Following unprecedented waves of layoffs in recent months, you might be surprised to learn of a new trend among employers in response to the tumultuous labor market: workforce stockpiling.
Workforce stockpiling — sometimes called “labor hoarding” — is essentially a retention strategy. Rather than cutting costs through layoffs, some employers have opted to invest in employees instead, in order to keep them from actively seeking different opportunities.
This defensive strategy has been employed by a variety of businesses to keep pace with the rapid changes, born from the need to combat persistent labor shortages and buffer against a potential economic downturn.
Battle for Talent
The workforce landscape is especially tough for small and medium-sized businesses, or SMBs. With typically lower cash reserves and hiring reach, these companies must fight to remain competitive amid potential labor shortages.
According to a survey conducted in 2022, a whopping 91% of SMBs were actively implementing workforce stockpiling tactics, with 89% planning to continue the same approach in 2023. And small businesses are twice as likely to pursue employee retention as larger companies.
Costs aside, the retention of existing talent may be more valuable than the gamble of acquiring new workers, particularly for SMBs. Workforce stockpiling can also help these companies cut back on hiring and training costs. Morale concerns and confidence in the existing team were also commonly cited as drivers of the trend.
As an employee, workforce stockpiling could translate to a variety of benefits. Retention strategies may include higher compensation, more opportunities for connecting with leadership, flexible remote work options, and more paid time off.
In the end, workforce stockpiling could create a winning situation for both the talent and the companies. For employees, this is an opportunity to be recognized and better compensated. For companies, workforce stockpiling provides a strategic way to meet business objectives while maintaining financial stability.
Ultimately, this shift in strategy is a refreshing take in a corporate world recently marked by mass layoffs. If it continues to gain steam, it could redefine relationships between employers and employees, creating a more stable and traversable landscape for both.
Looking for more stories like this? Check out On the Money — SoFi’s one-stop-shop for news, trends, and tips!
Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Advisor
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.