South Africa has issued a hiring freeze warning

According to KPMG’s latest CEO Outlook for South Africa, more than 80% of CEOs have implemented or plan to implement a hiring freeze in the next six months.

Between July and August, the financial services firm interviewed 50 top CEOs from various industries to learn about their perspectives on the country over the previous 18 months and their plans for the future.

The findings of the survey of South African CEOs were compared to those of 1,300 global executives. According to KPMG, all respondents were CEOs of companies with annual revenues of $500 million or more, with one-third of the organisations polled having annual revenues of more than $10 billion.

According to KPMG, in light of an impending recession, companies and their executives are being pushed to reconsider their strategies, with talent retention being one of the critical factors being addressed.

In comparison to international concerns, a smaller proportion of South African CEOs anticipate a recession in the coming year. Despite this, 86% of CEOs polled around the world expect one.

72% of CEOs who predicted a recession said they had taken proactive measures to boost productivity and be as prepared as possible. South African CEOs are far more concerned about the immediate consequences of a recession.

The anticipated global recession has resulted in a strong emphasis on a temporary halt in hiring practises and headcount reductions around the world.

36% of South African CEOs polled have already stopped hiring. This is almost identical to the 39% of CEOs worldwide who have done the same.

Some CEOs are also thinking about downsizing their workforce in the next six months, with 42% of South African CEOs thinking about it and only 34% of CEOs globally.

According to KPMG, when CEOs looked at the economy in the long term, 70% of South African CEOs and 76% of global CEOs expected their organization’s headcount to increase by 10% over the next three years.

“CEOs are still investing in their existing workforce, with 72% local CEOs compared to 50% CEOs globally focused on boosting productivity,” said KPMG.

In light of changing economic conditions and challenges, chief executives in South Africa have had to think long and hard about attracting and retaining talent.

According to KPMG, it has become increasingly important for CEOs in South Africa to recognise employee-driven business transformations; many have adopted this approach.

“78% of CEOs in South Africa, compared to 71% of CEOs globally, agree that the ability to retain talent with the pressures of inflation/ rising cost of living are top of mind, as are the long-term impacts to organisations from the pandemic and geopolitical tensions.”

Methods of retention

Despite the possibility of a hiring freeze, many employers emphasise the importance of retaining current employees.

After analysing trends among executive directors, financial services firm PwC discovered that employees in South Africa with in-demand skills have an advantage.

“The truth is, employees with specialised skills and training are in demand — and they know it,” said PwC.

It went on to say that hiring companies could no longer rely solely on guaranteed pay as a retention strategy. According to PwC, employees today are seeking higher levels of work-life integration, which is a negotiation process.

Employers should expect workers to exert greater pressure to achieve what they now consider to be minimum standards, according to PwC. Professional development and upskilling opportunities are available, as are competitive pay and other perks.

Offering employees the option to work from home on and off in a hybrid workplace model is one of the most popular retention methods. According to KPMG, this has had a positive impact on hiring and productivity over the last two years.

Although it has shown promise, KPMG predicts that hybrid work will cool off, with 76% of local CEOs expecting people to return to the office within the next three years.