With inflation rates in Australia hitting a historic high since 1990, concerns about a looming recession are in full swing. How can organisations ensure that economic uncertainty doesn’t thwart their plans for growth?
The prospect of a looming recession is playing on the minds of leaders around Australia. While Australian businesses are not in panic mode yet, we are seeing them work to smaller time horizons and cutting costs where they can in response to increasing challenges in securing funding and financing.
This cautious approach is trickling down to hiring practices, with recruiter Robert Half’s latest survey finding that two in five, or 39 per cent, of companies are focusing on maintaining their permanent headcount and only filling roles that are vacant.
But as we contend with this economic uncertainty, there are opportunities for companies to turn these challenges to their advantage within a job market that is expected to stay strong in 2023. Here are three ways businesses can grow sustainably during a recession:
1. Refresh the way your workforce functions
It is natural for companies to focus on short-term outcomes during tough economic times to protect themselves. However, a business strategy that is too narrow in its strategic plans can damage momentum in the long run.
Leaders should consider new approaches to their existing frameworks and entrenched ways of working in light of shifting market conditions. Ask yourself: Are there smarter or more efficient ways to meet the same goals with differing resources, whether they be people, technology or budget?
One way would be examining how their workforce can be adapted to the changing needs of the company. This involves reviewing different types of worker classification to ensure flexibility and that the right resources are being utilised at the right time.
For example, contract workers are useful for businesses who want to scale up their team for important but short-term projects, prevent future job cuts and avoid the overhead costs associated with full-time employees. Contractors can be a resource that are brought in as necessary and do not need to be provided the same employment benefits as an employee.
Implementing changes effectively requires teams to be empowered to work in different, but just as productive ways. In the modern workplace, flexibility is key – 40 per cent of respondents to Safeguard Global’s recent study on generations at work considered flexible hours the most important aspect of a job.
Empowered employees are more likely to accomplish both their own goals and the company’s wider aspirations. By removing obstacles or low-value tasks from highly skilled staff, businesses can ensure their teams work to their highest potential and deliver the best possible outcomes.
“Piling more tasks onto each employee’s plate instead of hiring sufficient staff to deal with an increasing workload is a recipe for burnout.”
2. Consider hiring internationally
As the market moves past the current economic slowdown, businesses that are too defensive on the recruitment front will encounter slower turnaround times and ultimately struggle with long-term growth. Whether there is a recession or not, work still needs to be done, so an adequate and capable workforce is still required.
Piling more tasks onto each employee’s plate instead of hiring sufficient staff to deal with an increasing workload is a recipe for burnout that leads to productivity loss and poorer business outcomes.
While Australia may be experiencing shortages for certain skilled workers, if companies are struggling to find the right talent locally, such as those in tech, they should look to international markets to fill skills gaps.
Hiring globally improves diversity within a business, which can increase productivity by as much as 33 per cent, according to McKinsey’s Delivering through diversity study.
A major advantage to recruiting and hiring global talent is cost savings. Remote working removes the need for office space and equipment, leading to significant cost savings in terms of rent, utilities and other expenses associated with maintaining a physical space for employees to work from.
Having local employees in different regions can also help companies establish relationships with local suppliers, distributors and other key stakeholders, creating a global network that empowers companies to tailor products and services to various markets.
Global organisations are better equipped to attract talent that is searching for diverse and inclusive workplaces and pose an exciting opportunity for employees to work in different countries and cultures. This improves the employer brand reputation of businesses.
By looking to international markets, businesses can simultaneously meet their staffing needs and drive growth through expansion in new regions. However, many simply are daunted by such a prospect and do not know where to start. External global workforce managers can provide great support to businesses that are taking their first steps into a new market.
3. Outsource HR functions when expanding overseas
Businesses can remove stress and guesswork when hiring overseas by bringing on a global workforce manager with access to local talent pools, salary benchmarking data and employer of record services.
By outsourcing HR functions in expanding overseas, businesses can streamline their operations, save on costs and get help to remain compliant in international markets. This is especially useful for companies planning to hire under different worker classifications to fill current skills gaps in Australia, as this process can be complex when you are looking at multiple markets with different laws and regulations.
Misclassifying workers is a big problem for many companies and organisations that choose to hire overseas. Significant penalties can be incurred by hiring a worker as a contractor but giving them a senior title or expecting them to perform critical work. An employer of record (EOR) can be brought in to handle complex legal requirements, leaving businesses to focus on their employees and their performance.
Businesses that are quick to react to a slowing down in the local market and take advantage of the sustainable growth they can achieve from accessing new markets may be better placed than those that hedge their bets during a recession – businesses need to be thinking bigger, not smaller.
Bjorn Reynolds is the CEO of Safeguard Global.
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