Last week I asked you to complete a questionnaire that asked some basic questions about what is going on in your recruitment world. Since then I have had numerous phone conversations and anecdotal stories from recruiters, colleagues, and students. What is emerging is an interesting story of how psychology and changing expectations can precipitate irrational behavior. Greenspan lowers the interest rates by one-half percent and the stock exchanges plunge. The media are showcasing every layoff announcement and every unmet earnings expectation, making it very hard to get a balanced view. Yet one recruiter at a very large Silicon Valley manufacturer told me that her multi-thousand announced layoffs were really “vapor layoffs.” This means that many of the reductions will be through retirements and voluntary attrition over many months. Some people will also be transferred into open positions and their old ones will not be filled – counting as a reduction. As usual, a lot of the numbers are statistical manipulations to pacify investors and “the street” rather than to meet a real need. Smaller firms seem to be hiring steadily and realize that this slack period is a golden opportunity. I get many phone calls from the so-called permanent recruiters left inside organizations telling me how they are stressed because they are still expected to hire the best technical people even though their workloads have increased. On the other hand, a lot of very seasoned contract recruiters have been let go, and, of course, they do not count in the layoff figures. This is actually exactly what is supposed to happen when firms use a contingent work force: the contractors and temporary staff go first so that regular employees can be retained. But the number of people in the contingent workforce has never been larger. We have never in my experience had so many free agents in the market at one time. The number of contract people that are (were?) being employed is much greater than it was a decade ago. In the late 1980s and early 1990s when things were really tough, many contract recruiters were kept very busy during the slow times because regular “permanent” staff was reduced. This time, it’s the other way around and no one really predicted that! Contract recruiters and free agents are the ones suffering this time. Whether this has any effect on the free agency phenomena is even harder to predict and will, of course, partly depend on how deep and how long this slowdown lasts. At the height of the current economic boom in 1998, there were 1.5 million layoffs according to the “Monthly Labor Review” published by the U.S. Bureau of Labor (BLS). I don’t know if we are going to get to this level, but I doubt it. So I urge you all to counsel calm and reason, not panic. Sure the economy is slower than the inflated numbers of the past 2 years. but it is still a strong economic environment. Your survey answers also indicate a recruiting environment that is a bit slower than in the past, but still strong. More than 200 of you responded to the survey (thanks, by the way!) and let us know what’s going on in your company. Overall, you are an optimistic bunch and also represent a wide cross-section of organizations. There was a slight bias toward service industries and recruiting agencies, but many of you also work for some of the nation’s largest manufacturing firms and telecomm companies. An overwhelming 81% are either optimistic or cautiously optimistic about the hiring situation and economy. I was amazed that only 5% of you were looking for other work or were pessimistic about the future. Your answers showed that 53% of your organizations are planning to hire more or the same number of people as last year. This really surprised me, as I thought for sure there would be far more reductions. About 45% of you said you were reducing hiring and over half said your firms were cutting the first quarter projected hiring numbers. And, 65% had all or most positions on hold for the first quarter. This seems reasonable and what I would expect given media-influenced management. But 64% of you are expanding in one or more areas and are adding sales, engineering, and IT technical staff, while reducing administrative and marketing people. This is most likely a good move, because NOW is the time to find those scarce techies and get them on board. The Bureau of Labor Statistics and the Employment Policy Foundation project a shortage of 3-5 million workers by the end of 2008! Even if they are off by as much as half, this is a huge gap that will not be easily closed, and this slowdown will not affect the fact that there are just fewer people than there used to be. Balancing everything, I am still convinced that we recruiters have to be firm in our conviction and sure in our knowledge that these economic times are transitory and that we will all be competing viciously again for the same talent in a few months. If you are lucky enough to be in a firm that is hiring, use this time to bring on some really fine people. If your firm isn’t hiring, use the time to improve processes, build a better website, figure out how to recruit more smoothly and quickly, and how to get the hiring managers on board more strongly than before. Next week I’ll give you my impressions and thoughts about ER Expo. Meanwhile, keep smiling – it could be 1991, you know? <*SPONSORMESSAGE*>
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