4 ways CEOs are managing the labor market in 2023

CEOs are optimistic about the year ahead, despite layoffs

April 11, 2023 4:07 PM

Four months into 2023, and employers and employees have already faced waves of layoffs, hiked interest rates and further economic uncertainty — but it seems business leaders haven't lost hope just yet.

Hiring software company Greenhouse surveyed 300 CEOs on their outlook for 2023, and found that 84% are optimistic about their economic success for the latter of the year, with a majority of leaders actually looking forward to seeing their company grow despite recent setbacks. This may come as a surprise, given the sweeping layoffs by big-name companies over the last few months, but Greenhouse's survey underlines a vital theme that has persisted since the start of the pandemic: talent is key.

The unemployment rate remains low, at just 3.5%, despite concerns that a recession is either coming or already here; the labor market is still tight. Ultimately, businesses cannot expand and succeed without the right talent, and CEOs know this, explains Daniel Chait.

"For the first time, we could enter and exit a recession without a major increase in unemployment," says Chait. "Our research shows that CEOs are prioritizing their talent as their most valuable asset and considering many other courses of action before cutting jobs."

Chait notes that despite headlines to the contrary, there are still approximately two jobs available for every job seeker, and employers continue to face a talent shortage. Even companies that laid workers off will have to eventually return to the labor market to effectively fill out their teams.

Here's how CEOs are planning to boost their ranks — and their bottom line — this year:

CEOs plan on increasing headcount

Nearly 70% of CEOs plan to hire this year, while only 10% anticipate decreasing their workforce, according to Greenhouse. Unlike the layoffs workers saw at the start of the pandemic, it seems fewer employers are eager to downsize at the first sign of economic downturn. Chait points out that employers who made big layoffs in 2020 found themselves returning to an incredibly competitive labor market and likely had a hard time attracting and retaining talent.

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The lesson remains the same: workers are not as replaceable as some may think, says Chait.

"Several companies that committed layoffs in 2020 realized hiring isn't a machine you can turn off and on," he says. "Talent is in demand and highly mobile, and as we face a skills shortage, coupled with high employment levels, companies that invest in people-first practices will come out on top."

CEOs do not want to sacrifice talent

According to Greenhouse, 54% of CEOs would rather cut their real estate budgets before considering layoffs. This is good news for anxious employees who know their company may be facing financial hardship, but for Chait, the choice between talent and physical capital should be a no-brainer. Especially in the world of remote work, office space and amenities aren't necessarily the biggest contributors to a company's success, he underlines.

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"Those that are quick to lay off staff and abandon their DEI initiatives before other cost-saving options are showing where their values lie," says Chait. "Human capital has replaced physical capital as a company's most valuable asset."

Flexibility remains a crucial benefit

COVID protocols continue to influence how people plan to work — Greenhouse found that 40% of CEOs anticipate that their workers will continue to expect a hybrid work structure and day-to-day flexibility. If leaders are smart, they will ensure remote and flexible work stays, says Chait.

"The real measurement of productivity is output, not work hours inputted," he says. "In order to be competitive, companies must adapt and become intentional with culture and management to get the best out of their people, whether that's in a hybrid or remote working environment."

The labor market won’t go easy on employers

According to Greenhouse's internal data, candidates are still turning down job offers at a rate of 11% to 12%. Job seekers continue to be selective about where they take their talent next — Chait urges employers to act accordingly.

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"The fact remains that talent has become the main driver of company value," he says. "You simply cannot win without talent — and both companies and job seekers know this."