Back to the Future: January 2010

Fast forward to January 15, 2010. What are some of the hiring challenges you’re now facing?

As you put the list together, consider these assumptions:

  1. The trough of the economic downturn was reached in April 2009.
  2. Job losses continued through October 2009, but at a declining rate, with job gains finally turning positive in November 2009, at around 20,000 or so.
  3. The unemployment rate peaked at 9.7% in September 2009 and although still at 8.5% in January 2010, it is forecasted to drop to 7.0% by June 2010.
  4. The number of searches on Google with the words “jobs” (e.g., “jobs nurses Seattle”) peaked at 7.3mm/day in April and has been declining by an average of 10%/month since then, but started inching up again in October 2009.
  5. An article by Lou Adler on ERE in November 2009 suggested that this pickup was due to people who are fully employed but now getting itchy to leave. He contends that the pent-up demand for a new job is finally being seen and that this is a new group of people entering the job market. Note: this will be unexpected for unprepared companies.
  6. Hiring for critical positions will begin in earnest three to four months before a general improvement in the jobless rate is seen. This will be exacerbated by an increase in voluntary turnover.

These assumptions are pretty realistic. The question is, are you ready for this scenario? If you are, here are some of the things you’ve probably been doing over the past six months:

  1. You’ve developed and implemented a sourcing strategy that emphasizes how top talent looks for new career opportunities, rather than how average people look for new jobs. This is a huge shift in thinking that required some understand and significant selling to your executive and entire hiring manager team.
  2. As part of your shift to a top talent hiring strategy, you’ve created a decision matrix based on how these top people compare and select job opportunities and have built this into your sourcing and recruiting process.
  3. You developed a rolling workforce planning system highlighting your hiring needs for all critical positions, including a tracking system to identify potential turnover problems.
  4. You’ve developed a multi-pronged sourcing strategy, including increased reliance on your employee referral program, more Web 2.0 channels, the grouping of similar jobs into talent hubs, and the use of niche boards instead of major boards coupled with an emphasis on search engine marketing and consumer marketing concepts. Part of this is the wholesale elimination of using traditional job descriptions as the basis for advertising purposes and incorporating messaging that ties directly to what top people are looking for.
  5. You’ve put together a succession planning process to tap into some upcoming stars to deal with the anticipated turnover or whenever unexpected promotional opportunities arise.
  6. You developed a means to tap into employee satisfaction to ensure you’re not caught unaware by an upsurge in turnover. As part of this, you created a new retention program to minimize the possibility of any business disruption.
  7. You’ve started training and rebuilding your existing recruiting team including lining up enough contractors and full-time recruiters to handle the hiring increase. You’ve even developed a short list of retained and contingency recruiters to handle some of your real critical positions and given them some insight on possible positions that will need filling.
  8. You’ve set up programs with your hiring managers to fast-track any top performers you identify before reqs have been formally approved. As part of this, and the expected hiring increase, your managers are now trained in using tools like the two-question performance-based interview to assess and recruit top performers.
  9. New analytics program have been installed to track in real time recruiter productivity and effectiveness, sourcing channel effectiveness, candidate quality, quality vs. cost, and hiring manager recruiting performance.
  10. Not only have you now using the LinkedIn and ZoomInfo premium packages, but your recruiters know how to call everyone they find and get at least two to three top referrals on every call. After just a few months, you’ve fully realized that these tools offer connections to the best people on the planet, not just sources of names.
  11. You’ve assessed your technology and have started a major upgrading effort to ensure that you can track quickly prospects, you’ve installed a robust CRM system, you have everyone using the new analytics program, hiring managers are fully versed on using the process, and you can create new talent hubs in days. Bottom line: you’ve used the slowdown to convert your technology from just a data management and reporting tool into a full-fledged productivity improvement system.
  12. You’re now building a huge pre-qualified prospect database with a drip marketing program already in operation. You know this is working since it’s growing in size by 5%-10% per month. Much of this build-up is driven by new employee referrals, Twitter feeds, pushed advertising to appropriate blogs and social networks, and an increased focus on getting prospects for future openings rather than finding candidates for current openings. This is another huge strategic shift in thinking for you and your company.

If you’ve done your job as a recruiting leader, the hiring challenges you’re facing in January 2010 are significant but manageable. In the past six months, you’ve probably done everything listed, and more. Here’s a reasonable recovery checklist to get started, but feel free to email me if you’d like the latest version.

Now back to today. If you want this story to be yours, you need to start this stuff right away. And if you haven’t yet started implementing most of the things listed, there’s not enough time to make it.

Article Continues Below

Consider, while the unemployment rate won’t start declining until late 2010, the demand for the best talent will start increasing three to four months earlier, driven by both business needs coupled with a modest increase in turnover. This means you’ll start feeling the heat by late summer 2009. Anecdotally, we’re already hearing the best third-party recruiters are now – in May — getting more assignments. This is clear evidence that the market for top people is starting to recover a bit right now.

The key to being ready is being more strategic than tactical. The strategic issues involved include a shift to thinking about how the best search for new opportunities, the conversion of technology into a business system, and the idea that building a top prospect database driven will replace posting requisitions as the primary means to fill positions.

If you’re ready for it, January 2010 will be an exciting time.

Lou Adler is the CEO and founder of The Adler Group – a training and search firm helping companies implement Performance-based Hiring℠. Adler is the author of the Amazon top-10 best-seller, Hire With Your Head (John Wiley & Sons, 3rd Edition, 2007). His most recent book has just been published, The Essential Guide for Hiring & Getting Hired (Workbench, 2013). He is also the author of the award-winning Nightingale-Conant audio program, Talent Rules! Using Performance-based Hiring to Build Great Teams (2007).

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5 Comments on “Back to the Future: January 2010

  1. I remember the downturn in 2002. We hired very little but became involved enough to help select the top talent when possible. We went from a “find the talent” org to a “help select and sell the talent”org. This was a needed service and a huge transformation.

  2. Thank you for a very optimistic forecast, Lou. I hope you are right
    This is in sharp contrast to much of what I have recently read:

    ======================================================

    http://www.businesstimes.com.sg/sub/specialfocus/story/0,4574,332535,00.html?

    Special Focus
    Published May 12, 2009

    STATE OF THE US ECONOMY
    Unemployment rate likely to keep rising until 2010
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    (WASHINGTON) President Barack Obama’s chief economics forecaster said on Sunday that the nation’s unemployment rate was likely to keep rising until 2010, even if the economy begins growing later this year.

    Ms Romer: Unemployment could hit 9.5% and GDP has to grow at a rate of about 2.5% before unemployment will fall. It’s reasonable to estimate that GDP’s growth rate in 2010 would be 3%, she says
    Christina Romer, chairwoman of the White House Council of Economic Advisers, said that she expected the economy to begin growing in the fourth quarter of this year. Ben Bernanke, the Federal Reserve chairman, made a similar prediction recently.

    But Ms Romer also said that she expected unemployment to rise even after the economy turns, saying that gross domestic product has to grow at a rate of about 2.5 per cent before unemployment will fall.

    Before that happens, she said, it is ‘unfortunately pretty realistic’ that the unemployment rate could reach 9.5 per cent. It was reasonable to estimate that the GDP’s growth rate in 2010 would be 3 per cent, she said.

    Robert Reich, who served as labour secretary under ex-president Bill Clinton and advised the Obama campaign, said on Sunday that the rate of growth would have to be higher – 4.5 per cent – to reverse rising unemployment.

    ‘I think that when we talk about – or anybody talks about – hitting bottom, what we really have to understand is that the bottom is a kind of an undefined concept here,’ he said on ABC’s This Week.

    According to figures released on Friday, the unemployment rate in April was 8.9 per cent, its highest level in a quarter-century. The so-called underemployment rate, which counts people who are working part time because their hours have been cut and those who have given up looking for jobs, reached 15.8 per cent.

    Still, the administration seized on the report as an early sign that the economy’s free-fall was coming to a halt, because the pace of deterioration had slowed.

    =============

    http://www.bloomberg.com/apps/news?pid=20601103&sid=aaL8T61F4UwE

    Unemployment at 8.9%

    The U.S. unemployment rate surged to 8.9 percent in April, the highest level since 1983, already worse than the government’s estimate. “Economic developments since the forecast was made suggest that unemployment may peak at an even higher rate” on an average basis, the budget documents acknowledged.

    Christina Romer, chairman of the White House Council of Economic Advisers, said in an interview on the Cable Satellite Public Affairs Network, or C-SPAN, yesterday that unemployment may rise to 9.5 percent this year.

    The administration’s forecasts for unemployment are more optimistic than those made by the CBO in its March report, though a budget official said they were in line with Blue Chip forecasts.

    ================

    http://voices.washingtonpost.com/economy-watch/2009/05/bernanke_i_still_see_late_09_t.html?wprss=rss_blog

    HE TICKER
    Bernanke: Let In More Foreign Scientists, Engineers
    UPDATED at 11:58 A.M.:

    Fed Chairman Ben Bernanke went off on a bit of a tangent when asked during a meeting of Congress’s joint economic committee underway right now what else could be done to stimulate the flagging economy.

    “I know it’s not very popular to say, but our immigration laws discriminate pretty heavily against talented scientists and engineers” from other countries, Bernanke said.

    “If you allow more people with high-tech skills to come here,” you get more innovation and more growth, Bernanke said, adding, “I know that’s controversial.”

    Bernanke: Unemployment Won’t Hit 10%

    11:34 A.M.: Bernanke said that he anticipates that U.S. unemployment will peak in early 2010 but not hit 10 percent. It currently stands at 8.5 percent.

    “Currently, we don’t think it will get to 10 percent,” Bernanke said, while testifying before Congress’s joint economic committee, currently underway. “Our current number is somewhere in the 9s.”

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    http://online.wsj.com/article/BT-CO-20090505-722418.html

    MAY 5, 2009, 10:30 P.M. ET
    Fed’s Yellen: See “Basis For Optimism” About Economy
    Article
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    MORE IN BUSINESS »

    BERKELEY, Calif. (Dow Jones)–The end of the recession is in sight, although the recovery could prove long and slow, the San Francisco Federal Reserve Bank’s top official said Tuesday.

    In a speech late Tuesday, Federal Reserve Bank of San Francisco President Janet Yellen said she sees a “basis for optimism” about improvements in the economy, which could come as early as the second half of this year.

    Yellen joined a chorus of other Fed officials, including Chairman Ben Bernanke, who sees signs that the long and painful downturn is starting to end.

    ====================

    http://www.federalreserve.gov/monetarypolicy/fomcminutes20090128ep.htm

    In conjunction with the January 27-28, 2009 FOMC meeting, the members of the Board of Governors and the presidents of the Federal Reserve Banks, all of whom participate in deliberations of the FOMC, provided projections for economic growth, unemployment, and inflation in 2009, 2010, 2011, and over the longer run. Projections were based on information available through the conclusion of the meeting, on each participant’s assumptions regarding a range of factors likely to affect economic outcomes, and on his or her assessment of appropriate monetary policy. “Appropriate monetary policy” is defined as the future policy that, based on current information, is deemed most likely to foster outcomes for economic activity and inflation that best satisfy the participant’s interpretation of the Federal Reserve’s dual objectives of maximum employment and price stability. Longer-run projections represent each participant’s assessment of the rate to which each variable would be expected to converge over time under appropriate monetary policy and in the absence of further shocks.
    FOMC participants viewed the outlook for economic activity and inflation as having weakened significantly since last October, when their last projections were made. As indicated in Table 1 and depicted in Figure 1, participants projected that real GDP would contract this year, that the unemployment rate would increase substantially, and that consumer price inflation would be significantly lower than in recent years. Given the strength of the forces currently weighing on the economy, participants generally expected that the recovery would be unusually gradual and prolonged: All participants anticipated that unemployment would remain substantially above its longer-run sustainable rate at the end of 2011, even absent further economic shocks; a few indicated that more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates of output growth and unemployment and by an appropriate rate of inflation. Participants generally judged that their projections for both economic activity and inflation were subject to a degree of uncertainty exceeding historical norms. Nearly all participants viewed the risks to the growth outlook as skewed to the downside, and all participants saw the risks to the inflation outlook as either balanced or tilted to the downside.

    (Buried in these figures from January is an estimate of the
    2009 2010 2011 unemployment rates:
    8.5 to 8.8 8.0 to 8.3 6.7 to 7.5 -kh)

    Table 1. Economic projections of Federal Reserve Governors and Reserve Bank presidents, January 2009
    Percent
    Variable Central tendency1 Range2
    2009 2010 2011 Longer Run 2009 2010 2011 Longer Run
    Change in real GDP -1.3 to -0.5 2.5 to 3.3 3.8 to 5.0 2.5 to 2.7 -2.5 to 0.2 1.5 to 4.5 2.3 to 5.5 2.4 to 3.0
    October projection -0.2 to 1.1 2.3 to 3.2 2.8 to 3.6 n.a. -1.0 to 1.8 1.5 to 4.5 2.0 to 5.0 n.a.
    Unemployment rate 8.5 to 8.8 8.0 to 8.3 6.7 to 7.5 4.8 to 5.0 8.0 to 9.2 7.0 to 9.2 5.5 to 8.0 4.5 to 5.5
    October projection 7.1 to 7.6 6.5 to 7.3 5.5 to 6.6 n.a. 6.6 to 8.0 5.5 to 8.0 4.9 to 7.3 n.a.
    PCE inflation 0.3 to 1.0 1.0 to 1.5 0.9 to 1.7 1.7 to 2.0 -0.5 to 1.5 0.7 to 1.8 0.2 to 2.1 1.5 to 2.0
    October projection 1.3 to 2.0 1.4 to 1.8 1.4 to 1.7 n.a. 1.0 to 2.2 1.1 to 1.9 0.8 to 1.8 n.a.
    Core PCE inflation3 0.9 to 1.1 0.8 to 1.5 0.7 to 1.5 0.6 to 1.5 0.4 to 1.7 0.0 to 1.8
    October projection 1.5 to 2.0 1.3 to 1.8 1.3 to 1.7 1.3 to 2.1 1.1 to 1.9 0.8 to 1.8

    =====================

  3. Here’s the latest Macroeconomic Forecasts from the experts:

    Looks like most say 9.5-10% unemployment through year end.
    I wonder where all those millions of demoralized folks who are supposed to quit soon will go?

    -kh
    ==========================================================

    http://web.rollins.edu/~wseyfried/forecast.htm

    Macroeconomic Forecasts

    link to Great Recession web page (links to selective news about the current state of the economy)
    Surv. of Prof. Forecasters (Nov) Wells Fargo (Jan) WSJ (Jan) Fed (Nov) CBO (Jan) OMB (Aug)

    Economic growth, 2009Q4
    2.7% 5.6% 4.3%

    economic growth, 2010
    2.4% 2.7% 3% 2.5 to 3.5% 2.8% 2.1%

    unemployment (end of 2010)
    9.8% 10.5% 9.5% 9.3 to 9.7% 10% 9.7%

    peak unemployment 10.2% 10.5% 10.4% >10%

    core inflation, 2010
    1.3% 1.2% 1.9% (overall) 1 to 1.5% 1% 1.4% (overall)

    Recent Forecasts

    CBO (Jan 2010): economic growth (end of year comparisons) = 2.1% in 2010, 2.4% in 2011; unemployment = 10% in fourth quarter 2010, 9.1% in 2011Q4, core PCE inflation = 1% in 2010, 0.9% in 2011

    IMF (January 2010): US economic growth = 2.6% in 2010, 2.4% in 2011

    Quarterly economic survey (USA Today – Jan 2010): economic growth = 2.8 in first half of 2010, 3% in second half; unemployment peaks at 10.2% in first quarter 2010, 9.7% by end of 2010; inflation averages 1.8% in 2010

    Wells Fargo Securities Economic Forecast (latest forecast: Jan 2010): economic growth 5.6% in fourth quarter of 2009, 2.7% in 2010 and 2.5% in 2011; core PCE inflation = 1.2% in 2009, 1.3% in 2010 and 1.6% in 2011; unemployment rate rising to 10.5% in the third quarter of 2010 and remaining there until first quarter of 2011 declining to 9.7% in the fourth quarter of 2011 (slow job creation beginning first quarter 2010)

    Economic forecasting survey, January 2010 (WSJ): economic growth = 4.3% in fourth quarter of 2009 and 3% in 2010; unemployment at 9.5% at end of 2010; inflation = 1.9% in 2010

    Bloomberg (January 2010): economic growth = 4% in fourth quarter, 2.7% in 2010; unemployment rises to 10.2% in first quarter of 2010 before declining to 9.7% at the end of the year; Fed begins to raise rates in fourth quarter 2010

    American Banker’s Association (Jan 2010): economic growth = 3.1% in 2010, core inflation = 1.2%, unemployment close to 10%

    Morgan Stanley (Dec 2009): economic growth = 2.8% in 2010 and 2011; core inflation = 1.4% in 2010 and 1.9% in 2011; Fed increases interest rate in third quarter 2010, reaching 1.5% by end of 2010 and 2% by end of 2011

    Livingston Survey (latest survey – Dec 2009): economic growth = 2.6% for the first half of 2010, 3% for the second half of 2010; unemployment rate = 10.3% in June 2010 and 9.9% in Dec 2010; inflation (CPI) = 2.2% for 2010 and 1.8% for 2011

    Fed Forecast as of Nov 2009: economic growth = 2.5% to 3.5% in 2010 and 3.4 to 4.5% in 2011 (note: these are from 4th quarter to 4th quarter while other forecasts compare yearly averages); unemployment rate = 9.3 to 9.7% in 2010 and 8.2 to 8.6% in 2011 (estimates are for 4th quarter of the respective year); natural rate of unemployment = 5 to 5.2% (range = 4.8 to 6.3%); inflation as measured by core PCE index of 1% to 1.5% in 2010 and 1 to 1.6% in 2011

    NABE consensus forecast: November 2009 (CNBC): unemployment = 9.6% by end of 2010; economic growth in fourth quarter of 2009 = 3%; economic growth for all of 2009 = 3.2% in 2010; federal funds rate raised in late Spring 2010, rising to 1% by end of 2010

    Univ. of Michigan Economic Forecast (executive summary – Nov 2009): economic growth = 2.3% in fourth quarter of 2009, 2.5% in 2010, 2.7% in 2011; core inflation (CPI) = 1.7% in 2010 and 2011; unemployment rate averages 10.1% in 2010 (peaks at 10.4% in early 2010, declines to 9.6% in 2011); total job loss of 7.5 million

    OECD: US Outlook, OECD Economic Outlook (Nov 2009): forecast for US – economic growth = 2.5% for 2010, 2.8% for 2011; unemployment rate averages 9.9% in 2010, 9.1% in 2011; inflation = 1.7% in 2010, 1.3% in 2011

    Survey of Professional Forecasters (latest survey November 2009): economic growth = 2.7% in fourth quarter, 2.4% in 2010, 3.1% in 2011; core inflation (PCE) = 1.4% in 2009, 1.3% in 2010 and 1.5% in 2011 (overall PCE inflation = 1.1% in 2009, 1.7% in 2010, 2.1% in 2011); unemployment rate =10.2% in fourth quarter 2009 and first quarter 2010; average unemployment rate = 10% in 2010, 9.2% in 2011, 8.3% in 2012

    Reuters survey (November 2009): economic growth = 3% in 4th quarter, 2.5% in first quarter 2010; unemployment peaks at 10.5%; core inflation declines to 1.2% in 2010

    Commentaries on Economic Conditions
    Beige Book (Fed)
    Haver Analytics: up-to-date commentary on recently released economic data

    Current Economic Data

    Economy at a Glance (BLS): Orlando Metropolitan Area; Florida
    Economic Calendar (Briefing.com)

    last updated: 01/26/2010

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