The Job-Market ‘Détente’

In the push-pull between employees and employers, one or the other almost always has the upper hand. In a strong job market—like the one we saw when the pandemic lockdowns ended—workers could often pit one potential employer against another, dictating terms on compensation and flexible work arrangements. In a weak market with scarce job openings, employers have most, if not all, of the leverage.

But now, several months of conflicting job-market data suggests that neither group is on top. The number of open roles is falling, but it’s still high, and organizations continue to add workers, albeit slowly. “Maybe there’s a détente,” says David Vied, global sector leader in Korn Ferry’s Medical Devices and Diagnostics practice. For their part, talent-market experts say the situation is all but unprecedented. “It’s a market I’ve never seen before,” says Dan Kaplan, a Korn Ferry senior client partner focused on chief human resources officers who has worked in the recruiting business for nearly three decades.

The latest government data continues a trend of data at odds with itself. US nonfarm payrolls rose by 216,000 in December. Unemployment held at a historically low 3.7%. The advance in payrolls was led by health care, government, construction, and the hospitality industry.

But US job openings continue their monthslong decline. In November, they fell to just under 8.8 million, a low unseen for nearly three years. The impact of inflation, together with higher interest rates, has convinced some organizations to curtail projects. David Ellis, Korn Ferry’s vice president for global talent acquisition transformation, says that employers, both in the US and elsewhere, have decided to “remodel” by moving some workers from low-growth to high-need areas. “You don’t need to net-add anyone,” he says.

Employers have slowed the growth of salaries and bonuses. Annual wages are growing at about a 4% clip, down from nearly 6% at the end of 2021. Also gone are the conditions of two years ago, when firms sometimes had to dole out raises of as much as 30% just to keep some employees from jumping ship.

While the layoff rate remains lower than usual, many organizations have instituted hiring freezes. Firms also are being more selective in the roles they’re keeping open. “Clients are looking more for the ‘been there, done that’ proven candidate,” says Liz Schaefer, a Korn Ferry senior client partner and practice leader in its Professional Search division.

Still, employees are “dictating the tune,” says Flo Falayi, a Korn Ferry associate client partner and leadership coach, by asking for, and often getting, flexible work arrangements. Even if fully remote work is no longer an option, hybrid scheduling—allowing employees to work outside the office on a couple of days each week—is a concession many organizations will make.

It’s an environment that can be good for everyone involved, adds Ellis, although no one knows how long it will last. Workers are getting one of their key demands met—hybrid work—and many are getting reskilled instead of laid off. Employers, meanwhile, have reined in some costs and find it a little easier to unearth talent than they have over the last couple of years. “Everyone wins,” he says.

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