Hire, lay off, hire, lay off

Businesses are facing an unprecedented talent shortage. So why are half of them also cutting jobs? This push-pull dynamic in the labor market surfaced in PwC’s latest Pulse Survey of over 700 public and private company executives, 14% of whom lead tech, media and telecom organizations. (Most others hail from consumer markets, industrial products and financial services.)

Even as these execs ranked talent acquisition and retention as the second-biggest risk to their business — right after the top risk, cyberattacks — many are cutting staff and withdrawing job offers.

• 52% said they were freezing hiring, half said they were cutting head count and 44% said they were rescinding offers.
• Despite this, only 9% said they would be decreasing investment in their workforce in the next year. 42% said they would invest more in their workforce.

This all adds up to a “labor market paradox,” Bhushan Sethi, joint global leader of PwC’s People and Organization practice, told reporters on Thursday. Amid all of the freezes and job cuts, execs cited growth as their top business objective (83%), and only 30% said recession poses a major risk to their companies.

• “We see this with many organizations, where they’re saying, ‘We may have overhired. There may be less demand, and we’re going to kind of manage overall head count,’” Sethi said. “But they still need to grow revenue, grow profits, and by doing that, they’ve got to have access to attract and retain specialized talent.”
• “Specialized” is the keyword here, and skilled workers are still sitting pretty in the labor market. Sethi called this a “workforce mix change” in which many companies are prioritizing certain skills as they rely more on automation and contract workers for other functions.
• If you can’t hire them, buy them: 52% of execs said they were considering an acquisition to snag talented workers.

Hybrid work is still hard to navigate. Companies are pulling out of real estate investments, but leaders are still struggling to figure out how to balance remote and in-person working styles.

• 22% of leaders said they were cutting their investment in real estate. Real estate was the top area where companies said they were reducing investment, followed by facilities and general capex.
• Allowing remote work has remained an important talent strategy, with 70% of leaders saying they were expanding permanent remote work.
• Still, many leaders are worried about how to keep their teams running both remotely and IRL. Almost 30% of execs said one of their top workforce challenges in the next year would be balancing hybrid, remote and in-person work.