Real Upside From an Inglorious Downturn: 2009, 2010, and Beyond

Spring 2010 conference-logoOne of the things I hear often, in many places I go, is that people tend to describe the downturn and the potential of the upturn in extreme terms. The downturn has been “all bad” and there’s “nothing good that’s come of it.” Similarly, when others talk about the upturn and 2010 (and beyond), I hear a lot unbridled enthusiasm and optimism.

To me, the truth lies somewhere in between.

Let’s face it: 2009 was certainly not a good year for business and talent acquisition, and we’re all glad it’s over. Conversely, we’re seeing signs of a rebound and there’s little doubt that 2010 will be better than 2009. But will we have a huge rebound in 2010? Probably not. Nonetheless, through all this, there have been many positive things to come from talent acquisition, and there’s every reason to hold real hope for the future.

But first, let’s look at 2009. There’s no question the downturn was difficult and a “game changer” for recruiters. Not only are there many fewer recruiters than before, but those who left likely won’t be returning. The reason for this is we won’t need as many as before. Why? Among many other things, because HR generalists have become much more sophisticated about recruiting.

You heard me right. I’ll say it again: HR generalists have become much more sophisticated about recruiting.

“But wait, Jeremy,” you say, “in the past, haven’t you talked about how HR generalists were slightly inept at recruiting?”

I have, but alas, things have changed … and I am more wrong about that now than ever. Since then, generalists have been forced to pick up the slack. They’ve learned to be better project managers and are more open to hiring additional resources, such as outsourced providers, search firms, etc. And because they’re closer to the business than their former recruiter brethren/sistren, as the economy continues to improve, companies won’t need as many recruiting specialists (and those recruiting jobs that do return won’t pay as much).

I have spent some time talking to some key recruiting leaders to get their perspective on these phenomena. Whether or not these developments are good for recruiting is debatable. However, what is clear is that the following things recruiters and recruiting leaders have had to do in 2009 to survive, in fact, will help them prosper as the recovery continues:

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  • Recruiters Are Using More Skills and Building the Skills They Have. According to Ginny Eagle, former director, talent acquisition, T-Mobile USA, “As requisition volumes shrank, I downsized accordingly. This caused us to ask recruiters to expand to other functional areas and stretch themselves a bit. We also took advantage of the lull to build on our foundation. Essentially, we focused on the four pillars of a corporate recruiting function: process & policy; organizational structure and alignment to the business; technology; and metrics. We used this time to strengthen each of the four foundational pieces.” Brad Warga, vice president, talent and employee engagement, Harrah’s Entertainment added, “We made some tough decisions in order to control our destiny in 2009. Despite the initial pain of downsizing, we’ve witnessed more innovation this year than any year in my tenure with the company. This economy has truly made us better and we hope to preserve the controls we put in place as we return to growth.”
  • Greater Adoption of Talent Acquisition Functions in Europe. Companies and divisions with operations in Europe have seen a greater adoption of the talent acquisition and recruiting functions. For instance, in 2009, Coc- Cola Enterprises streamlined its processes and used technology tools globally to achieve cost savings. In addition, CCE implemented a European Talent Acquisition function, which improved service to hiring managers and reduced costs (in the past, it primarily used agencies to recruit teams).
  • Upgrading of Talent. In 2009, companies were also able to take advantage of the downturn to clean their “talent houses” by terminating under-performing employees. This enabled them to clear space to upgrade talent and make some strategic hiring decisions. According to some corporate leaders, the biggest change in 2009 related to the business downturn was the opportunity to speed up performance management and upgrade talent. Some organizations incentivized executives to see the opportunity to go after talent from the other industries (especially those hit hard by the downturn, such as automotive and financial services) and make some strategic hiring decisions. These organizations continue to capitalize on the employer market by using their performance management process to free up space for upgraded talent.
  • Increase Brand/”Talent” Market Share. Warga continues, “We knew the importance of continuity with our key business schools, and while many companies scaled back significantly, we decided to take market share. Through innovative low-cost efforts we have improved our presence on campus and continue to hire students into our leadership development pipeline with the confidence that we will absorb them into our business. Maintaining this continuity took some convincing on the part of executive recruiting.” This strategy will pay off in droves when the economy rebounds. Campuses and students remember companies that were their fair weather friends, and those who stayed through the downturn will benefit.
  • Focus on Talent Acquisition/Employee Morale. According to T-Mobile’s Ginny Eagle, “We had to determine a different way to recognize and motivate people. Budgets were cut and we weren’t able to do the things that have always been available. We took a very personal approach to help the team feel a sense of community. Recruiters are very social and this is important to them. I spent a lot of time walking the floor and chatting with people.”

Finally, a key point that Ginny Eagle made: “In my opinion, the single most consistent reason for the demise of a corporate recruiting function (in 2009) is that the recruiting leader did not create an optimal environment for recruiters to be successful. No solution is better that a great in-house recruiter. The caveat is that, as recruiting leaders, we must be able to identify the great recruiters, train them effectively, and hold them accountable. This is what a great recruiter wants!”

So what about 2010? We know there won’t be a big hiring bump but rather small incremental jobs growth. As a result, there are many things that can be done during this time to prepare for the upturn:

  • Streamlining Processes. 2010 can be a year in which companies can continue to become more efficient, streamline their processes, and get their “houses in order.” For instance, in 2009, many organizations were so sensitive to adding any new costs that they created systems of “over-approving” offers and hires. This not only seriously impacted the cost of hiring (ironically) but created inefficient systems. In 2010, these processes need to be streamlined. More accountability needs to be put in the hands of hiring managers and, as a result, the process becomes more effective, is less costly, uses fewer talent acquisition resources, and makes greater use of technology. Thus whether it’s giving tools to hiring managers to help their efficiency, improving the assessment process, or setting up the interview process so that when key talent is needed, the right person can be hired, much can be improved in this area.
  • Innovation. According to Harrah’s Warga, “Despite having a smaller team, we’ve managed to focus on innovation alongside the day-to-day hiring. We’ve had to find cheaper and more efficient ways to recruit. We took the money used for advertising and used it in a couple of different areas: external awards in order to increase our brand awareness, creation of social networks (Facebook, YouTube, LinkedIn, etc), and integrated our career site with our social networks through interactive blogs and channels.”
  • Upgrading Skills of HR Generalists. Though necessity was the mother of invention with this last year, the smart companies will continue to upgrade the recruiting and project management skills of their HR generalists. This entails having HR professionals continuing to improve their project management skills (how to effectively use outside resources, such as external contractors, outsource providers, third party search firms, etc) and/or actually handling some recruitment execution on their own.
  • Using Recruitment Process Outsourcing more effectively. In the past, I haven’t been a big fan of full outsourcing because I always felt that developing an internal talent acquisition capability was key to an organization’s success. However, I now see a strong benefit to using RPO when there is a need, especially with respect to a geographic or specific expertise requirement. A talent acquisition function needs to be really good at sourcing and finding the core key job areas within their company (this is different for every organization — you need to find out what the top four or five key job areas are for your organization that are most core!) Outside of that, the savvy recruiting professional can likely add more value to his/her company by project managing effectively vs. doing everything themselves. In addition, many RPO companies are unbundling their services in unique ways. I’ve seen these companies take on just the scheduling of candidates, or the web sourcing of candidates, etc. Spend some time and learn more about this.

There are many other ways 2010 can be used to help your talent acquisition team become more efficient and better prepared for the upturn. In fact, I would love to meet you in person and spend more time talking about these issues. Please join me at the upcoming 10th Annual ERE Expo Spring 2010 in San Diego, California. I will be hosting and moderating an exciting ERE Expo General Session panel discussion entitled “Beyond The Downturn: A Panel of Survivors — Surviving the Year & Planning for the Decade,” March 16, 2010, 10:15-11:15 a.m. My panel will include Ginny Eagle, former director, talent acquisition for T-Mobile USA; Brad Warga, vice president of talent and employee engagement for Harrah’s Entertainment, as well Jason Farr, vice president, global talent acquisition, Coca-Cola Enterprises.

During our session we’ll have a direct, hard-hitting, transparent, and very interactive conversation about this topic. Not only will we be looking to get feedback from the audience, but if you have any comments or questions that you would like us to discuss during our panel discussion—feel free to shoot me an email or leave a comment here. Our goal is to be very open and talk about anything. We’ve all gone through some real challenges in 2009 and 2010 won’t solve those problems. But there’s great work to be done and I look forward to doing it with you and seeing you there.

Jeremy is managing principal of Riviera Advisors, Inc. (www.RivieraAdvisors.com), based in Long Beach, California, a leading human resources consulting firm focused on helping companies improve their internal recruiting processes and capabilities. In addition to his more than 15 years of consulting with corporate staffing teams all over the globe, he has more than 20 years experience leading the global staffing function for companies such as Universal Studios, Idealab, and Amazon.com. He is a leading speaker to organizations on the value of the staffing function, including chairing the ERE Expos in 2006-2007. He is a professional member of the prestigious National Speakers Association and the Institute of Management Consultants; and has served on the national staffing management special expertise panel and the workforce planning standards committee of the Society for Human Resource Management. He is the author of the book “RecruitCONSULT! Leadership: The Corporate Talent Acquisition Leader’s Field Book” (STARoundtable Press, 2011).

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7 Comments on “Real Upside From an Inglorious Downturn: 2009, 2010, and Beyond

  1. One of the trends I’ve seen in smaller businesses that downsized their recruiting department in 2009 is that after they realized they’d shot themselves in the foot, instead of looking for more recruiters they have been bringing on higher-quality HR generalists, and lower-level administrative personnel to take care of much of the day-to-day recruiting tasks.

    What emerges is a new system where the HR Generalist manages a small team of semi-recruiters who handle the initial and administrative parts of the process and then then generalist and hiring managers take over when the interactions with the candidates get truly personal. For many small businesses this is proving to be more economical than a dedicated in-house recruiter with a recruiter’s salary, because in the event that hiring slows drastically, the administrative personnel can be re-directed to other tasks fairly easily, and in the event of further downsizing the cost of replacement is lower than a traditional recruiter.

    It will be interesting to watch how this evolves over 2010.

  2. Another explanation regarding why HR Generalists might be perceived to have become more sophisticated in regards to recruiting is that in some organizations, mine included, dedicated Recruiters were retasked or double-hatted into being HR Generalists.

    Great, dedicated in-house recruiters are absolutely still invaluable. The challenge for many organizations will be when hiring does pick back up again, how quickly can they rebuild their recruiting organizations either by converting the recruiters-turned-generalists back to recruiters, or by hiring new ones. Those who react the most efficiently and effectively will be in the best position going forward, and for some companies and some industries, that could indeed start this year.

  3. While the article does a great job of stating the obvious, I couldn’t disagree more with this hoi polloi. The section on “Upgrading Skills of HR Generalists” is an insult to anyone currently holding that position (which I have held). In the first place, since when has an HR Generalist not had to effectively manage projects or deal with outside providers, etc? Are we talking HR interns here? Most any Generalists are going to be adroit at these elementary tasks that Jeremy has listed.

    Secondly, even with the economic downturn, progressive organizations recognize that 2009 was a strategic time to hire (as stated in this article), so guess who leads that strategic conversation, that’s right, a strategic in-house or contract recruiter or recruiting manager! I have been in the recruiting business for over 20 years and I can tell you as a point of fact, all the good recruiters are still working. In addition, I haven’t met an HR Generalist yet that was as effective as a dedicated recruiter will always be. Unless the requisitions that Jeremy refers to as “handling recruitment execution on their own” means low level administrative/clerical type positions.

    There is NO WAY HR Generalists of the world can or will ever fill the gap of talent acquisition requirements, that demands the skills of an effective recruiter. If for no other reason then the simple fact that effective recruiting is a very time intensive process. The HR Generalist that gets only one ER call can forget about filling that Senior Web Developer requisition within the next few weeks as requested by a Hiring Manager, unless they work from 6am to 10pm, Monday – Sunday.

    As Jeremy accurately states, “no solution is better that an in house recruiter”. Since this is a Recruiting Exchange, can we read articles that support us as recruiters in these challenging times but sharpening our sourcing, relationship development and emerging technology implementation skills? Instead of us having to endure childish self aggrandizing fodder about spending more corporate resources for “more effectively outsourcing recruitment processing” Shameless…

  4. Thank you, Jeremy. I liked many points in your article, and want to “riff” off one:

    IMHO, recruiters should be paid $80k-$100k+ yr.
    Why is this? Almost anything that recruiters do should be worth this amount of money, and anything that isn’t worth this amount of money should be eliminated, automated, or outsourced *whenever possible.

    Here are a couple of examples:
    1) Scheduling/Coordinating interviews: Virtual Assistants doing this routinely cost less than $2.00/hr. They could also make sure that every applicant receives feedback in a professional way, and they could probably do a lot of job posting too, if you think that’s beneficial.

    2) Internet/Telephone Sourcing: Good sourcers which are useful if you don’t have a “Purple Squirrel Search,” can cost $10-$11/hr retail and be found on the web and elsewhere. (No one who says to me that the $10-$11 people can’t do one of these has yet given me examples of what kind of search that they can do that these folks can’t do, but I do concede there may are some….) As one of our respected commentators said: “‘Good enough’ sourcing is getting better and better.”

    So what’s left to do that’s worth the decent money which can’t easily/affordably be eliminated, automated, or outsourced?

    Here are examples:

    1) Persuading candidates and managers: This includes both front-end candidate development and back-end closing. If you need it done, it’s worth whatever you pay.

    2) Creating, implementing, supervising, and improving hiring processes.

    3) Project-managing the virtual resources.

    Folks, what’re your thoughts? Any other low-cost things that you can think of which can/should be eliminated/automated/outsourced or high-cost things that can’t/shouldn’t be? Do you have any examples of “Purple Squirrel Searches”?

    Cheers,

    Keith
    keithsrj@sbcglobal.net

    *Sometimes it’s not possible or desirable. -kh

  5. Thank you everyone who made comments. Even those of you who may feel that my observations were some that you did not agree with, I appreciate your comments and your viewpoints. The value of the ERE community and our upcoming panel at ERE Expo Spring 2010 is the opportunity to have a great dialogue even when we may disagree.

    A few points I want to clarify. The purpose of my article was to share observations on what I have personally experienced in my work as a Talent Acquisition consultant. I have spent more than 20 years in this profession, and like many of you, I feel as if there is nothing better than a highly qualified internal talent acquisition professional to achieve the good work (that is no diss on external resources by the way– the best internal experts know when to partner with external partners). However, whether I think its the right organizational structure or not… what I have observed over the last year is true: even great recruiters have in fact been laid off. Not because they are poor performers, but because of many factors, including the fact that the HR or Recruiting Leader was not able to show a clear ROI or value to the business of keeping them on. The other clear fact is that most organizations are not large companies with a full-fledged recruiting department, but had maybe one or two recruiters in their whole organization. In many of these smaller organizations, those recruiters have been laid off due to volume as well as the perception that recruiting was an overhead cost they did not need. Because of this, I have observed (again, I don’t advocate this, I just observed this), that yes, in fact some HR Generalists have been taking on recruiting as a big part of their job, and yes, they have been upskilling some of their recruiting-specific and project management skills. I disagree on the generalization that HR generalists already had great project management skills when it comes to recruiting…this is something that many have had to learn on the fly in 2009… I know, because I have spent much of our work helping organizations to upskill their HR Generalists in 2009. Again, this is because of corporate requirements, not because of something that I personally advocated.

    Lastly, let me make a fairly pronounced observation…it depends on the talent of the person handling recruiting to make the statement that this is the “best” person or not to do the work of recruitment. It could be that the person is in in-house recruiting, an HR Generalist, a third-party recruiter, a search firm recruiter, an RPO recruiter, etc. Making generalized observations that this person is good or bad just because of where they sit (in or outside of an organization) can have circular arguments go forever. It really depends on the talent… and isn’t that always the issue with anything?

    Thanks again for all of your feedback and observations… I appreciate the dialogue.

  6. This article & subsequent comments are obviously about the corporate recruiting environment. I’d like to add there’s an upside to the downturn for third-party/contract recruiters as well.

    Those who have been in the recruiting industry for more than 20 yrs know the current downturn may be deep, but it’s certainly not the first or the last. It’s always been a cyclical business, something short-sighted organizations tend to forget.

    When times are good, a lot of hungry sales & recruiting professionals jump on the quick-buck bandwagon. I remember in the 90’s you couldn’t swing a dead cat in Phoenix without hitting a job order and the market was filled with people that used the “spray & stick” method of recruiting, basically they were internet savvy sales types who knew how to source resumes & make a pitch.

    When times are bad, the market shakes loose these people as job orders become harder to find, and candidates are easier to find. As Calvin pointed out, “all the good recruiters are still working” being those who knew how to build relationships and win-win-win outcomes — they were able to survive & thrive in spite of the downturn.

    The upside being that this periodic purging of wannabee recruiters who came along for the quick cash is good for the industry. It’s similar to the controlled burn of a forrest; it makes the remaining trees stronger and provides improved opportunity for growth.

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