Many businesses welcomed 2023 while emerging from — or still grappling with — supply chain issues, inflation at a 40-year high, and more employees quitting than usual with insufficient applicants to replace them.
Unfortunately, 2023 offers no reprieve, only more uncertainty. Given this set of circumstances, employers’ resolution for the New Year should be to control the space they can readily maintain — their workplace. For the first time, employers should consider focusing on making the workplace, and their employees, the prime focus. It could pay multiple dividends. Employers in numerous industries continue to face persistent hiring difficulties, with “Help Wanted” signs ubiquitous across the country. Grappling with limited applicants, employers face a serious quandary. The result is one of the most confounding labor markets we have ever seen. The federal government’s monthly employment numbers report hiring is strong, yet millions of jobs remain unfilled. Estimates are that 1.7 job vacancies exist for every person available to fill them, leading to the lowest unemployment rate in decades.
However, while unemployment remains low and many employers struggle to find qualified applicants, thousands of employees are being laid off in other sectors of the economy. The most pronounced workforce reductions are in specific sectors, including tech, media, financial services, and automotive industries. Amazon, Apple, Meta Platforms, Microsoft, and Twitter have all reduced staff and frozen hiring. In the case of Amazon, the company recently announced its plans to eliminate 18,000 positions, while Microsoft indicated it would cut 10,000 jobs.
CNN, The New York Times, Gannett, and BuzzFeed have all announced or implemented staff reductions. Goldman Sachs is eliminating 4,000 positions. Morgan Stanley announced it is reducing staff by 1,600, while Credit Suisse cut 2,700 jobs in 2022 and plans to eliminate 9,000 by the end of 2025. At least 15 other financial institutions have already cut employees or announced staff reductions shortly.
Additionally, the Federal Reserve’s ongoing battle to tame inflation through increasing interest rates — a necessary if not a bitter pill to swallow — has produced a significant slowdown in new housing starts, purchases of existing homes, and real estate and mortgage-related firms to reduce workers, too. Mortgage start-up Better.com has cut over 7,000 employees. Realtor RE/MAX has laid off 17% of its workforce, and real estate brokerage firm Compass has cut more than 10% of its staff.
The international automaker Stellantis N.V. shuttered a large auto assembly plant in Illinois, while electric carmaker Rivian announced the layoff of at least 5% of its workers. In June 2022, Tesla laid off approximately 10% of its salaried workers and announced more layoffs throughout the first quarter of this year.
Amidst voluntary quits, steady hiring, and widespread layoffs, the workforce participation rate was 62.1% as of November 2022, substantially below the pre-pandemic rate of 63.4%. Both numbers are well below the peak of 67.3% during the 2000 dot-com boom. In practical terms, there are more than 6.5 million fewer workers in the economy today. With a reduced pool of potential labor and many of these workers “job hopping” to seek better pay and benefits, more flexibility, a better work-life balance, or a career change, it is incumbent upon employers to optimize their position.
The challenge for employers in 2023 will continue to be hiring and retaining the workers needed to run a successful business, which underscores why having a satisfied and dedicated workforce is more critical than ever. While competitive pay and benefits are paramount, employees remain or choose to leave a job due to how management perceives and treats them. Employees quit bosses, not companies. In a pre-pandemic survey, nearly half of the employees interviewed said they had resigned because of a bad manager or supervisor. In a Hays Research study involving almost 2,000 employees, 43% said corporate culture was the primary reason they were looking for a new job.
Now, more than ever, it is imperative that the workplace be employee-centric, which means showing employees they are valued and appreciated for what they do to make the company successful. It requires open communication and the ability for employees to give feedback without fear of repercussion (i.e., an open-door policy). Managers and supervisors must be present and establish an open rapport with employees, taking the time to say “hello,” and “good morning” sincerely. For your own sake, employers, make an effort to demonstrate appreciation by thanking your employees for doing a good job, working overtime to complete a project, or working on a Saturday because of the press of business. This personal and daily interaction and positive feedback show you sincerely care.
As trite as all of these actions may seem, imagine trying to run a successful business in 2023 while routinely losing your most experienced employees. It will require a sincere effort to demonstrate to employees that they are the most critical element to the company’s success. Remember that the two most important questions an employer can ask an employee are: “How are you doing?” and “What can I do to help?”