Today, the Fed decided to maintain the federal funds rates target, as reported by the Federal Reserve. There will likely be a number of implications for the recruiting and hiring industry if the Fed will continue to raise interest rates, again, in the future.
One of the most immediate impacts is likely to be a slowdown in hiring. As interest rates rise, businesses become more cautious about investing in new employees. This is because it becomes more expensive to borrow money, and businesses are less likely to be able to pass on these costs to customers.
Another impact of rising interest rates is likely to be a decrease in wages. As businesses become more cautious about hiring, they are also likely to be more cautious about raising wages. Businesses will want to keep their costs down in order to remain competitive.
However, there are also some potential positive implications for the recruiting and hiring industry. For example, rising interest rates are likely to lead to a stronger dollar. This could make it easier for businesses to recruit and hire talent from overseas.
Additionally, rising interest rates could lead to an increase in the number of people looking for jobs. This is because people who are living on fixed incomes will be more inclined to look for jobs in order to supplement their income if living expenses rise.
Here are some specific things that hiring and talent acquisition professionals can do to prepare for the potential impacts of rising interest rates:
- Put your focus on the candidates. Be purposeful about building up your candidate relationships – when the job market slows down, it is important to have a strong network of warm candidates to draw from. Even if your business is not currently hiring, you will be setting yourself up to quickly hire for the next open positions. Additionally, take some time to audit the performance of your career site platform, or your applicant tracking system – this could be the first touchpoint of any future hire – and upgrade the experience if you can to make a good first impression. Your job application process should be easy and straightforward–oh–and mobile friendly.
- Improve your employer branding. We’ve learned that job seekers really care about the culture of the companies they work for. According to the Employ data survey, 45% want to see that their prospective employers are focused on DEI and social justice efforts. And, candidates want to know what it’s like to work for your company. You can engage with hiring tools, like video interviewing software, to highlight your company’s culture and core values in your job postings and during interviews.
- Build Employee Experience to drive your businesses growth – It’s a fact that employee experience directly impacts business performance. Help your organization’s leadership implement new practices to achieve a best-in-class workplace. With that, you can lean on your employees to help deliver the message about your corporate culture, and include them in the hiring process. You may want to consider a new employee referral software tool, and take the time to listen to your employees ideas about how to improve corporate culture.
- Invest in HR technology – the HR Tech industry is seeing rising demand for tailored solutions and the increasing need to automate hiring operations to support business growth. Technology can help TA pros be more efficient and effective. Look for tech and solutions to help automate tasks, source candidates, and screen resumes.
Overall, the impact of rising interest rates on the recruiting and hiring industry is likely to be mixed. In the short term, it is likely to lead to a slowdown in hiring and a decrease in wages. However, in the long term, it could lead to a stronger dollar and an increase in the number of people looking for jobs.
We want to hear from you. Tell us, how are you preparing your recruiting and hiring departments for the potential impact if interest rates should be further raised? Please reach us at, [email protected].