents challenges. There’s an upside, however. Navigating those challenges requires the same fundamental skills and tools as hiring during an economic boom would require.

Here’s a look at how economic downturns translate to candidate behaviors and hiring decisions — and why companies with data-driven hiring processes in place now are in a position to succeed.


How People Respond to Negative Economic News

The U.S. is officially in a recession.

And according to Gallup, 71 percent of Americans believe the economy is in a recession or a depression. Contrast that to when Gallup asked Americans the same question in late March. Then, only 57 percent said the economy was in a recession or depression.

It’s human nature to respond defensively to the threat of precarity. When any of us feel that our investments are in trouble or hear that the economy is shedding jobs, we look for ways to safeguard ourselves and our loved ones against that danger.

A study from the University of Amsterdam details what drives that dynamic. Over several years of research, the UvA team found that people are more sensitive to negative news than they are positive news. When news media offer daily reports of economic troubles, people begin to lose confidence in the economy itself, the researchers say.

This has implications across the board, impacting how people vote in subsequent elections, how companies strategize, and how people assess their career prospects. Case in point: In August 2019, the United Kingdom experienced its biggest drop in employment in four years, The Guardian’s Richard Partington reported that October. Three-plus years of unease around Brexit negotiations made companies hesitant to make long-term plans, and so many postponed hiring.

That unease impacts would-be job seekers, as well.

In March 2020, CNBC reporter Abigail Hess talked to several New York City residents about their job prospects in the face of COVID-19. “It doesn’t feel like I can look for other jobs right now,” said one source, who lost her service-industry job and was making ends meet with freelance work.

“There’s just so much uncertainty going on, and I don’t think this is necessarily a hiring market.”

smartphone displaying stock ticker; Hiring During Recession concept

Job Seekers Vet Employers Differently During Downturns

With this backdrop, job seekers put much more emphasis on pay and what security a job could offer them.

The media reflect and reinforce that mindset as well. During bad economic times, advice for job seekers focuses on material rather than aspirational opportunities:

  • In May 2020, Forbes’ Nicole Lapin wrote how recession job hunting should focus on growth industries. For candidates, of course, that’s smart advice — go where the jobs are plentiful and likely to be secure.
  • Meanwhile, the Institute of Physics in the UK reminded job seekers to be realistic about job prospects during a recession. “You’re unlikely to leap straight into your ideal job, so keep an eye out for opportunities that could be stepping stones to your long-term goals.”

Again, this is good advice for individuals who are looking for near-term financial security: Prioritize financial safety over career aspirations.

The problem for hiring companies, however, is that people motivated by near-term security tend to make poor long-term hires. (More about that here in “3 Things TA and HR Leaders Should Be Doing to Engage the 2020 Graduating Class.”)

In late 2019, researchers Ruud Gerards and Riccardo Welters published the results of a longitudinal study of data from Australia into people facing financial hardship. The study looked at things like what kinds of jobs the people took and how they felt about those jobs during the first year of employment.

Unsurprisingly, the study found that people dealing with financial strain often took jobs they were less than enthusiastic about. They had prioritized financial safety over career aspiration.

During that first year of employment, those employees reported feeling less satisfied, showed signs of disengagement, and demonstrated a higher willingness to leave that job.

For employers, then, this means economic downturns can motivate candidates who are not necessarily good long-term fits for available positions.

businesswoman addresses a meeting; Hiring During Recession concept

Hiring Strategies Built Around Data Are Recession-Proof

In April 2020, Glassdoor chief economist Dr. Andrew Chamberlain told employers to be ready for an “influx of applicants” in the wake of COVID-19 economic fallout. That influx will only amplify the challenge outlined above.

Chamberlain says overcoming that challenge requires HR teams to understand where and how they’ve hired their best candidates. This is ultimately a question of data. A company’s hiring data can reveal what referral networks or hiring channels deliver the best candidates, and what candidate personas most align with top performers — if they have the right platform for parsing that information.


Invest in Data-Driven Recruitment Technology

HR Exchange Network editor David Rice writes that outsourcing recruitment is no longer feasible for many companies. Instead, the best ROI comes from identifying people who bring a results-oriented, data-driven mindset to recruitment.

“Through streamlined career sites, one-button applications, text and video recruiting, video job posting and AI applicant mining, bringing recruitment efforts in house doesn’t necessarily mean a back breaking burden on talent acquisition staff,” Rice writes. “It just means a commitment to automation that proves effective.”

By empowering recruiters with the right technology, you will create efficiencies that can handle the strain of a flood of new candidates and help you find the best people to fill open roles.


Invest in Your Employer Brand, Too

As susceptible as we all are to the gloom of bad economic news, it’s worth remembering that all downturns eventually pass. Your company demonstrates continuity through times good and bad with a strong employer brand.

“It’s important to know how to preserve employer brand image during a recession,” Chamberlain at Glassdoor writes. “It has been a decade since the last recession, and this is the first U.S. downturn in which there have been so many avenues on social media and online for employees to share information about employers.

“Building a strong employer brand can take years and, when the economy picks up again, companies who’ve maintained a positive employer brand will enjoy a clear strategic advantage.”


Images by: Hunters Race, Jamie Street, You X Ventures