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Bailing Out the Recruiting Industry - a Time to Advance or Retreat?

By Bryan Johanson, October 8, 2008

In battles, victory almost always goes to the bold and confident.  Many companies are feeling the strain of the economic situation, but how will the bold react?  Last Friday was week one of our October Recruiter Boot Camp Online. The economic bailout bill had just been signed into law and I believe there was a short sigh of relief followed by a whole lot of anxiety.  We asked our new class of eager recruiters to identify any challenges they now face as a result of the growing economic/financial crisis.  Below are some of their comments:

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"It's actually getting a little easier; we've been able to pick up some very good talent from failing financial companies."

"There seems to be more talent available now for some positions."

"Good people are more hesitant to move. It takes a lot more work to recruit them."

"The price of gas is affecting decisions about length of commute." 

"People are afraid to move right now, especially if they've got a steady job.  They are holding tight to see what's really going to happen.  It's a wait and see attitude."

Your comments are welcome.  Are you seeing changes?  Hiring freezes?  Is it getting harder or easier to close top talent?  Email me any and all comments.  The last recession saw a 50% decrease in the number of third-party and corporate recruiters on the market.  No one quite knows what the economic future of our country will be right now, but the situation is tenuous and good recruiters are going to have to dig in and hone their skills if they want to continue to attract and place top talent.  Some troubled industries will present opportunities for stronger, better capitalized companies to pick up top talent, but other industries will find it increasingly harder to attract the best. Unless a top person is in an industry like finance, my guess is they are lying pretty low right now.  Here are my observations of what's happening right now – these are not predictions of what will happen, but rather explanations of the realities of recruiting in a tough economy: 

Uncertainty breeds fear.  Candidates will find it more difficult to take risks in an economy that's uncertain. Fear tends to paralyze people and decision making processes.  Taking a new job when you've got a decent one now isn't considered the smart choice and top talent will be hesitant to even consider new opportunities until confidence in the economy is restored.
 
Families are less mobile.  The collapse of the housing market has created a situation where families can't move without losing a lot of money on their homes.  As I sit here in my home office looking out my window I see five houses for sale on my street.  The local real estate gurus tell me that the inventory is up to 33 weeks now here in the Denver area.  Three dads have taken jobs in other parts of the country leaving their families right here.  The houses aren't selling.  Two decided to take their house off the market for now.  Even if someone wants to take a new job, it's likely to be a long distance commute putting additional strain on families.  Compensation models will have to take this into consideration.

Commuting distance is problematic – especially for lower paid hourly workers.  This summer I had four teenagers working at hourly jobs.  One had a 17-mile one-way commute to work.  The gas was killing his take home pay.  He worked as a mover and it only made sense to continue in that job because he was able to work 12-14 hours a day.  As the cost to get to work increases, companies will have to consider offsetting that cost in higher wages or benefits, or by recruiting closer to home.
 
Baby Boomers will extend their working years by agreeing to work part time or extending their retirement age altogether.  If you are among the many Baby Boomers who just lost 30% value in their retirement accounts, you may be thinking twice about retiring.  This will create an opportunity for companies to retain their brain trust and transfer knowledge to a new generation of leaders.  Health care is also a significant consideration.  Many Boomers who could otherwise retire are waiting until they are fully eligible for Medicare.  This is another opportunity for employers wanting to pick up experienced workers.

Bargains will be possible, but only for those who are keenly focused on sourcing top talent.  As unemployment rises, any job will become better than no job. 

I welcome your comments about what you see as the recruiting challenges facing us in this historic situation.  My main point is that in a tight market – unless one is forced to move like so many executives in the financial industry – top talent becomes sticky.  This requires a whole new set of skills that recruiters must be able to use to continue to attract top talent.  Below are four suggestions that recruiting departments and senior leaders need to remember:

1.  This too shall pass!  The knee-jerk reaction to this environment is often to downsize the recruiting staff, layoff a few recruiters, and rehire them when the market turns around.  This may be exactly the wrong strategy.  Talent acquisition is the life blood of an organization.  Companies that choose to gut their recruiting departments are losing key resources and unique opportunities. 
 
2.  Upgrade your team.  That's right, upgrade it.  Do you have the best performers on your team?  Some really good talent from troubled industries is coming onto the market.   Now is your chance to snatch them up.  There are some great bargains out there and smart companies will continue to shop for talent even in a recession.

3.  Build the pipeline.  We hear a lot of talk about building candidate pipelines.  Pipelining takes time – 6 months to a year if you do it right.  When hiring is booming, recruiting departments don't have the time to really focus on pipelining.  Now is the perfect time, so that when you do start to hire again, you will already have a ready-made group of candidates and a sustainable process for gathering more.  If you want to have a personal discussion with me or Lou about pipelining, please email me directly at bryan@adlerconcpets.com.

4.  Train your recruiters.  If you are still hiring, your recruiters are going to have to be at the top of their game.  That means that they will have to be more persuasive, more attuned to candidate needs, more flexible with offers, and more focused on top talent.  This requires training.  Just throwing resumes over the wall won't be enough.  As unemployment soars, sorting through the chaff to find the wheat will become increasingly more important and will require new skills and capabilities.

Now is the time to build capabilities, not cut them.  As always, comments are welcome.