Dr John Sullivan Talent Management Thought Leadership
Most of the talk around the tariffs should have been about “where is your job moving to?” Yes, I urged smart recruiting leaders not long ago to prepare for the upcoming tariffs. Well, now that these tariffs have been announced. Here are my updated predictions on how they will completely disrupt recruiting. And maybe where you will work, and if you have a job!
Prepare For These Tariffs-Driven Challenges In Recruiting
The top 10 emerging tariff-related trends that recruiting leaders and employees should be preparing for are listed below. The most impactful trends appear early on the list.
A record high level of uncertainty will create the largest impact – historically (outside of the pandemic), we are in uncharted territory. Even though now that the tariffs have finally been announced, you would think that everyone would be a little more relaxed. But the opposite is true. Because nothing about the tariffs is set in stone. Many elements will continue to fluctuate as a result of ongoing independent tariff negotiations, the reactiveness of the president, and sudden retaliations from both foreign countries and the US. As a result, TA leaders need to expect at least 18 months of constant uncertainty and volatility. And that means your corporate strategic recruiting plan will need to be flexible and highly adaptive so that your corporation can quickly adjust its recruiting location, volume, and the skill sets you will need. And as an employee, unless you have proven your adaptability, you will need to say goodbye to any hope for job security until these tariff issues settle down.
How severe corporate budget cuts and even a recession will impact recruiting – the recent dramatic drop in the stock market means that talent leaders need to prepare for a significant economic downturn and even the real possibility of a recession. Uncertainty in the stock market has almost always meant that executives will be extremely reluctant to consider, and no less approve, any long-term hiring plans. Also, having to pay large amounts for tariffs if you import anything of value from high-tariff countries like Cambodia, Vietnam, China, Thailand, or Taiwan will inevitably reduce your corporate bottom line. This, in the talent area, will mean more headcount reductions, a continuation of today’s already record layoffs as well as significant cuts in corporate recruiting budgets. Unfortunately, when large-scale hiring does actually occur in a new low-tariff country, the way that the talent is hired will have to be structured in such a way that your company’s talent investment can be rapidly reversed should the tariff advantage of that location go away.
Job seekers will have to learn to expect periodic hiring freezes in almost all job families, with the exception of the ongoing search for tariff experts, and a continued focus on hiring AI and Quantum computing talent. And even if your company decides to create some of its jobs in the US, as a potential job seeker, realize that it may not happen for more than one year.
This tariff episode has made “work location” a critical new area of expertise – for the first time in decades. “Where the work is done” may now be the most important factor in workforce planning (surpassing work quality, labor costs, speed, and transportation costs). So now talent leaders have no choice but to develop their own “best location” expertise and to focus on building the work location expertise of their team.
If new tariffs are added to the service sector, even more of your work locations will have to be shifted – the trade imbalance between other countries and the US would be significantly greater if tariffs were to be added to any of the services provided between borders. And because I am predicting that this will occur, when it does, many of a corporation’s service jobs will have to be shifted to countries where the service tariffs are the lowest. Obviously, if you now provide services as an employee, that will put your job security at risk.
Even with an approved hiring plan, TA must be ready for frequent hiring pauses – uncertainty and volatility are the primary killers of large-scale hiring plans, even when the large-scale hiring has already been approved. And because the application of tariffs will likely remain volatile for at least the rest of the year, your recruiting leadership will need to expect frequent hiring pauses and freezes. In some cases, this volatility will require major revisions in your already approved strategic hiring plans. This same volatility will also mean that it won’t be unusual for some already approved job requisitions and hirings to be later withdrawn and canceled.
When there is new hiring, the first choice of many will be the US – with the current 10% across-the-board tariff on all countries. Some corporations will act to avoid paying any tariffs when they can, by shifting their work currently done in high-tariff countries to the US. That means that most talent management teams will need to develop the capability to rapidly reduce their workforces in countries that are no longer viable because of the new higher tariffs.
In some cases, companies will shift overseas work to new countries – with much lower labor and transportation costs. It will make it a desirable country to place work in, even with their high current tariffs. For each of these countries, your recruiting function will need to dedicate a rapid recruiting team to ensure that your increased hiring in this new country is quick and effective.
DOGE cost-cutting will have a separate impact on your recruiting budget – completely outside of the fact that these new tariffs will reduce your recruiting budget. Smart talent leaders will also need to prepare for the additional severe cost-cutting trend that has been championed recently by the DOGE team. This means that even corporations not greatly impacted by tariffs and trade wars will be making deep “efficiency cuts” to all administrative functions, including recruiting. So recruiting leaders need to prepare once again to “do more with less.” And with their reduced TA budgets, there will be increased pressure to reduce cost per hire and significantly lower recruiter headcounts (with a larger percentage of them becoming contractors).
Expect a significant increase in applicant volume that will strain your screening process – throughout the next year as the number of laid-off workers increases dramatically. Your recruiting function needs to prepare to handle a dramatic increase in your applicant volume. That increased volume will strain both your ATS and your resume screeners.
With such a large number of applicants, the importance of sourcing will continue to decrease – with the above-mentioned abundance of job seekers that will literally “find you” without much outreach by recruiters. This will lower the importance of your sourcing function, and that, coupled with the availability of more powerful AI-driven sourcing tools, will keep sourcing from ever again being a place with much job security.
Your candidate experience effort will receive less funding – because finding a good job will become much more difficult throughout this next year. The power in the recruiting relationship will shift away from the applicant and back to the corporate recruiter. This, coupled with the severe cost-cutting in TA, will unfortunately reduce the TA resources devoted to providing a great candidate experience. So, most job seekers will no longer get the white glove candidate experience.
Your time to fill will become much longer – because overworked hiring managers with only a relatively small number of open requisitions will want to “get it right” every time. It will take much more time to make a hiring decision. And those extended deliberations will increase your time to fill. And if you allow it, this will cause your corporation to lose many top candidates who have already jumped at their first offer.
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Final Thoughts
With tariffs exceeding 50% on some imported goods for the first time in decades, “selecting the ideal location” where the product should be produced or assembled has now become one of the highest cost factors throughout your production and supply chain. So, in my view, smart talent leaders need to seize this opportunity to increase their strategic business impact. By becoming experts in what I call “the total cost of labor” (where total labor costs include both compensation costs and any added tariff costs). Your talent function can now provide your corporation with a strategic competitive advantage in this increasingly critical but volatile decision on “where to place the work.”
Note for the reader
This is the latest article from Dr. Sullivan, who was labeled “the Michael Jordan of Hiring” by Fast Company.
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