Amybeth Hale – Research Goddess


The Recession & The Effects On Staffing
June 29, 2009, 10:00 am
Filed under: Recruiting, Thoughts

This economy has affected so many of us in staffing. A large number of our friends and co-workers, myself included, have been victims of companies scrambling to find places to cut back on expenses. One of the first places they look to make reductions are the “non-revenue generating” internal positions – and unfortunately recruiting falls into that category during times like this.

It’s sad to me because finding talent, in my opinion, is a business essential – especially when you consider the cost of having a position vacant. Dr. John Sullivan once estimated that it could cost between $7,000 – $50,000 per DAY to have an engineering position vacant, and that in key leadership positions, the cost of vacancies could run into the millions for each week of vacancy.

So why do companies cut positions that are responsible for keeping these astronomical vacancy costs down? Well, in an economy such as what we’re experiencing today, companies look at the fact that they’ve placed a hiring freeze on operations, or the fact that they don’t have budget for the next few quarters to make many new hires, and at the top levels, the decision is made that as there will be little to no hiring made for the remainder of the year, the natural thing to do is to reduce the size of the staffing team.

I think this is very short-sighted mentality.

We are not going to be in this economic situation forever. History dictates this. Geoffrey H. Moore, former director emeritus of the Center for International Business Cycle Research, Columbia University, New York wrote an article back in the 90s examining the various recessions and depressions throughout US history. In his studies, he determined that of the 3 depressions, the average length of time was 24.6 months. His studies also found at the time that we went through 6 sharp recessions – average length of time 12.5 months; and 5 mild recessions – average length of time 9.6 months. Even though this information does not include recent recessions from after 2000, the information still paints a historical picture and lets us know that things will eventually turn around.

Most scholars and analysts have agreed that our present recession began in December of 2007. If that’s the case, we’re due for an upswing and I believe that it’s coming sometime this fall. But when hiring needs resume, who’s going to be there to fill all of the vacant positions, since so many corporations have laid off massive numbers in their staffing teams?

That’s where the agency recruiters come in. For those of you who can hang on through these turbulent times, you will have more work than you can handle when the economy turns the corner. Lots of corporations have been downsizing their staffing teams to bare bones; some completely eliminating them. When hiring resumes – most likely sometime this fall or winter – they’re going to be seriously hurting for people to help fill their needs. That’s where you come in – since there won’t be people in corporate staffing roles, companies are going to look to you for assistance, and you’ll have more work than you know what to do with. So hang on for the next several months and you will be rewarded handsomely.

As well, here is my advice to large corporations: this is the time when you need people building trusting relationships with future candidates. Letting go of your staffing teams during times like this will only come back to hurt you in the long run. Hold on to those people who are good at building relationships – because candidates will remember those people when things get better. I personally feel blessed to be working with an organization that embraces this idea about staffing.

Just keep in mind: this, too, shall pass. Recessions never last forever. There is a light at the end of this dark tunnel. Make smart business decisions – do not be penny-wise and pound foolish. Stay the course and never give up!

*disclaimer: I am not an economic scholar; these are simply my thoughts on the current situation based on my observations and my own personal experiences.

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7 Comments so far
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Agreed. This is an opportunity to change and redefine one’s value (to your internal client’s, but also your external ones). Cuts, budget or otherwise, never made a difference long term – without being paired with innovation..

Comment by williamu

A very smart and well written article. The companies and recruiters with vision recognize the current economic cycle as one of opportunity and a chance to ‘snag’ the great talent that is available. The quickest way to expand is into a vacuum, and a vacuum is being created by those trading tomorrow for today.

Comment by Bill Vick

I am glad you are distinguishing recruiting from HR. I have always been proponent of extremely lean HR (technicaly I can replace HR with software and outsourced vendor or two), but at the same time keeping recruiters on staff. Good or bad economy, we constantly need to be in search of great talent, because without people we can’t succeed. I look at recruiters (especially in-house) the same way I look at business dev/sales folks – no successful company can survive without them. Now maybe big corp. world is different, I would not know, I chose to spend my 12+ year career with rapidly growing early and late-stage startups and I realize things are a bit different in the startup world. BUT, I do know that this is the time not only for HR folks to re-tool themselves, but also for companies to change their thinking from looking at the employees as assets and instead looking at them as investors (of their human capital). Attitude change is definitely in order!
If interested, I have a very popular article on my blog on exactly that subject: Time to make HR accountable! The rise of Human Capital professionals.

Comment by Apolinaras "Apollo" Sinkevicius | LeanStartups.com

This is a very astute review of this ecomonmy and how it affects staffing, recruiting and third party recruiters (TPR). Amybeth, you may not be an economic scholar, but on this one I think you take most of them to school! Thanks for sharing, I hope many read this article and find the optimism and wisdom found within.

Comment by Jeff Skrentny

Jeff, I am honored! I know how well-respected you are and I appreciate the compliment. In fact, thank you to everyone here. These are simply some things I had been rolling around in my brain and thought I’d share 🙂 I’m glad you found value in them!

Comment by Amybeth

This is a great article. As an executive recruiter feeling the effects of the economy I too believe that things will turn around and I will be busier that I ever thought I would be. Thank you for the encouragement and belief in our industry.

Comment by Debra Young

Very well written. Thank you for putting your personal experiences into something positive for recruitment professionals to look forward to.

I am also feeling the squeeze because I am one of the many laid off recruiters with staffing and corporate experience and I am not a HR Generalist. Perhaps my experience with both staffing an corp recruitment at all levels of positions will help me once staffing firms and corporations start hiring again. I am also one of those recruiters you mentioned – I create trust and creditable relationships with my managers and am well known for that. I hope that helps me with my next gig.

Thank you for sharing the study information from Mr. Moore. It did help to put things into perspective as well. Time will tell and the strong will survive 🙂

Comment by Kathy Narvaez




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