Shrinking head count and growing revenue: Welcome to the labor market paradox

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.

You can still do DEI training in Florida … for now

• This week a federal judge blocked a Florida law that would restrict discussion of race at work (and in schools). Earlier this year the Florida legislature passed the Individual Freedom Act, calling race-based employee training or other “required activity” an unlawful employment practice. The law was championed by Republican Gov. Ron DeSantis, who calls it the “Stop Woke Act.”

Meanwhile, DEI experts from all over the tech industry are celebrating the news of the blocked law. But while diversity training is essential, it’s still easy to get it wrong. "I do think there are practitioners out there telling white people, 'You’re bad and it needs to be your life’s work to sort of undo the historical racism in this country,'" Kellie Wagner, chief executive of the DEI Collective, told The Wall Street Journal. “That’s not the approach that we take.”

In an interview earlier this year, Y-Vonne Hutchinson, CEO and founder of the DEI consulting firm ReadySet, told Protocol that leaders should focus less on guilt and more on allyship. Hutchison explained that in the context of the workplace today, allyship is “a practice of continuously showing up, and showing up with humility to undo the systemic racism, sexism, homophobia, ableism, etc. that affects your colleagues who have less privilege than you every day.”

Rachel Williams, chief diversity officer at The Motley Fool, told Protocol that while many companies focus solely on diversity and representation efforts, "inclusion is where people should start."

Read Protocol’s special report on inclusion in the workplace.

Sponsored content from DataRobot

DataRobot's AI Cloud for Financial Services Unlocks the Art of the Possible: DataRobot continues to attract clients in financial services who want to de-risk their AI investments and rapidly scale AI to almost every part of their operations, resulting in improved productivity and higher customer satisfaction.

Read more from DataRobot

Some personnel news

Anyone else having a bad case of Great Resignation whiplash? It’s hard to keep up with which tech companies are growing, shrinking, floating or sinking. We’re here to help.

⬆️ People familiar with the matter told The Information that Cisco Systems is increasing operating expenses by $1 billion over the next year to keep people from leaving.

⬆️ Twitter is hiring! But the company is still a bit of a mess, and your new boss is not actually buying Manchester United, FYI.

⬇️ Last year Stripe acquired TaxJar, a tax compliance startup. Now sources told TechCrunch that Stripe has laid off between 45 and 55 TaxJar employees over the last month.

⬇️ According to The Verge, Crypto.com is laying off hundreds of employees and trying to hide it.

For more news on hiring, firing and rewiring, see our tech company tracker.

Around the internet

A roundup of workplace news from the farthest corners of the internet.

Six hundred fifty Google workers are demanding more abortion care protections. Googlers already receive reproductive health care benefits, but the most recent petition asks that those benefits be extended to temporary and contract workers and also demands that Google stop any and all lobbying. (The Guardian)

Two female employees from SAP (one of the world’s largest tech companies) said the company’s HR department failed to respond effectively to reports that they were raped at company events in 2018 and 2019. “We take all allegations of misconduct and criminal behavior extraordinarily seriously. Ensuring the safety and well-being of our employees underlies all our decisions,” Joellen Perry, an SAP spokesperson, told Bloomberg. The company also says they encouraged the women to report the rapes to the police and that “The SAP of 2022 is, moreover, different than the SAP of the past.” (Bloomberg)

Sponsored content from DataRobot

DataRobot's AI Cloud for Financial Services Unlocks the Art of the Possible: Banks need to secure a competitive advantage in an increasingly tight race to harness best-in-breed technology. Decision makers need to not just plan a future-ready strategy, but also recognize the value of AI that could boost not just their performance in-house but also their reputation among their global customers.

Read more from DataRobot