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The Impact of COVID-19 on the Labor Market

An overview of the pros & cons, and HR recommendations on what can and must be done

Written by HRCap, Inc.

The pandemic has significantly transformed the job market, hiring needs, and recruiting processes. Advanced technologies and new hiring practices have been introduced to the recruiting industry, and the pandemic has accelerated the adoption of such practices.

There was a shortage of talent with record low unemployment rates before the pandemic. Almost 70% of employers had difficulty filling jobs, as it was hard to attract and convince top candidates to consider a better career opportunity. Even with increased pool of available candidates from pandemic related mass layoffs, it has become even harder to attract the top candidates, who have become even more reluctant to leave their current, stable jobs.

Most companies have been forced to close due to government mandated lockdowns, to downsize with mass layoffs due to the impact on business operations, and to initiate hiring freezes given the limited resources and buy-in for talent expansions during the crisis. On the other hand, some industries have shown spikes in job openings to meet surges in business demand. The pandemic has led to a decline in hiring for many industries, while it has increased hiring and created new critical roles for others.

The pandemic has encouraged and even forced companies to innovate and modernize their HR policies, processes, and practices. During the lockdown, companies had to adapt and change their recruitment processes with virtual recruitment and remote onboarding through effective investment, adoption, and usage of advanced technology. The following timeline shows the impact of the pandemic on the labor market, and highlights actions taken by both client-driven and candidate-driven markets.

The timeline shows the importance of being nimble and flexible to grow from the crisis. There are commonalities between organizations who have successfully stood the test of the crisis, and have quickly adapted and implemented essential HR changes.

Below are 4 critical recommendations that will prove helpful if used to implement new processes to better adapt to the new business normal:

1) Embrace flexible schedules and hybrid work policies. Not all companies have had the infrastructure, capital, or processes in place to immediately drive flexible and remote working environments – especially with business operations and client relationships having been severely impacted by the pandemic. But, given the government lock down and social distancing mandates, many companies were required to adapt and to revisit their existing policies for a new business normal to ensure organizational sustainability and productivity, as well as workplace health and safety. Companies should look at the positive benefits of such changes. Flexible work hours may allow businesses to have greater coverage for around-the-clock services for customers, clients, and patients to provide more customized and targeted solutions. Work from home policies have enabled corporations to remove geographical boundaries to grant the ability to hire talent from across the country without any locational limitations. Such policies have also allowed employees to be more productive considering the reduced commute and prep time.

2) Place greater emphasis on candidate soft skills when interviewing. 90% of “bad hires” are due to lack of soft skills. Bad hires can be marked by both performance and non-performance related measures; some indicators may be employee disengagement, misdemeanors, and a clash of cultures. In order to prevent bad hires, there must be a greater emphasis on interviews. Interviewers must pay closer attention to a candidate’s interview answers, word choices, and body language. Not all hiring managers are great interviewers, so they must be better educated on what to ask and what not to ask, and should be trained on how to carefully screen for cues on the candidate's soft skills. Background checks are critical, but reference checks are just as important, and must be conducted to thoroughly probe on work ethics, collaborative abilities, ability to resolve conflict, and stance on ethical dilemmas.

3) Consider acquisitions and investing in executive recruiting. Many companies have begun to invest in talent more widely by either hiring top executives or acquiring companies for human capital. By buying up corporations, companies are able to acquire employees with the critical skills essential for the targeted business growth. By hiring top executives with professional brand, track record of success, and large network of partners and followers, companies can reduce recruiting costs by utilizing the executives to identify and satisfy talent gaps through their own professional networks. With that being said, the key is to ensure employee engagement and seamless integration of people, process, and technology for acquisitions, and to prevent bias for executives who are building out their own teams.

4) Improve corporate culture and brand. More than 75% of job seekers review the employer's brand before applying to a given job, and heavily factor in the company culture prior to accepting job offers. Therefore, companies must be much more sensitive to diversity and initiate more inclusive employee engagement. In an attempt to keep employees engaged, many companies have increased the frequency of their corporate-wide communications to better inform, and assure, during this time. Organizations should also invest in rebuilding their corporate websites to ensure they are mobile-friendly and accessible, and better promote and align on the corporate mission and goals. Companies should focus on being more active, visible, and interactive on social media, in order to demonstrate their agility and willingness to learn, to listen, and to grow and change.

Though the pandemic has caused devastating layoffs and shut downs for many, it has accelerated tremendous growth in other industries. In these tumultuous times, the business landscape is constantly changing; the changes are impacting employers and employees alike. Agility and flexibility have proved to be crucial in weathering this storm. Amidst the chaos, human capital has become increasingly important and difficult to acquire and retain. How organizations adopt change will determine their future success or failure.

Source: HRCap, U.S. Bureau of Labor Statistics, Monster, ZipRecruiter, TalentLyft


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