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How Companies Should Handle Their Talent Management During a Crisis

In uncertain times, companies face challenges in their talent management. How do they watch their costs while still attracting the right talent?

Marc Clemens
Marc Clemens

Nov 29, 2022

We currently face economically uncertain times. We are seeing layoffs in many places, or companies are reluctant to hire new staff. It is not easy to make the right personnel decisions in times of crisis. Two approaches often receive too little attention: working with freelancers and remote hiring.

Staying flexible with freelancers

In times of an economic downturn, companies naturally want to be cautious about hiring. Increasing the workforce and then seeing a decrease in business is not a great scenario. Nevertheless, there may be a lot of work at the moment, and the hiring freeze may even block developments that would be necessary to remain competitive.

Freelancers can be a solution for this. They can be hired on a project-by-project basis, provide support quickly, and make a valuable contribution with their specialized expertise. However, if the situation changes, the collaboration can also be terminated quickly. And it's much easier than it would be to lay off an employee.

In many cases, working with freelancers is even less expensive than hiring employees. In this article, we show the reasons in detail and give a sample calculation. Among the reasons:

  • Freelancers are only paid for hours they have actually worked, and not for vacation or sick time.
  • They cover their own social security costs.
  • They usually work with their own equipment and take care of their own training.

Reducing costs through remote hiring and nearshoring

For certain roles, companies may want permanent team members rather than freelancers. This may be the case, for example, for tasks that are long-term or require insight into internal information. In this case, remote hiring is an interesting alternative that can save costs even though there is permanent employment.

This effect occurs when the new team members live in a country with a lower wage level. Their salary can then be lower than what would be paid for this position in the company’s own country. They may be hired as a contractor, which leaves them self-employed. Or they can be formally employed through an Employer of Record, who takes care of the legal aspects of employment and charges a monthly fee.

An internationally distributed team comes with some challenges, such as different languages and time zones. With nearshoring, at least the latter aspect is not a problem, as the people are located in other countries nearby. The potential cost savings are lower, but many administrative things are easier.

Nearshoring is also possible through an agency that places talent or directly assembles an entire team, for example in the IT sector. In the past, nearshoring was only possible through such agencies, and companies could only work with their employees, which often led to unpleasant results. Now it is possible to hire the talent directly. This way, additional agency costs can be avoided, and it is ensured that the people are a fit for the company.

Three ways to deal with talent shortage

The situation seems like a paradox: On the one hand, there are mass layoffs at companies like Twitter or Meta, while on the other hand, according to Bitkom, 137,000 IT jobs are unfilled in Germany in 2022 - an all-time high. Talent shortage is evident and is making life difficult for companies looking for employees despite the crisis.

When the usual approaches won't do the trick, these three approaches can help:

  • Recruit terminated talent: During large waves of layoffs, lists of terminated employees are often published, along with information about their skills. There might also be spreadsheets where companies can post job openings for them. Another idea: target people on LinkedIn who have posted about their layoff and have an interesting profile. This may bring in talent that would be unavailable under other circumstances.
  • Consider remote hiring: Team members from abroad are not only less expensive, they are also an effective way to meet talent shortage. The talent pool expands tremendously when location is no longer a factor. For example, if a company is having trouble attracting local developers because its salary budget is too small, things are likely to look different in other European countries.
  • Rely on freelancers: Even if they are not permanent employees, freelancers can fill many gaps in the workforce. There is no need for a lengthy recruiting process with them, they can usually start within a few days. Especially in economically uncertain times, many freelancers are open to long-term collaboration. However, companies should ensure that the risk of false self-employment is kept as low as possible.

In complicated times, it sometimes takes new ways to have continuous success and to get the right people on board for this. Companies that recognize this and are open to change have the better hand in the long term.

Marc Clemens

Marc Clemens is the founder and CEO of CodeControl and 9am. He is a serial entrepreneur who studied at University of St. Gallen and HEC Paris. In 2016, he founded CodeControl, a curated marketplace and a community of the best tech freelancers in Europe. With 9am, he has created a platform that enables smooth collaboration between freelancers and companies.

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