HR Development: It’s the Economy, Stupid

When I was asked to moderate a main-stage discussion at ERE’s Fall Expo in September with two economic analysts from Morningstar, I was both excited and a bit worried. To clarify, for those who may not know, Morningstar (not to be confused with Morningstar Farms, the maker of frozen meatless meals) is a leading provider of independent investment research in North America, Europe, Australia, and Asia. It offers investment consulting and retirement planning services and manage nearly $200 billion in assets. Among other things, Morningstar employs a crackerjack team of economists and analysts who research and comment on trends in the global marketplace.

I was (and am) excited to be a part of this particular session because I’m a news junkie, I’m passionate about HR/talent acquisition development, as well as the need for HR professionals (that includes you, recruiters) to understand and use information about our economy to drive business results.

But I was also a bit nervous because — let’s face it — most HR professionals will proclaim (with little if any hesitation): “I’m terrible at math”; “I don’t get numbers”; and that “I’m a ‘people’ person.” Bottom line:  news and trends about the economy are not top of mind for many in our field. So I knew right away that my challenge was going to be getting folks engaged with this topic. But I’m always up for a good challenge.

The trends in our economy affect our business and our roles as talent professionals every day. But what information is the most important? What can we do with it? Why should we care?

Let’s break it down: Each month, the U.S. Department of Labor’s Bureau of Labor Statistics measures labor market activity, working conditions, and price changes in the economy. The monthly jobs report is part of this suite of data and is, as NPR says, “an important weather vane for anyone trying to get a bead on which way the economic winds are blowing.”

Embedded in the monthly BLS data is information such as the number of jobs added in the last month in the U.S., hours worked, unemployment rate, personal income data, and so on. Now there’s no need to dig through pages and pages of raw data because people like our friends at Morningstar do the heavy lifting for us. All you need to do is watch a 5 or 10-minute video about the most salient information.

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HR professionals can use these figures to predict and prepare for organizational changes they may soon encounter. Fluctuations in the number of jobs added each month provide clues to recruiters and others to get ready to either expand or cut back on hiring. Aggregate job growth generally predicts increased company revenues/sales, which leads companies to allocate more funds toward hiring to prepare for a hike in demand. 

More broadly, HR leaders can use monthly employment reports to draw conclusions about two broad concerns: 1) the organization’s future budgeting capacity based on growth, spending, and employment trends, and 2) the attitudes/behavior of the market. After all, these reports are largely driven by consumer expectations, but they greatly affect consumer behaviors as well. When the numbers are poor, businesses sometimes react immediately by hoarding cash, freezing hiring, and cutting spending. This in turn, affects consumer spending.

These reports are general indicators and show macros trends; they can’t predict specific scenarios or outcomes that organizations will face. But they still provide invaluable economic insights and should be seen as a key tool for decision making. Plus, keeping tabs on such data helps drive the business acumen of HR professionals and, in turn, their credibility to business leaders within the organization. And, these reports and analysts’ assessments of their meaning (like Morningstar’s) are free. So if you haven’t been using this information as a data point and resource, start now by looking at the most recent Morningstar commentary or the BLS Monthly Job Report itself.

Linda Brenner is co-founder and managing partner of Talent Growth Advisors (TGA), a national management consultancy based in Atlanta, Georgia. Prior to founding TGA, she led talent acquisition and talent management teams for companies such as Gap, Pepsi/Pizza Hut, and The Home Depot.

She started TGA in 2004 with the vision of helping business leaders improve talent results leveraging experience across operations, finance and talent management.

She and the TGA team have run finance and talent functions at Fortune 500 companies and have partnered with clients such as Coca-Cola, Raytheon, L’Oréal, Ogilvy, and Expedia. She works directly with companies to align talent strategies that map to the bottom line.

TGA helps clients with talent planning, talent acquisition and talent management current state assessment, process design and implementation services. She is passionate about defining what great looks like in measurable terms and taking concrete, measurable, and staged steps to get there.

TGA recently released the results of a first-of-its-kind Intellectual Capital Index that revealed that talent is the number one driver of market value in the Dow Jones Industrial Average.

This finding has talent strategy and management implications for companies of all sizes.

She co-wrote, along with TGA Co-Founder Tom McGuire, Talent Valuation: Accelerate Market Capitalization through Your Most Important Asset, which details the firm’s innovative approach to talent strategy. She’s also the author of How to Manage Self-Directed Employee Development.


5 Comments on “HR Development: It’s the Economy, Stupid

  1. Linda, Fantastic article! It is so easy for those of us who like to “work with people” to avoid the numbers. But as you state, that is a grave mistake because those numbers have an unavoidable affect on the people we serve- both employers and candidates. Being aware of the trends and movements within the world of Labor not only prepares us for what our own jobs will be looking like in the upcoming months, but gives us more arsenal when we are approached by companies looking to use our services to hire. Many are afraid to hire these days because of numbers they here randomly. However, if we can provide current and accurate information about what the world of labor REALLy looks like we can encourage them to take calculated and educated risks and hire, hire, hire when appropriate.

    As the owner of an executive career management and recruiting firm I will definitely be taking your advice and looking into what MorningStar has to offer.
    Ken Schmitt

  2. As a CPA and headhunter, numbers don’t rattle me. In fact, I’m pretty good with them and in my opinion the BLS has been politicized to the point of unreliability. Nobody in their right mind is basing investment decisions on their data. Anyone in the executive recruiting field knows exactly how well new job production is doing and, right now, it is no better than 2008. It is not going to get better until all businesses, large or small, feel confident enough to release cash into PP&E investment and no responsible management team is going to do that until the political atmosphere changes. Right now, business is a dirty word in Washington and until that changes, business will keep it’s power dry. A much better indicator of employment markets is how much cash is being held by corporations. This is where the rubber meets the road. In the real world, when cash stockpiles begin to shrink employment will follow immediately thereafter. Morningstar knows this, as does anyone else in the real world. Unfortunately, no one in Washington lives in the real world.

  3. Is it possible that the free information you so clearly illustrate as strategically meaningful is suspect primarily because it is free?

    Said another way, “The HR tradition may be so dependent on outside consultants who earn their keep by chasing down such important information, packaging it into a colorful presentation (with reference to the sources of information you mention), and invoicing as appropriate for the people hours required for such an arduous effort.” Clearly a Win –Win by traditional standards.

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