Strategic Recruiting During an Economic Downturn


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Dr. John Sullivan\'s presentation from the ERE Expo 2008 Fall.

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  • Strategic Recruiting During an Economic Downturn

    1. 1. STRATEGIC RECRUITING IN A DOWN ECONOMY ERE Expo East 10/30/08 © Dr. John Sullivan Dr John Sullivan [email_address]
    2. 2. Dr. Sullivan’s current books
    3. 3. Dr. Sullivan has a monthly column… on the “last page”
    4. 4. Firms that I have “helped” Enron Lehman Brothers Bear Sterns Wachovia Countrywide WorldCom Fannie Mae Freddie Mac WaMu
    5. 5. Topics for today <ul><li>How to predict when cuts are coming </li></ul><ul><li>Why this downturn will be different </li></ul><ul><li>What are the positive aspects </li></ul><ul><li>Potential problems </li></ul><ul><li>Proactively approaching the CFO </li></ul><ul><li>Low cost/ high impact actions </li></ul><ul><li>Other things recruiters can do </li></ul><ul><li>Your questions </li></ul>
    6. 6. How to predict future cutbacks in recruiting <ul><li>Precursors or warning signs </li></ul><ul><li>The number of Req approvals needed goes up </li></ul><ul><li>Travel freezes </li></ul><ul><li>Paper clip memo </li></ul><ul><li>Contract recruiters are let go </li></ul><ul><li>Other firms freeze their hiring (See their web page) </li></ul><ul><li>A hiring freeze at your firm </li></ul><ul><li>Recruiting budget cuts </li></ul><ul><li>Layoffs </li></ul>
    7. 7. <ul><li>  </li></ul><ul><li>Why this downturn will be different </li></ul>
    8. 8. This downturn will be different <ul><li>Factors that make this downturn different </li></ul><ul><li>Volatility of stock markets (firm valuation) and credit availability mean spurts of growth </li></ul><ul><li>Global markets mean somewhere there will be local growth </li></ul><ul><li>Global competition will increase in order to regain lost status, lost markets and lost customers </li></ul><ul><li>Expectations for innovatio n will not decrease </li></ul>
    9. 9. This downturn will be different <ul><li>Factors that make this downturn different </li></ul><ul><li>Churn will be common – Where you hire and release at the same time (HP) </li></ul><ul><li>Real estate option – Recruiters will not have this career alternative to fall back on </li></ul>
    10. 10. <ul><li>  </li></ul><ul><li>The top advantages of recruiting </li></ul><ul><li>during tough times </li></ul>
    11. 11. Advantages of recruiting during tough times <ul><li>1) Less competition from other firms – </li></ul><ul><li>Because of their reduced recruiting budgets </li></ul><ul><li>As well as the loss of their top recruiters </li></ul><ul><li>Candidates will be easier to sell because they will have fewer options… and fewer counter offers to choose from </li></ul>
    12. 12. Advantages <ul><li>2) More high quality candidates will be available </li></ul><ul><li>More higher quality released/ laid off individuals be on the market </li></ul><ul><li>Less loyalty among the “survivors” (401k cuts, mergers etc) </li></ul><ul><li>Action step - An opportunity to “trade up” (SWAP) talent </li></ul><ul><li>Action step - It is an opportune time for &quot;counter cycle&quot; recruiting where you “load up” with great talent (College market) </li></ul>
    13. 13. Advantages <ul><li>3) Weakened employment brands </li></ul><ul><li>“ Public” layoffs, ethical issues and mergers have weakened some brands (Yahoo, Citi, Merrill Lynch etc.) </li></ul><ul><li>Raid weak firms while you still can </li></ul><ul><li>Action step - This provides increased opportunities for firms that maintain or intelligently strengthen their employment brand during this period </li></ul>
    14. 14. Advantages <ul><li>4) Turnover and retirement rates will decrease </li></ul><ul><li>Downturns… increase the desire for job security </li></ul><ul><li>Which means… lower turnover (Because new hires have no tenure) </li></ul><ul><li>Fewer retirements due to the dramatic reduction in the value of their 401(k)’s, may ease some baby boom retirement concerns </li></ul>
    15. 15. Advantages <ul><li>5) Higher quality recruiters will be available </li></ul><ul><li>Many excellent recruiters will be available for those firms planning for the long-term </li></ul><ul><li>6) The dollar is stronger </li></ul><ul><li>The newly strengthened US dollar makes recruiting international candidates (paid in $) much easier </li></ul>
    16. 16. Advantages <ul><li>7) New recruiting technology is available </li></ul><ul><li>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 </li></ul>
    17. 17. Advantages <ul><li>8) An opportunity to explode out of the box </li></ul><ul><li>Well prepared firms will have the capability of &quot;exploding out of the box&quot; immediately after the downturn is over </li></ul><ul><li>This capability will put you far ahead of other firms that have decimated their recruiting capabilities during this time </li></ul>
    18. 18. Advantages <ul><li>9) Tight times make you stronger </li></ul><ul><li>Tight budgets and the extra pressure could force you to focus more on metrics and a strong business case </li></ul><ul><li>By eliminating the deadwood, streamlining processes and focusing on the best approaches , you will eventually strengthen the function over-all </li></ul>
    19. 19. Advantages <ul><li>10) Workforce planning will be encouraged </li></ul><ul><li>It's usually a &quot;fight&quot; to convince executives to invest in workforce planning </li></ul><ul><li>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 </li></ul><ul><li>Action step - Use this &quot;lull&quot; to develop an effective forecasting capability and a &quot;flexible&quot; recruiting strategy that &quot;shifts&quot; during the different economic cycles </li></ul>
    20. 20. Advantages <ul><li>11) Some industries will suffer less </li></ul><ul><li>Healthcare, defense, financial regulators, green technologies etc. may suffer fewer negative impacts </li></ul>
    21. 21. <ul><li>  </li></ul><ul><li>The top 10 recruiting problems </li></ul><ul><li>you might face during tough economic times </li></ul>
    22. 22. Potential problems <ul><li>Executives are already viewing this as a time of surplus talent or opportunity </li></ul><ul><li>Some see it as a time where no recruiting will be needed for years </li></ul><ul><li>Others see it as an opportunity to “cherry pick” </li></ul><ul><li>This has already led to dramatic changes at some major firms (Deloitte, MS, E&Y, Yahoo etc) </li></ul>
    23. 23. Potential problems <ul><li>2) Resource freezes are common </li></ul><ul><li>Hiring freezes - One of the first knee-jerk reactions </li></ul><ul><li>Budget / new project freezes … increase turnover </li></ul><ul><li>Promotion freezes </li></ul><ul><li>Freeze on raises </li></ul>
    24. 24. Potential problems <ul><li>3) Stock options are no longer a major motivator </li></ul><ul><li>They become a less reliable as a motivator both for current employees and for candidates </li></ul><ul><li>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 </li></ul>
    25. 25. Potential problems <ul><li>4) Job security is king </li></ul><ul><li>Volatility makes both employees and candidates nervous about their future </li></ul><ul><li>This fear makes “drawing them away” harder </li></ul><ul><li>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 </li></ul>
    26. 26. Potential problems <ul><li>5) An increased volume of traffic </li></ul><ul><li>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 </li></ul><ul><li>This high-volume, low quality flow means that your screeners will be strained and that your selection process has to be more precise </li></ul>
    27. 27. Potential problems <ul><li>6) Relocation issues </li></ul><ul><li>Moving people between regions becomes nearly impossible when individuals can't get credit, new mortgages or sell their existing homes </li></ul><ul><li>This problem affects both internal transfers and new hires </li></ul><ul><li>Action step - Consider focusing on recent college grads that generally rent or consider “narrowing” your recruiting area to a reasonable commuting distance </li></ul>
    28. 28. Potential problems <ul><li>7) A loss of trust and confidence </li></ul><ul><li>The general mistrust of business means your employees and candidates will likely now have less trust and confidence in anything that you say </li></ul><ul><li>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 </li></ul><ul><li>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 </li></ul>
    29. 29. Potential problems <ul><li>8) Managers will focus less on recruiting </li></ul><ul><li>Manager’s interest in recruiting will decrease even further as the stress from their business workload increases, while their available staff decreases </li></ul><ul><li>They certainly won't be doing it as often </li></ul><ul><li>Frustration when many of their “active searches” are never be completed because of frequent &quot;surprise&quot; hiring or budget freezes </li></ul><ul><li>Their lack of interest in reading resumes and interviews will increase your time to fill </li></ul>
    30. 30. Potential problems <ul><li>9) Technology budgets </li></ul><ul><li>Budget for buying new technology (ATS systems or new software) are likely to disappear… but deals are available </li></ul><ul><li>So either make your purchases immediately or be prepared to live with what you got for a while </li></ul>
    31. 31. Potential problems <ul><li>10) HR politics will get worse </li></ul><ul><li>Build over buy will predominate </li></ul><ul><li>They will ask you to fund other HR positions </li></ul>
    32. 32. <ul><li>  </li></ul><ul><li>Work with the CFO </li></ul>
    33. 33. Build CFO “street creds” <ul><li>Building the business case </li></ul><ul><li>Show you are “efficient” / low cost provider </li></ul><ul><li>Quantify recruiting impacts on revenue in dollars </li></ul><ul><li>Calculate the risks, delays & the added startup costs of reassembling the recruiting function </li></ul><ul><li>Utilize split samples </li></ul><ul><li>Turnaround weak business units </li></ul>
    34. 34. Generating additional revenue <ul><li>Increase revenue or save big bucks </li></ul><ul><li>Work with GM’s </li></ul><ul><li>In-house temp agency </li></ul><ul><li>Speak for dollars </li></ul><ul><li>Bring executive search in-house (Savings and exposure) </li></ul>
    35. 35. <ul><li>  </li></ul><ul><li>Other possible action steps to consider </li></ul>
    36. 36. Action steps for recruiting <ul><li>Prioritize your jobs and best recruiters </li></ul><ul><li>Revenue generating jobs </li></ul><ul><li>Rev impact jobs </li></ul><ul><li>Focus on growing business units </li></ul><ul><li>Focus on growing regions </li></ul><ul><li>Mission critical jobs </li></ul>
    37. 37. Action steps for recruiting <ul><li>Focus on recruiting innovators </li></ul><ul><li>Calculate their huge revenue and TTM impact (300 times) </li></ul><ul><li>Realize that they are hard to sell </li></ul><ul><li>Realize that they look and act differently during the hiring process </li></ul>
    38. 38. Action steps for recruiting <ul><li>“ Do more with less” using “OPT” </li></ul><ul><li>No $ Referrals (Give me 5, Drawings, Edward Jones, AmTrust) </li></ul><ul><li>Events (Bring back 3 names) </li></ul><ul><li>Employment branding (Speaking and writing) </li></ul><ul><li>Social network profiles (EE profiles) </li></ul><ul><li>Blogs </li></ul><ul><li>Employee generated videos (Deloitte) </li></ul><ul><li>CEO calls to candidates </li></ul><ul><li>PDA parties </li></ul>
    39. 39. Action steps for recruiting <ul><li>Identify & then use low cost but high impact tools </li></ul><ul><li>Boomerangs / corporate alumni </li></ul><ul><li>Google searches for names </li></ul><ul><li>New hire “who else is good” </li></ul><ul><li>Reference referrals </li></ul><ul><li>Names research </li></ul><ul><li>Use interns </li></ul><ul><li>Contests </li></ul>
    40. 40. Shift to high impact tools <ul><li>“ Received 3 times the amount of applications” </li></ul><ul><li>48 hrs with videos was equal to 5 mths using ads </li></ul>
    41. 41. <ul><li>  </li></ul><ul><li>Finally… other things that recruiters can do </li></ul>
    42. 42. Expand your Talent Management capabilities <ul><li>Other things recruiters can do </li></ul><ul><li>A focus on internal movement – Rapid movement to areas of higher return (Booz Allen) </li></ul><ul><li>Retention – Use sales skills to keep the best </li></ul><ul><li>Aid in employment branding </li></ul><ul><li>Help with layoffs </li></ul><ul><li>Handle outplacements </li></ul><ul><li>Sales </li></ul>
    43. 43. <ul><li>Did I make you think? </li></ul><ul><li>Any questions? </li></ul><ul><li> </li></ul>