Essential steps for a smart hiring strategy

In turbulent market conditions, many businesses are desperate to cut costs, which can often prompt knee-jerk spending decisions, such as recruitment freezes, training budget cuts and 
headcount reductions.

While this approach might save money in the short term, it fails to consider how trading conditions might look in six months or a year. By then, the economic climate may have improved dramatically. Inevitably, organisations that slashed spending on their human capital take longer to recover from their slump than companies that continued investing.

The solution, therefore, isn’t to put a total halt on your recruitment and instead, organisations should consider adopting a smart hiring strategy. In this article, we set out how to implement a smarter approach to hiring, supported by expert insights from Tania Garstang, Director at Michael Page HR.

Look for alternative cost savings

When it comes to cutting costs, human capital is an easy target. Taking into account wages, benefits, payroll, and related taxes, labour can account for up to 70% of total business costs. 

But, in reality, there are all kinds of efficiencies that can be achieved within the average business. The first step to adopting a smart hiring strategy is to seek out these savings rather than starting a hiring freeze or making layoffs.

For instance, manufacturing firms can create more sustainable facilities, implement continuous improvement, and transition to a lean manufacturing model. Or they could plan routine maintenance rather than simply waiting for equipment to break down. Investing in maintenance engineers could reduce downtime or the need to shut a line, thereby improving output and revenue.

These sorts of efficiencies have long-term benefits for the business — whereas spending less on people will only place you in a worse position once the business landscape improves.

Alternatively, you may not have to cut costs at all. Tania cites the example of a Yorkshire-based industrial laundry company that saw energy and water costs rise by 40%. They notified all their customers that they would have to pass on these higher costs and expected to churn around one-third of their customer base. 

But that didn’t happen. “They didn't lose a single customer because all of their customers understood the rhetoric and agreed to pay the higher prices in order to maintain the service.”

Continue investing in people

Finding alternative cost savings frees up your budget to continue investing in your most valuable resource: your workforce.

Businesses that keep investing in people — in terms of hiring, career development, and engagement — are more likely to retain their top talent, which means they spend less on combating attrition and hiring replacements. This can lead to significant cost savings down the line.

Tania points to a recent example in the specialism of recruitment and talent acquisition. During the pandemic, many organisations drastically reduced their in-house recruitment resources because they stopped hiring. 

The result? Those same organisations were hit hardest by the so-called “Great Resignation”, which has seen the volume of vacancies far outstrip the number of available candidates. 

“All of a sudden, everyone wanted in-house recruiters, but they couldn't get them for love nor money,” Tania explains. “The market rate to hire in-house recruiters went up by 30% – 40% to hire the same calibre individual you would have got 12 months earlier.”

Investing in people also allows you to get the most out of your existing human capital. It might be easier, cheaper, and of greater long-term benefit to upskill a lower-skilled employee than to hire a more experienced candidate. 

As Tania puts it: “Whether you're in a solicitors firm or a construction company or a webcam business, if you upskill and develop and set expectations, set performance indicators and then reward people based on that performance, your business will do better.”

Analyse skills gaps

To hire smarter, you first need to understand what a smart hire looks like for your business. That means taking the time to perform regular skills gap analysis. Broadly speaking, a skills gap analysis involves three key steps:

1. Looking at the structure of the business, assessing what skills you've got and where gaps exist.
2. Setting robust performance expectations with individual employees.
3. Empowering talent to achieve their performance goals.

The specifics of a skills gap audit can vary widely from one organisation to another, depending on the makeup of the business and its specific needs. However, Tania says it ultimately comes down to three things — people, technology, and data. “Investment in good systems, good measurement, and good data is the foundation for good decision-making.”

Get the right talent in your HR team

A smart hiring strategy cannot exist without a smart human resources function. That means hiring and developing the right types of HR professionals.

As the Director at Michael Page HR, Tania has a deep understanding of this. She advises any business looking to implement a smarter hiring process to look for the following traits in HR specialists:

• They can prove how they have driven high-performance cultures in a business setting
• They have experience of organisational structures and rightsizing
• They have driven robust talent and performance metrics

Take a big picture view

Ultimately, one of the most helpful steps you can take in developing a smart hiring strategy is simply to avoid getting bogged down by short-term trends.

Financial dips are an unavoidable fact of life. A Gen X employee in their early 20s might have lived and worked through the imaginary crisis promoted by fears of the Millennium Bug, the global financial crisis of 2007 – 2008, and the double-dip recession in 2009. While businesses are understandably worried about growing energy costs and rising inflation, markets are always up and down.

Clearly, businesses cannot afford to ignore external events. But they should always strive to make decisions based on the fundamental goal of retaining the best talent. 

“It's about making strategic decisions,” Tania explains. “Cutting into hiring spend, cutting into development and investment should be a last resort for organisations, because ultimately that's what's going to pull you through.”

What’s next?

Attracting and hiring the best talent is challenging for businesses of any size and in any industry. But we have the insights to help, whether you need to write better job specifications or level up your remote hiring process.

Looking to hire top HR talent? Get in touch with Michael Page Human Resources today to start your search. 

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