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Should Your Company Be Labor Hoarding? HR Leaders Share Why They Believe The Answer Is Yes

In an effort to save money on training and hiring new staff, organizations are turning to labor hoarding to retain their talent. 

Emma AscottbyEmma Ascott
October 18, 2022
in Workforce
Reading Time: 4 mins read
A A
Labor hoarding
  • Labor hoarding is when companies find ways to hold on to talent rather than lay off workers in order to save money in the long term.  
  • Companies are more concerned with mitigating costs than they are hiring new team members. 
  • Allwork.Space spoke to three HR leaders to gauge their opinion on the practice of labor hoarding.  

As companies are trying to figure out how to stay profitable and are subsequently implementing hiring freezes and layoffs, some other organizations are taking a different approach. They’re doing something called “labor hoarding,” which is when companies find ways to hold on to talent rather than lay off workers in order to save money in the long term.  

Amidst the consequences of the pandemic, companies are more concerned with mitigating costs than they are hiring new team members. 

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Some economists think that with companies’ recent difficulty in hiring new employees, as well as the issues created by the Great Resignation, this has an effect that is preventing companies from pulling the trigger on layoffs, according to Inc.com.  

Allwork.Space spoke to three HR leaders to gauge their opinion on the practice of labor hoarding.  

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Dannie Lynn Fountain, DEI Expert and HR Staffer at Google, says that employers should be investing in current talent.  

“The basic reason for the term and trend is because employers decide to ride out the uncertainty with higher payrolls in order to avoid the long-term costs of hiring and training new people when the economy rebounds,” Fountain told Allwork.Space.  

A report by the Center for American Progress indicated that companies in the United States lose an estimated $64 billion annually as a result of having to replace employees who departed because of unfairness and discrimination.  

“In other words — it’s genuinely surprising (and somewhat disgusting/disappointing) to hear that companies want to focus on retention now because they’re worried about the cost of rehiring / training after an economic downturn, when they’ve been losing billions of dollars every year through the loss of employees who depart due to discrimination. It’s only when that talent loss cost gets compounded with the broader financial hit of an overall depressed market that the focus turns to retention,” she said.  

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If leaders focused on ways to mitigate discrimination and ensure equity of pay and advancement, companies could overwhelmingly mitigate the cost of talent loss while creating a company culture that is truly legendary, according to Fountain.  

Alec Rahman-Jones, Managing Director of Phaidon International, told Allwork.Space that he believes labor hoarding is beneficial to an organization.  

“Employees are the most important asset to a company, but business-critical talent is not always readily available to hire. ‘Labor hoarding’ embodies the mindset that top talent is vital to an organization, so it is critical to hold onto them, even when times are tough. Successful talent partners advise clients to go one step further; to always keep looking to acquire talent even with an uncertain economic climate,” Rahman-Jones told Allwork.Space.  

He says it’s advantageous for hiring managers and companies to ride out periods of economic uncertainty rather than to have to back-fill talent later. This is the sentiment behind labor hoarding or what some others call “talent nurturing.”  

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“We have found that companies that implement hiring-freezes and cut back on sourcing new talent do not fare as well and fall behind companies that continue to hire consistently and have an always-on approach,” he said.  

Farzana Nayani, DEI specialist and international keynote speaker, told Allwork.Space that organizations are acknowledging that it is actually more expensive to let employees go and then hire and train new employees, even though resources are constrained and there may be a decreased need for personnel. 

“The implications of labor hoarding are visible in the lack of investment in people beyond the bare minimum to keep individuals around. For example, companies are reluctant to offer more robust benefits packages due to limited budget and conservation of resources, which is a wise fiscal decision, but from an employee’s perspective — quite frustrating. Companies also are cutting back on promotions and salary increases to make sure the current wages are sustainable for the long run, but oftentimes these actions do not match employees’ needs for increased wages due to inflation and increases in cost of living,” Nayani told Allwork.Space.  

It’s clear that the retention of employees is an ongoing cycle — with labor hoarding being both a cause and a result of constraints on the organization due to the volatility and uncertainty of the current times, according to Nayani.  

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Emma Ascott

Emma Ascott

Emma Ascott is a contributing writer for Allwork.Space based in Phoenix, Arizona. She graduated from Walter Cronkite at Arizona State University with a bachelor’s degree in journalism and mass communication in 2021. Emma has written about a multitude of topics, such as the future of work, politics, social justice, money, tech, government meetings, breaking news and healthcare.

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