Strategic Recruiting During an Economic Downturn

STRATEGIC RECRUITING IN A DOWN ECONOMY ERE Expo East 10/30/08 © Dr. John Sullivan www.drjohnsullivan.com Dr John Sullivan [email_address]

Dr. Sullivan’s current books

Dr. Sullivan has a monthly column… on the “last page”

Firms that I have “helped” Enron Lehman Brothers Bear Sterns Wachovia Countrywide WorldCom Fannie Mae Freddie Mac WaMu

Topics for today
How to predict when cuts are coming
Why this downturn will be different
What are the positive aspects
Potential problems
Proactively approaching the CFO
Low cost/ high impact actions
Other things recruiters can do
Your questions

How to predict future cutbacks in recruiting
Precursors or warning signs
The number of Req approvals needed goes up
Travel freezes
Paper clip memo
Contract recruiters are let go
Other firms freeze their hiring (See their web page)
A hiring freeze at your firm
Recruiting budget cuts
Layoffs

Why this downturn will be different

This downturn will be different
Factors that make this downturn different
Volatility of stock markets (firm valuation) and credit availability mean spurts of growth
Global markets mean somewhere there will be local growth
Global competition will increase in order to regain lost status, lost markets and lost customers
Expectations for innovatio n will not decrease

This downturn will be different
Factors that make this downturn different
Churn will be common – Where you hire and release at the same time (HP)
Real estate option – Recruiters will not have this career alternative to fall back on

The top advantages of recruiting
during tough times

Advantages of recruiting during tough times
1) Less competition from other firms –
Because of their reduced recruiting budgets
As well as the loss of their top recruiters
Candidates will be easier to sell because they will have fewer options… and fewer counter offers to choose from

Advantages
2) More high quality candidates will be available
More higher quality released/ laid off individuals be on the market
Less loyalty among the “survivors” (401k cuts, mergers etc)
Action step - An opportunity to “trade up” (SWAP) talent
Action step - It is an opportune time for "counter cycle" recruiting where you “load up” with great talent (College market)

Advantages
3) Weakened employment brands
“ Public” layoffs, ethical issues and mergers have weakened some brands (Yahoo, Citi, Merrill Lynch etc.)
Raid weak firms while you still can
Action step - This provides increased opportunities for firms that maintain or intelligently strengthen their employment brand during this period

Advantages
4) Turnover and retirement rates will decrease
Downturns… increase the desire for job security
Which means… lower turnover (Because new hires have no tenure)
Fewer retirements due to the dramatic reduction in the value of their 401(k)’s, may ease some baby boom retirement concerns

Advantages
5) Higher quality recruiters will be available
Many excellent recruiters will be available for those firms planning for the long-term
6) The dollar is stronger
The newly strengthened US dollar makes recruiting international candidates (paid in $) much easier

Advantages
7) New recruiting technology is available
The availability of social networking, text messaging, YouTube, Google searches and other web-based technologies now makes effective recruiting possible with little or no budget

Advantages
8) An opportunity to explode out of the box
Well prepared firms will have the capability of "exploding out of the box" immediately after the downturn is over
This capability will put you far ahead of other firms that have decimated their recruiting capabilities during this time

Advantages
9) Tight times make you stronger
Tight budgets and the extra pressure could force you to focus more on metrics and a strong business case
By eliminating the deadwood, streamlining processes and focusing on the best approaches , you will eventually strengthen the function over-all

Advantages
10) Workforce planning will be encouraged
It's usually a "fight" to convince executives to invest in workforce planning
Economic volatility and the pain of laying off talent they fought so hard to acquire almost always convinces senior managers of the need for a strong workforce planning function
Action step - Use this "lull" to develop an effective forecasting capability and a "flexible" recruiting strategy that "shifts" during the different economic cycles

Advantages
11) Some industries will suffer less
Healthcare, defense, financial regulators, green technologies etc. may suffer fewer negative impacts

The top 10 recruiting problems
you might face during tough economic times

Potential problems
Executives are already viewing this as a time of surplus talent or opportunity
Some see it as a time where no recruiting will be needed for years
Others see it as an opportunity to “cherry pick”
This has already led to dramatic changes at some major firms (Deloitte, MS, E&Y, Yahoo etc)

Potential problems
2) Resource freezes are common
Hiring freezes - One of the first knee-jerk reactions
Budget / new project freezes … increase turnover
Promotion freezes
Freeze on raises

Potential problems
3) Stock options are no longer a major motivator
They become a less reliable as a motivator both for current employees and for candidates
Need to shift your sales approach to candidates to emphasize exciting work, flexible work, better benefits, more security or to focus on cash performance bonuses

Potential problems
4) Job security is king
Volatility makes both employees and candidates nervous about their future
This fear makes “drawing them away” harder
Action step - Re-examine the information you provide on job security on your website , in position descriptions and in its offers in order to make your security more compelling

Potential problems
5) An increased volume of traffic
Unfortunately if you actively recruit during tough times, the volume of mediocre but enthusiastic unemployed people that will apply for your jobs will also increase dramatically
This high-volume, low quality flow means that your screeners will be strained and that your selection process has to be more precise

Potential problems
6) Relocation issues
Moving people between regions becomes nearly impossible when individuals can't get credit, new mortgages or sell their existing homes
This problem affects both internal transfers and new hires
Action step - Consider focusing on recent college grads that generally rent or consider “narrowing” your recruiting area to a reasonable commuting distance

Potential problems
7) A loss of trust and confidence
The general mistrust of business means your employees and candidates will likely now have less trust and confidence in anything that you say
Layoffs will hurt your firm’s brand - Although you probably can't stop layoffs, work with PR to ensure they don't become front-page news
Action step - Your website must be more objective and believable, your interviews need to be more credible and your offers will need to be stronger, if you expect to convince the cynical

Potential problems
8) Managers will focus less on recruiting
Manager’s interest in recruiting will decrease even further as the stress from their business workload increases, while their available staff decreases
They certainly won't be doing it as often
Frustration when many of their “active searches” are never be completed because of frequent "surprise" hiring or budget freezes
Their lack of interest in reading resumes and interviews will increase your time to fill

Potential problems
9) Technology budgets
Budget for buying new technology (ATS systems or new software) are likely to disappear… but deals are available
So either make your purchases immediately or be prepared to live with what you got for a while

Potential problems
10) HR politics will get worse
Build over buy will predominate
They will ask you to fund other HR positions

Work with the CFO

Build CFO “street creds”
Building the business case
Show you are “efficient” / low cost provider
Quantify recruiting impacts on revenue in dollars
Calculate the risks, delays & the added startup costs of reassembling the recruiting function
Utilize split samples
Turnaround weak business units

Generating additional revenue
Increase revenue or save big bucks
Work with GM’s
In-house temp agency
Speak for dollars
Bring executive search in-house (Savings and exposure)

Other possible action steps to consider

Action steps for recruiting
Prioritize your jobs and best recruiters
Revenue generating jobs
Rev impact jobs
Focus on growing business units
Focus on growing regions
Mission critical jobs

Focus on recruiting innovators
Calculate their huge revenue and TTM impact (300 times)
Realize that they are hard to sell
Realize that they look and act differently during the hiring process

“ Do more with less” using “OPT”
No $ Referrals (Give me 5, Drawings, Edward Jones, AmTrust)
Events (Bring back 3 names)
Employment branding (Speaking and writing)
Social network profiles (EE profiles)
Blogs
Employee generated videos (Deloitte)
CEO calls to candidates
PDA parties

Identify & then use low cost but high impact tools
Boomerangs / corporate alumni
Google searches for names
New hire “who else is good”
Reference referrals
Names research
Use interns
Contests

Shift to high impact tools
“ Received 3 times the amount of applications”
48 hrs with videos was equal to 5 mths using ads

Finally… other things that recruiters can do

Expand your Talent Management capabilities
Other things recruiters can do
A focus on internal movement – Rapid movement to areas of higher return (Booz Allen)
Retention – Use sales skills to keep the best
Aid in employment branding
Help with layoffs
Handle outplacements
Sales

Did I make you think?
Any questions?
www.drjohnsullivan.com

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Strategic Recruiting During an Economic Downturn

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Strategic Recruiting During an Economic Downturn — Presentation Transcript