The Legacy of Layoffs

The old saying goes, “Those who refuse to learn the lessons of the past are doomed to repeat them.” In HR/staffing, it appears we are that particular clich?’s most ardent practitioners. We are doomed again, again, again, and yet once again, to relive the past. As the news continues to worsen regarding employment, limited career opportunities, layoffs, salary freezes, reductions, canceled contracts, and the growing number of unemployed, it’s tough to keep a bright and happy smile. Somewhere along the line the attitude about the recovery transitioned from “when” to “if,” and the only true silver lining in this cloud is that nothing, good or bad, lasts forever. (Wouldn’t you love to run into one of those “new economy” types who kept writing about “no more recessions”? You just can’t trust writers. Well, not all of them. I’m okay.) A company has the right, if not the obligation, to reduce expenses (read: personnel) during periods of decreased or negative cash flow to protect both the company’s financial standing and its investors’ dividends. If the standing of the company diminishes, the cost of borrowing money increases. If the confidence or satisfaction of the investors is damaged, then the increased sale of your company’s stock lowers its value and decreases the availability of cash and requires even more borrowing. Therefore, it is the time-honored tradition of companies to reduce headcount to save the company. Staffing and employment groups feel the ax most of all. Why? Because if the company is not hiring right now, why do they need employment people? But if you ask me, if the logic of this who-needs-employment-people philosophy were correct, then an accurate extension to everyday life would be, “Ouch, I cut my finger, I better amputate my arm.” Is it not also the company’s officers’ obligation to insure their cost-saving measures do not gut the company and render it incapable of capitalizing on the next up cycle? It shouldn’t require an MBA from Harvard to know there is always more money to be made in good business cycles than there is to save in bad ones. My point? The time has come to face the “recession within the recession,” and the inherent issues contained within:

  • The immediate impact of the decline and fall of staffing and employment as a career of choice due to its instability and volatility
  • The long-term damage to the profession’s ability to attract its share of the best and brightest for a career as the human equivalent of a “Schick Disposable Razor”
  • The inevitable negative ramifications for companies that someday plan to return to growth mode to capitalize on new growth opportunities, but cannot, due to the limited numbers of experienced recruiting professionals

Business has rules, and one of them is: “Skill sets that are not gainfully employed will cease to exist.” The shortsighted claim senior executive management makes is, “Why do we need to maintain viable staffing and employment groups when we aren’t hiring today?” That may be so, today, but what about tomorrow? Tomorrow, when employment and staffing professionals are needed again. Where do you think they will come from? Over the last six months I have spoken to friends at numerous large, medium, and small companies, in some cases friends who “were once” at these companies and now are not, that boasted staffing departments of 45-60 full-time and contract recruiters. In each case, without exception, there is now only zero to five. Agency friends tell me about year 2000 recruiting staffs of up to 140 that are now less than 20 – and half of those are looking for new careers outside recruiting. A professional society I belong to is offering an “alternative careers” seminar for HR/staffing consultants who feel the need to eat more than the desire to stay in the business. After all, if you are bright, energetic, creative and resourceful, why would you want a career in employment? “How about a job here as our Director of Employment?” “Well, I was hoping for something more career-orientated and stable. Any openings in the mailroom?” “No, sorry. The Senior Technical Recruiter transferred to that job last week.” We look to business leaders for insight and vision. Yet this cycle of neglect to employment and staffing has occurred so many times, and the resultant negative ramifications have haunted us for so long, that the repetition would be funny if it weren’t so sad. Here is how the next few quarters will play out:

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  1. The economy will slowly improve, but companies will resist rehiring until the evidence is overwhelming that the recession is well past.
  2. They will place faith in automating processes, outsourcing efforts, and increased efforts in productivity measures to meet increasing person productivity goals for a depleted workforce failing to meet growing production needs.
  3. Companies will face the inability to meet new customer demands and find themselves behind the upward curve without any staffing momentum to help catch up with headcount “on-hand” versus “headcount needed.” You see, no one has been keeping the pump primed. Cost cutting!
  4. Reluctant candidates initially require labor-intensive recruiting efforts, as they are still fearful of risking their current jobs in search of better opportunities.
  5. Existing HR/generalist staffs will do their very best to rise to the situation. But the increased tempo of business, combined with understaffed companies, causes increases in the internal pressures with existing employees, and pulls the HR/generalists deeper into existing employee-based issues. (“If you are going to expect me to work 55 hours a week, you better pay me for the increased daycare.”) With absenteeism, disciplinary actions, disputes, and the rise of turnover, the tide slowly shifts as employees seek better work environments from among other companies also trying to hire. Staffing falls further behind.
  6. The “Law of Excessive Backlog” brings all staffing to a virtual halt. (The Law of Excessive Backlog – my own name – dictates that backlog ultimately reaches critical mass when the efforts to “maintain it” require all available resources and none remain to “deal with it.” The maintenance of increasing backlog becomes the sole occupation of an organization. In essence, negative inertia.)
  7. Automated tools help, but shorthanded staffs, untrained in their use and not comfortable with the new pressures of emergency staffing, fail to close the gap.
  8. In reaction, companies will seek consultants and agencies to compensate for their own inability to meet staffing needs. But these traditional solutions are facing their own limitations and increasing demands.
  9. Agencies hire replacement personnel with no previous experience. Contractors with marginal experience market themselves as senior players due to the fact that they are “the only game in town.”
  10. Market need exceeds market availability, and product pricing goes up. Fees that were reduced to 15% climb back up to 30%. Instead of praying for $30 an hour, contractors are demanding at least $75.
  11. The lost momentum is not easily overcome. Companies now must “overbudget” headcount to compensate for lost time. A specified enhanced staff level, if in place and trained that could have met the company’s needs for the year, has to be doubled and tripled to make up for lost time due to delays in hiring up to “real need.” By failing to increase staffing by 10-15% in a timely manner, doubling is not enough.
  12. Companies find inexperienced recruiting staffs with little or no company history and lacking critical and basic recruiting skills getting the job done at a level of efficiency around 65%, but the cost is 175% of plan.
  13. Companies face the expense of lost time and opportunity as a function of lost sales and lost revenue.
  14. By not capturing the “spotlight” early, you also face the added burden of not being identified as one of the “new economic boom” leaders. More money now has to be reinvested in re-branding your image.
  15. The candidate pool senses the corporate panic, and their demands begin to climb and exceed even reasonable expectations, but companies with depleted recruiting staffs have no choice but to hire what’s available, at any price, again. Workers laid off so quickly last year, seek revenge in negotiations this year.
  16. (Oh yeah!) Once again, an unending list of CEOs get interviewed by Fortune, Business Week and other publications and proclaim, “Staffing is the number one goal of any business that wants to survive!”
  17. The spiraling of employment costs continues, but slowly competency returns to staffing and costs begin to come back under control.
  18. But the stock market “burps” and I decide not to buy a refrigerator due to my concerns about my job, along with 250 million other consumers, and a new recession begins.
  19. Everybody in employment is laid off and we all run back to the starting point for the next scheduled recovery.

It’s d?j? vu, all over again. It’s d?j? vu, all over again. It’s d?j?… (Hey, wait a minute!) Bitter? Angry? No, not really. But the consistent failure of responsible people in business, in general, and in our own HR/staffing industry in particular, to recognize this cycle and the inherent waste within it, is to me at the very least a conundrum. No wonder Nostradamus was always in a bad mood. Being able to see into the future, especially a pathetically sad and unnecessary future, is no picnic. I wonder if we should stop using the expression “common sense” now that “sense” is no longer “common.” Many companies have eliminated or reduced to well-below-minimum requirements the staffing function as a standalone part of their human resources community. Often, those retained are the most junior with job descriptions that contain elements that often border on clerical. Others have returned to combining the duties of an HR representative and a staffing representative into the role of a generalist as a cost-cutting measure, but certainly not as a performance-enhancing measure. By combining two job descriptions, each sufficiently demanding in their own right, those companies are insuring less-than-stellar performance in one or both fields. It is sort of like requiring all astronauts to be brain surgeons. Even those people smart enough to be both an astronaut and a brain surgeon have a personal preference as to what they actually want to do, and they will naturally gravitate to that role to the exclusion of the other. (Now, before I receive offended emails of outrage from every generalist in America let me say this: I have 20 years of human resources and staffing experience, and I am proud of both skill sets. But when I am expected to manage both the HR function and the staffing function at the “hands-on level” simultaneously, the total job suffers. I have never pretended that I am able to leap tall buildings in a single bound. The Superman complex is a serious burden and should be avoided whenever possible. Besides, who wants to spend their life living in fear of Kryptonite?) I think both the human resources profession and the employment profession are diminished by the perception that doing both “is no big deal.” (Anybody with an opposing thumb can do human resources or staffing work, right?) The argument that, due to diminished staffing demands, the total burden is not too heavy on a generalist to perform both duties efficiently, effectively, and with enthusiasm, survives only if you agree that, in a pinch, an astronaut with time on their hands could “give a go” at a little brain surgery. (Let’s see, where is that “lobotomies made easy” manual I had?) By habit we combine staffing and the other areas of human resources as an organizational convenience, and we have inherently assumed that any good human resources person (benefits, compensation, employee relations) can “do” staffing. We consequently have denied the profession credit for requiring more talent and intelligence than the ability not to drag your knuckles or chew with your mouth open. The truth is that efficient, effective, and timely staffing is both a science and an art. It is not a hobby! It is not something you can “pick-up” on the run. It is not a light-weight skill bundle that just about anyone can do well! Not all human resources professionals enjoy staffing, not all staffing professionals enjoy HUMAN RESOURCES. The vocations are mutually exclusive. We recognize the individual skills required in other professionals. Why are we so slow to admit the differences within our own? Software engineers work in development and in quality. But I never met a really good developer who liked doing quality assurance work, and vice versa. No profession is more desperately sought after and compensated during periods of extreme need than staffing and employment. Yet, none is more quickly discarded during periods of business downturns. Could there be a link? (Rhetorical question.) The employment profession needs to be stabilized in the corporate culture as a critical, standalone contributor to the corporate business plan. Staffing is constant, even in an economic downturn. Imagine all the good intellectual resource upgrading companies could be engaged in right now if they still had ongoing, aggressive, and intensive recruiting programs in this candidate-rich environment, or the training and process improvement that could be accomplished during this lull to insure better, more cost-effective and efficient recruiting for the next growth cycle. The money that could be saved by not running a “knee jerk” recruitment program in the future far outweighs the short-term savings of decimated staffing groups today. So here we are, back again to the same basic question: “If staffing with the best people is the number one need of business today, why isn’t the survival of the staffing profession also seen as a priority?” Can the end result truly be a priority if the process needed to achieve that end result is not? In a popular kid’s program, “Mister Rodger’s Neighborhood,” he always has a word for the day; “Today’s word, boys and girls, is I-N-E-V-I-T-A-B-L-E. Can you say INEVITABLE? I knew you could.” Executives of America, go look up “inevitable” and see what it means. We already know what ignoring it means. Then look up I-N-D-I-S-P-E-N-S-A-B-L-E. p.s. I am staying in staffing. I think the job matters. Have a great day recruiting!

Ken Gaffey (kengaffey@comcast.net) is currently an employee of CPS Personal Services (www.cps.ca.gov) and has been involved in the Department of Homeland Security, Transportation Security Administration project since its inception. Prior to this National Security project Ken was an independent human resources and staffing consultant with an extensive career of diversified human resources and staffing experience in the high-tech, financial services, manufacturing, and pharmaceutical industries. His past clients include Hewlett Packard, First Data Corporation, Fidelity Investments, Fleet Bank, Rational Software, Ericsson, Astra Pharmaceutical, G&D Engineering, and other national and international industry leaders. In addition to contributing articles and book reviews to publications like ERE, Monster.com, AIRS, HR Today, and the International Recruiters Newsletter, Ken is a speaker at national and international conferences, training seminars, and other staffing industry events. Ken is a Boston native and has lived in the greater Boston area most of his life. Ken attended the University of South Carolina and was an officer in the United States Marine Corps.

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4 Comments on “The Legacy of Layoffs

  1. Excellent article, Ken. Of course, the only workable (dare I say “inevitable”?) conclusion is that staffing/recruiting professionals need to “professionalize” in the same manner as doctors, lawyers and nurses. This would mean *mandatory* professional licencing, state sponsored monopolies, and a radical shift in the paradigm of North American Executives.

    Of course, *they* (NA Executives) are selected and promoted based on a paradigm of managerial efficiency that goes back to FW Taylor’s Scientific Management. Part of that paradigm pre-supposes that workers are lazy, self-organizing slackers who want to get “money for nothing” (as the song goes). So how could HR and Staffing/Recruiting in particular professionalize in view of that attitude?

    Personally, I suspect the only way it could happen would be to show solid, bottom line, business cases (something that you point to in your article). At the same time, both Canada and the US would have to change some of the laws regarding Executive/Corporate responsability (vide the Enron debacle).

    Can we professionalize HR/Staffing away from its current “prison guard” role (“keep the workers working and the government off our backs”)and towards a role of employee ombudsman? Maybe. But the only way that this could happen is by arguing and *proving* that HR/Staffing *professionals* are not prison guards but, rather, vital assets in corporate R&D and Knowledge Management.

    Marc

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  2. Thanks Ken for giving what we are all thinking an articulate and thoughtful voice.

    When ever any profession has as few barriers to entry as recruitment does you are going to be perceived as expendable when things get tough.

    Also, recruitment lacks the fraternity of lawyers, doctors, accountants, etc. We constantly undermine each others work and credibility and typically don’t work together to improve our profession.

    True or not I am sure these perceptions are in the minds of execs when it comes time to downsize.

    If we behave like mercenaries we will be treated as such.

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  3. Bravo for a well thought out view of what is going on. I’ve been telling anyone within shouting distance that what we are experiencing is a repeat of history. It is truly a shame that we (the recruiting and human resource professionals) are viewed this way but it is up to us to “show our worth.” Until we find a way to do so, history is doomed to repeat itself.

    While it is easy to lay the blame and not take responsibility for this cycle, we need to be sure we are doing our part to not let this continue. (Especially since we’ve all read a great article explaining exactly what is happening!)

    Duane

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  4. Great article! I am fortunate to work for a company that values ALL of their positions as necessary to leverage business and talent for the best possible future use.

    We are the premier Expedited Freight company in the world and there is much of our culture that seems to be very forward-thinking. Even though our business levels are the first to decrease in our business segment, we also are one of the first to have business levels increase dramatically as the economy turns back around. In speaking with the CEO, his vision is to retain people in the slow business climates, to be able to handle both the increased business when it comes back, but also help train new people when we are hiring.

    I just think it’s great that I still have a job even though I haven’t needed to recruit since October. Other projects have kept our Recruiting Team busy utilizing some other talents that we bring to the table.

    Just my $.02

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