News »Browse Articles »
Managing Recruiting During an Economic Downturn: The Top 10 Action Steps to Take
+1
Managing Recruiting During an Economic Downturn: The Top 10 Action Steps to Take
By Dr. John Sullivan, Oct 20, 2008, 6:00 am ET
http://www.ere.net/2008/10/20/managing-recruiting-during-an-economic-downturn-the-top-10-action-steps-to-take/#more-4436
Editor`s note: Dr. John Sullivan will present "Strategic Recruiting During an Economic Downturn" at ERE Expo at 10:30 am on Thursday, October 30. This article is based on his upcoming presentation.
A key question in every recruiting manager`s mind these days is "how will recruiting and talent management be impacted by the economic downturn?"
In fact, it will also be a major topic at next week`s ERE Expo in Hollywood Beach, Florida. If you can`t wait till then, this article will highlight some issues to anticipate and action steps you can take that will increase the probability of your survival and perhaps even prosperity during these tough economic times.
If you are a regular reader of my articles, you know that I warned of the upcoming downturn as early as August 2007. However, if you missed that "heads up" and have been in recruiting for more than a few years, you already realize that there are periodic economic downturns. These downturns quite often negatively impact the recruiting function through hiring freezes and dramatic budget cuts in recruiting as organizations seek to "contain costs."
However, this economic downturn is different. Traditionally, when the economic cycle peaks and starts its cycle downwards, everything related to business and recruiting declines; events are consistent and relatively predictable.
Instead of recruiting heading straight down, it will be volatile. The demand for talent management services will go radically down, then back up again in short spurts, and then down again. This volatility will require more planning than ever before from the recruiting function.
Instead of planning for one consistent, long, downward spiral with associated layoffs and hiring freezes, organizations will need to prepare for spurts of growth and continuous hiring in some areas while layoffs occur in others. Some might call these actions "right-sizing" the workforce, but that would imply that organizations are much better at forecasting and workforce planning than most actually are.
There are several reasons why hiring will continue:
• The volatility in credit markets
• Globalization
• The need by organizations to continually innovate
The first and perhaps most important cause of volatility will be the chaotic availability of credit and capital. The continued uncertainty related to financial markets will cause oscillations or "spurts" during which capital will be easier and then harder to get. This volatility will cause firms to grow and to hire in spurts.
A second cause of volatility is globalization. In a truly global business world, there will almost always be some degree of economic growth in emerging economies scattered around the world. Because many major US companies now book a majority of their revenues abroad, pressure to keep corporate functions fully staffed will continue despite possible layoffs in production and client service groups.
A third reason volatility will plague the recruiting function is relentless consumer demand for new innovative products. Despite the downturn, consumer demand remains high. When negative news erupts, those in Western societies go shopping!
Because the rate of innovation among competitive firms is unlikely to slow down, firms will still need to rapidly innovate in their products and business processes.
The demand for relentless innovation will continuously alter the skills needed by a firm at any particular point in time. Firms will need to learn how to continuously hire workers with new skills, while simultaneously releasing workers with obsolete skills with surgical precision. Truly strategic firms see economic downturns as an opportunity, in part because it`s now faster and cheaper to "buy" talent rather than to "develop" existing talent.
The Top 10 Advantages of Recruiting During Tough Times
It`s quite common during periods of economic turmoil for CFOs to assume and declare that robust recruiting functions will not be necessary due to a surplus of talent becoming available as more and more firms engage in layoffs, consolidations, and the ceasing of operations.
Well-known and respected firms like Deloitte have already partially downsized recruiting using this failed logic. Despite this negative perspective, there are some positive things that routinely happen during bad economic times:
1. Less competition from other firms. If your firm isn`t well known or doesn`t have a strong employment brand, you will face less head-to-head competition for talent during this time. As other firms reduce recruiting budgets, the recruiting effectiveness of your competitors will decrease dramatically also, giving your firm a competitive advantage. Candidates will be easier to sell because they will have fewer options and counter offers to choose from.
2. More high quality candidates will be available. Not only are more candidates available during times of high unemployment, but higher-quality candidates are also available. Not only will laid off individuals be on the market but you should also target individuals that "survived" the layoffs and mergers because they will have reduced company loyalty as a result of all of the trauma. Taken together this means that innovators and top-performing individuals that could never be "drawn away" from their current jobs are now available and interested in lesser known firms. This surplus along with little competition makes "counter cycle" recruiting a great strategy for "loading up" with great talent, especially in the college market.
3. Weakened employment brands. As competitor firms make the mistake of conducting large-scale "public" layoffs, their employment brand and external image will be dramatically weakened. Thus providing increased opportunities for firms that have maintained or intelligently strengthened their employment brand during this period.
4. Turnover and retirement rates will decrease. As the downturn increases your employees desire for job security, fewer will even consider leaving their current jobs for firms where their lack of tenure will mean little security. This means that it`ll be easier to retain your top talent (and recruiting won`t have to work so hard to find replacements). Conversely, it will be more difficult to draw away top talent working at other firms. The downturn in the stock market and the dramatic reduction in the value of their 401(k)`s will also mean that fewer of your employees will opt to retire as soon as they are eligible, easing any baby boom retirement concerns.
5. Higher quality recruiters will be available. Tough times means that some excellent recruiters will be available for those firms planning for the long-term.
6. The dollar is stronger. The newly strengthened U.S. dollar makes recruiting international candidates much easier.
7. New recruiting technology is available. The availability of social networking and other web-based technologies now makes effective recruiting possible with little or no budget.
8. Capability to explode out of the box. If you successfully defend your recruiting budget, your firm will have the capability of "exploding out of the box" immediately after the downturn is over. This capability will put you far ahead of other firms that have decimated their recruiting capabilities during this time. In order to have that advantage, you will need to calculate and then report the negative impacts of "disassembling the recruiting function" to your executives. That includes costs related to the delays in being able to resume hiring, the increased risk of losing top applicants, the lower quality of hires and the increased startup costs related to reassembling the recruiting function.
9. Tight times make you stronger. A tight budget forces you to focus more on metrics and a strong business case. Both of these should allow you to better identify the most effective recruiting tools and approaches. By eliminating the deadwood, streamlining processes and focusing on the best approaches, you will eventually strengthen the function over-all.
10. Workforce planning will be encouraged. While it`s often a "fight" to convince executives to invest in workforce planning, economic volatility and the pain of laying off talent they fought so hard to acquire almost always convinces senior managers of the need for a strong workforce planning function. Use this "lull" to develop an effective forecasting capability and a "flexible" recruiting strategy that "shifts" during the different economic cycles. Both can help you prepare your firm for the next imminent up or down cycle.
Even if you successfully defend your recruiting budget during these volatile times, it`s critical that you focus your resources on talent-management approaches that are both low-cost and effective:
Using Other People`s Resources
• Employee referrals. The key practice for recruiting during economic volatility should be "recruit using other people`s money." As a result, employee referrals need to be your number-one focus, because they shift a great deal of the recruiting "work" away from recruiters and on to your firm`s employees. Referrals produce high volume and high quality but during tight budget times, the cost of referral bonuses needs to be reduced. Shift to a drawing approach; instead of giving individual cash bonuses, employees get an opportunity to win trips, vacation time, lunch with the CEO, or other non-cash yet compelling prizes. Some firms like Edward Jones have produced over 50% of their hires from referrals without offering any cash incentives; granted, they have a great brand. You can also make customers, employees` families, suppliers, and consultants who work with your firm eligible for the referral program.
Source:
http://www.ere.net/2008/10/20/managing-recruiting-during-an-economic-downturn-th
http://www.ere.net/2008/10/20/managing-recruiting-during-an-economic-downturn-the-top-10-action-steps-to-take/#more-4436
Editor`s note: Dr. John Sullivan will present "Strategic Recruiting During an Economic Downturn" at ERE Expo at 10:30 am on Thursday, October 30. This article is based on his upcoming presentation.
A key question in every recruiting manager`s mind these days is "how will recruiting and talent management be impacted by the economic downturn?"
In fact, it will also be a major topic at next week`s ERE Expo in Hollywood Beach, Florida. If you can`t wait till then, this article will highlight some issues to anticipate and action steps you can take that will increase the probability of your survival and perhaps even prosperity during these tough economic times.
If you are a regular reader of my articles, you know that I warned of the upcoming downturn as early as August 2007. However, if you missed that "heads up" and have been in recruiting for more than a few years, you already realize that there are periodic economic downturns. These downturns quite often negatively impact the recruiting function through hiring freezes and dramatic budget cuts in recruiting as organizations seek to "contain costs."
However, this economic downturn is different. Traditionally, when the economic cycle peaks and starts its cycle downwards, everything related to business and recruiting declines; events are consistent and relatively predictable.
Instead of recruiting heading straight down, it will be volatile. The demand for talent management services will go radically down, then back up again in short spurts, and then down again. This volatility will require more planning than ever before from the recruiting function.
Instead of planning for one consistent, long, downward spiral with associated layoffs and hiring freezes, organizations will need to prepare for spurts of growth and continuous hiring in some areas while layoffs occur in others. Some might call these actions "right-sizing" the workforce, but that would imply that organizations are much better at forecasting and workforce planning than most actually are.
There are several reasons why hiring will continue:
• The volatility in credit markets
• Globalization
• The need by organizations to continually innovate
The first and perhaps most important cause of volatility will be the chaotic availability of credit and capital. The continued uncertainty related to financial markets will cause oscillations or "spurts" during which capital will be easier and then harder to get. This volatility will cause firms to grow and to hire in spurts.
A second cause of volatility is globalization. In a truly global business world, there will almost always be some degree of economic growth in emerging economies scattered around the world. Because many major US companies now book a majority of their revenues abroad, pressure to keep corporate functions fully staffed will continue despite possible layoffs in production and client service groups.
A third reason volatility will plague the recruiting function is relentless consumer demand for new innovative products. Despite the downturn, consumer demand remains high. When negative news erupts, those in Western societies go shopping!
Because the rate of innovation among competitive firms is unlikely to slow down, firms will still need to rapidly innovate in their products and business processes.
The demand for relentless innovation will continuously alter the skills needed by a firm at any particular point in time. Firms will need to learn how to continuously hire workers with new skills, while simultaneously releasing workers with obsolete skills with surgical precision. Truly strategic firms see economic downturns as an opportunity, in part because it`s now faster and cheaper to "buy" talent rather than to "develop" existing talent.
The Top 10 Advantages of Recruiting During Tough Times
It`s quite common during periods of economic turmoil for CFOs to assume and declare that robust recruiting functions will not be necessary due to a surplus of talent becoming available as more and more firms engage in layoffs, consolidations, and the ceasing of operations.
Well-known and respected firms like Deloitte have already partially downsized recruiting using this failed logic. Despite this negative perspective, there are some positive things that routinely happen during bad economic times:
1. Less competition from other firms. If your firm isn`t well known or doesn`t have a strong employment brand, you will face less head-to-head competition for talent during this time. As other firms reduce recruiting budgets, the recruiting effectiveness of your competitors will decrease dramatically also, giving your firm a competitive advantage. Candidates will be easier to sell because they will have fewer options and counter offers to choose from.
2. More high quality candidates will be available. Not only are more candidates available during times of high unemployment, but higher-quality candidates are also available. Not only will laid off individuals be on the market but you should also target individuals that "survived" the layoffs and mergers because they will have reduced company loyalty as a result of all of the trauma. Taken together this means that innovators and top-performing individuals that could never be "drawn away" from their current jobs are now available and interested in lesser known firms. This surplus along with little competition makes "counter cycle" recruiting a great strategy for "loading up" with great talent, especially in the college market.
3. Weakened employment brands. As competitor firms make the mistake of conducting large-scale "public" layoffs, their employment brand and external image will be dramatically weakened. Thus providing increased opportunities for firms that have maintained or intelligently strengthened their employment brand during this period.
4. Turnover and retirement rates will decrease. As the downturn increases your employees desire for job security, fewer will even consider leaving their current jobs for firms where their lack of tenure will mean little security. This means that it`ll be easier to retain your top talent (and recruiting won`t have to work so hard to find replacements). Conversely, it will be more difficult to draw away top talent working at other firms. The downturn in the stock market and the dramatic reduction in the value of their 401(k)`s will also mean that fewer of your employees will opt to retire as soon as they are eligible, easing any baby boom retirement concerns.
5. Higher quality recruiters will be available. Tough times means that some excellent recruiters will be available for those firms planning for the long-term.
6. The dollar is stronger. The newly strengthened U.S. dollar makes recruiting international candidates much easier.
7. New recruiting technology is available. The availability of social networking and other web-based technologies now makes effective recruiting possible with little or no budget.
8. Capability to explode out of the box. If you successfully defend your recruiting budget, your firm will have the capability of "exploding out of the box" immediately after the downturn is over. This capability will put you far ahead of other firms that have decimated their recruiting capabilities during this time. In order to have that advantage, you will need to calculate and then report the negative impacts of "disassembling the recruiting function" to your executives. That includes costs related to the delays in being able to resume hiring, the increased risk of losing top applicants, the lower quality of hires and the increased startup costs related to reassembling the recruiting function.
9. Tight times make you stronger. A tight budget forces you to focus more on metrics and a strong business case. Both of these should allow you to better identify the most effective recruiting tools and approaches. By eliminating the deadwood, streamlining processes and focusing on the best approaches, you will eventually strengthen the function over-all.
10. Workforce planning will be encouraged. While it`s often a "fight" to convince executives to invest in workforce planning, economic volatility and the pain of laying off talent they fought so hard to acquire almost always convinces senior managers of the need for a strong workforce planning function. Use this "lull" to develop an effective forecasting capability and a "flexible" recruiting strategy that "shifts" during the different economic cycles. Both can help you prepare your firm for the next imminent up or down cycle.
Even if you successfully defend your recruiting budget during these volatile times, it`s critical that you focus your resources on talent-management approaches that are both low-cost and effective:
Using Other People`s Resources
• Employee referrals. The key practice for recruiting during economic volatility should be "recruit using other people`s money." As a result, employee referrals need to be your number-one focus, because they shift a great deal of the recruiting "work" away from recruiters and on to your firm`s employees. Referrals produce high volume and high quality but during tight budget times, the cost of referral bonuses needs to be reduced. Shift to a drawing approach; instead of giving individual cash bonuses, employees get an opportunity to win trips, vacation time, lunch with the CEO, or other non-cash yet compelling prizes. Some firms like Edward Jones have produced over 50% of their hires from referrals without offering any cash incentives; granted, they have a great brand. You can also make customers, employees` families, suppliers, and consultants who work with your firm eligible for the referral program.
Source:
http://www.ere.net/2008/10/20/managing-recruiting-during-an-economic-downturn-th
