Hiring is in the news. Every day articles cover the current state of employment and unemployment along with analysis and predictions of future labor market trends. Curiously, the data and prognostications are not consistent among various publications and journalists. Here are some examples. BusinessWeek Online reported:
Some 25% of the executives on The Business Roundtable, an association of top CEOs who lead a combined workforce of more than 10 million, say they expect to bring people on in the first six months of 2004. (Another 25% said they still expect more bloodletting, while the remaining half said they expect no change in staffing levels.) Compare that with the beginning of last year, when a terrifying 60% of corporate big-wigs warned they would eliminate jobs in 2003 ó and then followed through on their predictions.
According to the Hudson Employment Index:
Data from the Hudson Employment Index, a monthly measure of employee attitudes on critical work issues, also reveals 31% of respondents predict their companies will be hiring more people, while only 16% expect layoffs. The gap between the two widened in January, rising to 15% from 12% the previous month.
Yet Reuters reported:
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Indeed, even companies with quarterly profits soaring are shy about adding workers ó if they’re not laying people off. ‘We listened to over a hundred quarterly earnings conference calls and we have not heard from anybody who says they are picking up the pace of hiring,’ said Richard Yamarone, director of economic research at Argus Research. ‘Not one.’
Strategy from Trends Which prediction is correct? What data is accurate? What will the labor market look like by the end of 2004? The discrepancy in the forecasting of trends in hiring is frustrating. Without clear and consistent information, it may seem counterproductive to spend precious time deciphering all the disparate data cited by the journalists, economists and analysts. So why is it important to pay attention to employment indices, hiring forecasts and other employment trend indicators? Company business plans require skilled people for their execution. The ability to attract and retain a team of the right talent is a precondition of fulfilling any business plan. Company management relies on knowledge of factors affecting the ability to carry out a business plan, including the supply of talent. As a professional in a corporate staffing department, you are an expert in your company on the labor market. Executive management expects to turn to the staffing department for information on labor trends, to adjust business strategy accordingly. Supply and Demand A corporate staffing director needs to be able to answer the question “Can we get enough people, possessing the right skills, to accomplish our goals?” To answer this, you must know two things:
- Demand, or the number of people possessing the required skills needed to fulfill business plans
- Supply, or the number of people possessing these skills available in the labor market
The demand side of the equation ó the number of people needed to fulfill business plans ó may be calculated using proper workforce planning. Knowledge of labor supply, including available sources and market rates, is the second puzzle piece in aligning demand and supply. Select labor market indicators are aids to gauge trends in labor supply. Some labor market indicators are qualitative, such as the hiring outlook survey reported above by BusinessWeek Online. Others, such as help-wanted indices, are quantitative. The Bureau of Labor Statistics is a valuable resource for labor market data. It supplies volumes of information on unemployment rates, population demographics, wages and other key pieces of intelligence. Think Globally, Work Locally The availability of specific types of workers within your region can significantly impact your company’s business plans. For immediate, actionable knowledge, pay particular attention to data that reflects your region or industry, or data that is specific to the skills-sets or functions you require. Nonetheless, as you look to relevant regional labor trend indicators, stay informed on national and global trends. To some extent, all companies now function in a global business market. HR professionals must prepare to be called upon for information on trends in the labor market and to develop long-term forecasts. Different labor market indicators may give conflicting guidance. Find indicators that are most relevant to your region, industry or hiring activity. If indicators still conflict, formulate alternative scenarios and watch for signs that validate one scenario over another. Be conversant with macro-economic trends and analysis of employment issues. Hiring outlooks may not yet be a common topic on quarterly earnings calls, but undoubtedly will be, as workforce demographics and the supply and demand of labor are increasingly central to corporate results.