FGP’s Midyear Market Update

As we pass the midpoint of the calendar year, it is an opportune time to look back at what we have experienced in the first half of 2023, evaluate market shifts, make adjustments, and set expectations for the second half of the year. As a company, we want to take the opportunity to pause, review, and prepare. As the hiring market evolves and changes, it’s important to consider how we can adapt and continuously improve to meet the needs of our clients and candidates.

We asked our division leaders for our staffing & executive search teams to share their thoughts on what we’ve seen so far in 2023. We’ve also tapped our consulting division leader to share key organizational insights and considerations for the second half of the year.

A Shift to a Contract Workforce

Throughout this year, we have continued to experience a competitive hiring market, and our teams have had to remain diligent in the search for great talent. Across both our staffing and executive search teams, we’ve seen a migration towards contract or temporary workforce. We’ve seen a slowdown in permanent job order volume and an increase in temporary orders. While the number of open staffing-level positions is not changing greatly, our client partners are moving to contingent staff to help meet business demands.

Theoretically, this makes great sense to mitigate the risk of over hiring staffing level full-time teammates, but candidate availability is proving to remain a challenge when a skilled temporary contractor is needed. Many of our client partners choose to search for talent in both temporary and permanent categories simultaneously to understand what the market will return, and ultimately, which solution is best to meet business demands.

As the year has progressed, the executive search team has experienced a slowdown in the pace of searches in a market where hiring managers have become more selective and measured in their processes. For candidates, opportunities are still there but clients are being more selective and measured than they were before – some even making that shift to a temporary or contract role as they evaluate needs. Big picture, companies are no longer just looking for bodies to fill a spot, appropriate qualifications and skills matter more this year than they did last.

Continued Market Strength

The most surprising thing about our market year to date is that the level of open positions in our staffing group remains quite strong. When we digest noise around layoffs or a potential recession it is an assumption that employment opportunities will diminish to some degree. According to our consulting team, most workforce reductions that we are seeing are due to more of a strategic business decision than an overall business decline, which may not have been the anticipated reasoning at the beginning of the year as an economic decline was initially anticipated.

While some organizations are making decisions to cut costs strategically, by and large, most organizations are still actively hiring key talent and, in some areas, continue to experience talent shortages based on lack of availability in the market.

Within our executive search team, we have experienced a leveling-out of job order volumes. In the previous year, we saw record high demand, which wasn’t sustainable long term market trajectory. This change has happened quickly, whereas we might typically expect to see a more gradual leveling of the market, but job opportunities remain strong overall compared to historic levels.

A Discerning Candidate

Our executive search teams are seeing that candidates are now even more discerning and a bit more hesitant. As such, it is more important than ever for hiring managers to recognize that an interview is an evaluation of a candidate, but it’s also the candidate evaluating the client.  How do you sell your company to candidates – what is the value proposition for them coming to work there? This is especially important to consider as we’ve seen an increase in counteroffers accepted and falloffs as candidates become more conservative about making changes in the market. Companies must market themselves well and actively enhance their employer brand.

One area that will remain similar post-Covid and across the board is the desire for a flexible or hybrid workforce model. This is almost non-negotiable now for most candidates. Most of our client partners have moved towards a flexible work model with distinct anchor days (where the whole team is in the office Monday and Friday for example). An alternate hybrid option includes requirements around 3 days in/2 days out with flexibility for the team on which days those are.

Focus Areas for Companies in the Second Half of The Year

Seek Employee Feedback

As the market has continued to normalize and companies adjust to market shifts, there is an increased need for and focus on gathering employee feedback to better understand company dynamics and culture. This is directly related to the increased conversation regarding engagement and retention from both the candidate and the client side.

Establish an Attractive Employee Engagement Model

For companies to be successful in hiring, developing, and retaining talent in the current market, they must provide the right blend of competitive offerings, career growth and development, engagement & inclusion, and meaning & purpose. Whereas in the past organizations often focused on one of these areas or “typical” offerings within these areas, it is important to think “out of the box” and evaluate offerings that increase the employee value proposition.

Optimize The Recruitment Process

Companies must focus on enhancing efficiencies and optimizing their recruitment and selection process. Often, we find companies struggle to achieve recruitment goals only to find out that they don’t have a consistent internal process that is efficient, flexible, clearly communicated and executed. Roadblocks exist causing frustration with candidates and hiring managers and ultimately loss of great talent. Companies need to move through the recruitment and selection process with consistency and agility—this takes intentionality and alignment throughout the organization.

Match Highest Talent Capabilities to Highest Value Roles

With the compensation spikes over the last few years, companies are realizing now more than ever the need to balance budgets with talent demands to support the business. Identify your highest value roles and match those with your highest talent capabilities. This informs decisions on recruitment, retention initiatives, compensation, and individual career growth.

If you have questions about the current staffing or executive search market or have questions about how our HR Consulting team can help you adapt to market shifts, contact our team today!