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Countercyclical Hiring: The Greatest Recruiting Opportunity in the Last 25 Years

by
Dr. John Sullivan
Aug 24, 2009, 6:20 am ET

Being strategic always requires some degree of unconventional thinking. If you are a corporate recruiting manager and you are looking for an opportunity to have a strategic impact, you need to understand why today is literally the best time to be actively recruiting in at least the last 25 years.

I’ll demonstrate why there is a confluence of factors that make this a “perfect storm” of opportunity if you implement a countercyclical hiring strategy.

I’ll start out with three analogies that show how this current economic lull is an outstanding opportunity to fill your forecasted senior management vacancies that will result from baby boom retirements.

Analogy #1 — Understanding the Perfect Time to Buy

Any manager who has participated in a significant volume of corporate purchasing negotiations realizes that there are economic and competitive factors that make a particular period the “perfect time” to get the best deal. The “best deal” means a procurement opportunity where, with little effort, you are likely to get the best quality, the broadest selection, and at the lowest price.

The five factors that provide a “perfect deal” opportunity include:

  • No competition — when your competitors aren’t buying.
  • High availability — when the available quantity or volume of the product is high so that sellers have a surplus.
  • High-quality — when the quality of the product is high.
  • Low cost — when the cost is low (because of the high supply and the low demand).
  • Low supplier power — when the weakened bargaining power of the seller has made them more open to concession in terms.

For many markets, it’s a “once in a generation” perfect-storm opportunity when these five factors occur simultaneously. While many nations do not have a labor shortage, many including the United States do have a talent shortage.

If your organization has struggled in the past two decades to find top talent to fuel growth initiatives, this temporary respite in competition for labor should be leveraged to the hilt.

Procuring high-quality talent at low cost and with minimal effort would certainly make you a hero among senior managers with mounting volume of work to be completed.

Analogy #2 — Understanding the Perfect Time to Acquire Exceptional Sports Players

Let’s assume for a few minutes that you run a professional sports team. You would quickly realize that the best time to build a sports franchise by recruiting enough star players to give you the capability of winning the championship would be when most of the following “five factors” are present:

  • No competition — the other top teams aren’t recruiting, so no one else even bids on top talent.
  • Talent costs were low — because no one is actively bidding, the costs of acquiring any available talent would be low.
  • High-quality talent available — an opportune time to recruit would be when there were a number of genuine superstars available and in addition, there was also a large volume of high-quality talent available across all of your key positions.
  • The players lack power — whenever there is a lack of competition and few open positions, even exceptional players become amenable to considering and accepting job offers that they would not have previously been considered.
  • Everyone is recruitable — and most important, all in the case where all no trade clauses have been made null and void, you could literally “take” any player from any team without any remuneration or legal restrictions.

Actions that you would take when most or all of these factors occurred would include:

  • You would over-hire players — should this “perfect storm” confluence occur, the opportunity would undoubtedly excite both you and your managers. It would probably also cause you to expand your recruiting, so that you would “load up” with talent, even in positions where you were already satisfied with the talent you currently had.
  • You would designate “evergreen jobs” to ensure you never have a shortage of great players. For these few roles, you would continually recruit and hire exceptional talent whenever it was available at a reasonable price. The logic would be simple. In the sport of baseball, you could never have “enough” pitchers with an ERA of under 3.0. If you “own” all the talent, your competitors can’t. If you had “surplus talent” in key positions, you could just adopt new approaches to take advantage of the available talent.
  • You would make immediate “opportunity hires” — if the team that you managed was a professional golf team, you would have previously assessed all of the top talent in your league. As a result, you would not need a lot of time to decide who you wanted to hire and who you didn’t.
  • You would directly “raid” other firms when they are weak — unlike in professional sports, there are no restrictions on recruiting away top talent from competitors, so you would develop an active poaching process to take their best players when their team was at its weakest.

Analogy #3 — The “illogical” current corporate recruiting strategy

In 99.9% of all corporations, if Tiger Woods (or his equivalent in business talent) walked into your recruiting office and you did not have an open requisition for his specific position, you would literally send him away. Because the economy is down, corporate recruiting is stuck in cost-cutting mode. It isn’t doing any significant sourcing or hiring and the CFO may in fact have already decimated the recruiting team.

Most would classify this current time period as “bad times” when you lay low to avoid getting the recruiting budget cut even further. You certainly wouldn’t view this as the best time for recruiting in a generation.

All the Factors Point to a Great Time to Recruit

The purpose of these three related analogies is to demonstrate the identifiable factors that make it a perfect time to buy. You might be surprised to learn that whether you’re buying products or sports stars, the factors that make it “an ideal time to buy” are strikingly similar.

Currently, top talent is abundantly available; at no other time in recent economic history has the pendulum swung so far toward the advantage of the employer.

Unfortunately, most corporate recruiting leaders haven’t taken advantage of this opportunity. Perhaps the leaders in corporate recruiting are too close to the situation to actually see the tremendous opportunity that is facing us today.

Because revenues are down, today isn’t the perfect time to do large-scale hiring, so implement select “surgical hiring” where you selectively build your organization by hiring a relatively small number of exceptionally talented individuals for your key positions.

In the following section I’ve provided the most important factors that should cause you to begin countercyclical hiring.

The Perfect Time for Recruiting

  • Competitors are out of the market — almost no one is in the talent market right now. Most firms have instituted a hiring and/or a budget freeze, which means the competition for talent is ridiculously low. They won’t need to enter into a single bidding war for top candidates when the talent competition is out of the marketplace. In addition, you might feel relatively alone among corporate recruiters, if you choose to visit college career centers.
  • High-quality talent is available — in some downturns, only low-quality talent is laid off by corporations. However, during the current downturn, because of a large number of recent mergers, facility closings, and the complete elimination of some major firms, the amount of extremely high-quality unemployed or underemployed talent available around the world is at an all-time high. Even currently employed top talent who have jobs haven’t been treated very well during the downturn, and a record number of over 60% of these fully employed individuals are open to new opportunities.
  • Costs are low — the lack of competition and the down economy have forced the price of available talent in almost all positions back down to reasonable levels. New referral approaches and Internet and social networking recruiting tools have also reduced the cost of recruiting talent. Taken together they have dramatically decreased the cost of adding talent.
  • Talent is amenable — the lack of available job opportunities has “shifted the power” away from talent and toward corporations to the point where top talent will consider job opportunities and options today that they would have rejected as little as two years ago.
  • The coming retirement wave — the dramatic reduction in stock prices and 401(k) values has temporarily postponed the upcoming wave of retirements. Despite this delay, these retirements will come eventually and if the economy turns around suddenly, firms may very soon be faced with a tidal wave of retirements. Because large-scale retirements may begin in as little as a year or two, now’s the perfect time to “stockpile” and develop possible replacements for your most experienced managers and technical talent.
  • The coming retention problem — if your organization is among the many that have undergone layoffs, frozen hiring, reduced budgets, and maybe even cut salaries through the use of furloughs, the odds are that your current employees are overworked and stressed. This less-than-perfect treatment coupled with the fact that many of the “new generation” of employees have little to no loyalty to a single firm will result in a dramatic increase in turnover as soon as more external opportunities begin appearing. Obviously, you should begin retention efforts immediately but it may not be possible to remove the “bad taste” that your current employees experienced. Expand your recruiting efforts to find replacements and realize that new hires are likely to be more loyal than most employees because they are now seeking security and they would certainly remember the fact that you “saved them” during a period when no one else would even look at their resume.
  • Remote work is more feasible — the unwillingness of some talent to relocate has limited a firm’s talent options, but the increase in knowledge work coupled with the currently available technology makes it possible to allow top recruits to work at home with no loss in productivity.

Other advantages to countercyclical recruiting include:

  • There are benefits if you “begin looking early” — the competition in the market for products and services has not slowed down in the slightest. As a result, companies are now planning numerous new technologies and processes to increase their productivity. By hiring now you provide new hires with enough training and development time to be up-to-speed as these new technologies come online. Hiring individuals before you need them also gives them a chance to adjust to your corporate culture. Hiring a surplus of talent will provide you with an opportunity to “release” employees or new hires who can’t meet productivity goals. A final advantage of beginning your recruiting search early is that even if you merely stretch out the time period over which you are actively looking for talent, you automatically increase the odds that one or more top individuals will become available during the extended search time.
  • So what if you hire too many? — can you imagine a sports team having too many stars of the caliber of Tiger Woods, Kobe Bryant, or A-Rod? With this exceptional talent, you could more easily beat your competitors. I once saw a general manager at Agilent Technologies respond with astonishment when an HR manager suggested that it would be a problem to have a “surplus” talent in our number-one, high-impact position. The GM responded without hesitation that “would be a nice problem to have.” If we had too much talent in that position, “we would just try new things because of our increased capability.” I hope that you can see that, yes, there would be some added costs in “over hiring” but the opportunities and benefits would far outweigh those costs.

Update Your Recruiting Strategy with These Seven Elements

Hopefully the analogies and the eight factors listed above have convinced you that now is the time to rethink your approach to recruiting.

If so, there are seven major elements related to countercyclical recruiting that you need to consider adding to your current recruiting strategy:

  1. “Pre-need hiring” — this approach is where you build relationships and hire talent before you actually need it in order to provide ample time to develop and acclimate to your culture .
  2. “Over hiring” — over hiring is where you purposely hire more talent than you immediately need in order to prepare for an “upturn” in demand. Alternatively, you can also use this as a stimulus to “swap” poor performing current employees with high-quality replacements.
  3. Build a talent pool — a “talent pool” is a group of highly desirable talent that you identify, assess, and build relationships with over time, so that when an opening occurs, most of your sourcing and initial assessment is already done.
  4. Opportunity hiring — this approach involves quickly “pull the trigger” and immediately hire superstars (that you have pre-identified and pre-assessed) immediately as they become available.
  5. Most wanted list — this element is a combination of talent pool and opportunity hiring. Under this process, at the beginning of the year you select the top 25 (up to 100) most desirable individuals in your industry. You essentially “prequalify” them and you then spend the rest of the year trying to recruit them. As soon as one becomes available, you make a hiring decision.
  6. Employer brand re-building — odds are that if your firm has undergone layoffs, furloughs, mergers, or bankruptcy that your external image as a “top place to work” has been severely damaged. Add to corporate actions the fact that numerous opportunities for employees (current and former) to share their perspective online have popped up in recent years and it becomes clear that nearly every organization needs an aggressive strategy to manage their brand perception online.
  7. Approaches for identifying when your competitors are recruiting – “countercyclical” recruiting is where you recruit talent during times when other firms are out of the talent market. If you are not sure who is recruiting actively, have an intern check your competitor’s websites to see which jobs they are recruiting in high volume.

Final Thoughts

A handful of firms (Google, Slide, Microsoft, Principal, and HP) have to be recognized because they understood both the need and the opportunity to continue hiring during this downturn, even though they too may have been cutting their workforce.

However, the majority of recruiting directors haven’t taken advantage of this once-in-a-lifetime recruiting opportunity. I can only identify two major reasons for their lack of action.

The first is that they have just failed to be strategic and instead had a misdirected focus on cutting recruiting costs, rather than the more impactful strategic focus of increasing corporate revenues.

The second more palatable reason is that they understood the opportunity but they just didn’t have the capability of building an effective “business case” with senior management. That latter reason in one I’ll tackle in a future article.

This article is provided for informational purposes only and is not intended to offer specific legal advice. You should consult your legal counsel regarding any threatened or pending litigation.

  1. John Hennessy

    This is all very logical – except logic and business don’t seem to run together any more!

    I’ll risk an analogy with a different sport – boxing. In modern business the boxer, the CEO is paramount. Only he generates ideas and perspectives. He embodies the company. The rest of us? Mere ciphers who are interchangeable and can probably be picked up from the audience at the next fight. Our level of skill and our extended abilities do not matter. All that counts is for us to be able to hold the towel or the bucket or the fist for a few seconds right now. We can be disposed of and replaced with zero effort.

    This mess, this chaos around us is the result of poor management, greed and hubris. However, there is little sign of any change for the better in the next upswing. So – although counter-cyclic hiring is a good idea, I doubt that many if any companies will have the grit to try it.

    Dr. John Hennessy

  2. Brian Kevin Johnston

    Dr. Sullivan- Thanks so much for the great article. My firm (Boutique 3rd party) has done good in this downturn.

    The main reason is (among others in your well-written article) our competition is gone. (60% is a # I hear often, but not 100% sure as fact)

    We have “opted out” of the recession, and are not participating in this global fear… (sickness)

    I have total faith in the future, and believe recruiters/HR/Staffing professionals are some of the most intelligent, dynamic, well-versed, agile folks in the world. We are so excited for the future!

    Best regards
    Brian-

  3. bill josephson

    In taking advantage of this difficult jobs market/economy by grabbing those Tiger Woods’ out there at a cheap price what happens if/when the economy/jobs return? Will Tiger opt to stay with his present employer despite other prospective employers offering much more? How much will it cost to replace Tiger? What are the chances Tiger accepts a counter-offer?

    As for putting top candidates on the shelf for the future. As the market becomes positive won’t the Tigers out there overnight have a completely different employment opportunity? Whereas he may not have a choice of a company today he might have a half dozen instantaneously when companies start hiring again.

    Finally, in sports you can often sign superstars to multi year deals. In industry one’s employment is “at will” meaning either party can part companies at any point. If Tiger signs today with a company “at will” what’s to keep him?

    My point is having access to talented professionals is a good thing. However, the business climate timing can change all dynamics overnight, and all that great planning could all go for naught creating a high expense if all the Tigers simultaenously need to be replaced having left the company.

    Bill

  4. Merlynn Bertini

    While there are some positive points made. I am not in agreement with all of the comments in this article. There are some conclusions that were drawn which are not valid–such as assuming the wave of baby boomer retirement. With the impact of the economy, many baby boomers have (a significant number out of necessity) delayed retirement–for significantly longer than 6 – 12 months. The pre-need and over-hiring concept while in theory sounds good, is not practical. Companies are struggling to stay in business–many cannot afford their current payrolls and their employees are cutting back hours–they definitely cannot afford to expand their payrolls. Additionally, how likely are shareholders going to embrace this strategy after hearing the company’s losses for the quarter–yet seeing expanding payrolls?

    The comment by Bill above was very good–and quite appropriate. The article talks about “opportunity hiring” but also discusses “low-balling” on salary. The recruiting staff, spends their time finding this key talent, then is going to make low offers?–hmmmm It is never a good idea to try and “low-ball” top talent. It is only a matter of time before that individual leaves, and the company winds up with a negative reputation about how employees are treated. Probably one of the quickest ways for all the branding efforts to go down the tubes. A company may save a few dollars in the short term, but in the long term, they will not only lose talent–top talent, but end up paying more for their future hires–a lot more.

  5. Keith Halperin

    I agree with John H, and believe that much of recruiting is based on the GAFI Principles:
    Greed, Arrogance, Fear, and Ignorance (or Incompetence).

    As an example, many major companies base their hiring policies on the disproven or unproven prejudices and biases of the founders or major executives of the organization. As most individuals in positions able to act upon this information wish to keep their jobs, this is rarely brought to the attention of those in authority.

    In theory, it should be possible to develop Generally Accepted Recruiting Principles (GARP) for a wide spectrum of companies, much as we have Generally Accepted Recruiting Principles (GAAP), and am perplexed as to why the recruiting profession has not developed this decades ago. I can only speculate that if such were to be developed, it would make many influential decision makers look quite foolish in hindsight.

    Cheers,

    Keith Halperin keithsrj@sbcglobal.net

  6. Links 08/25/2009

    [...] Countercyclical Hiring: The Greatest Recruiting Opportunity in the Last 25 Years : ERE.net [...]

  7. Brian Kevin Johnston

    Time to “take a look in the mirror”… for some of us (Including myself/firm)

    The results (Manifestations) in our lives are in direct correlation with our beliefs.

    AMAZING how much power people “ALLOW” others to have over them… (CEO’s/EXECS)

    “There’s a big difference between “knowing about” something and truly “knowing” it. If you aren’t creating results you don’t really know”

    Best intentions,
    Brian

  8. Jeremy Langhans

    2009: Purchase A-Player Talent w/ B-Player $.
    2010: Lose A-Player Talent to another Firm that pays her what she’s worth.
    2011: Req. still open & only C-Players left in pool.

    Enjoy!
    Jer

  9. John Hennessy

    Or, Jeremy:

    2009 : Putchase A-player talent w/ b-Player $ on the understanding that a certain level of performance and an economic trip point trigger a-player $

    2010 : find out that a-player is actually a c-player with a loud voice

    2011 – Hire a guy you thought was a c-player 2 years ago and discover he is an a++!

    The evidence of recent times shows that many of the a-player folks were actually d– dressed up with a series of fancy titles and great expertise at getting hired! To continue the sports analogy – the shiny golf clubs and the nice shirt concealed the fact that they were lousy players.

    You should hear what I have to say about my own discipline, marketing!

    John

  10. Brian Kevin Johnston

    cyn·i·cism (sĭn’ĭ-sĭz’əm)
    n.
    1. An attitude of scornful or jaded negativity, especially a general distrust of the integrity or professed motives of others: the public cynicism aroused by governmental scandals.
    2. A scornfully or jadedly negative comment or act: “She arrived at a philosophy of her own, all made up of her private notations and cynicisms” (Henry James).

    op⋅ti⋅mism

      /ˈɒptəˌmɪzəm/ Show Spelled Pronunciation [op-tuh-miz-uhm] Show IPA
    Use optimism in a Sentence
    –noun
    1. a disposition or tendency to look on the more favorable side of events or conditions and to expect the most favorable outcome.
    2. the belief that good ultimately predominates over evil in the world.
    3. the belief that goodness pervades reality.
    4. the doctrine that the existing world is the best of all possible worlds.

    ERE COMMUNITY: Which definition are YOU? Which people to YOU want to align YOURself with based on there comments on ERE?

    Have a GREAT day…
    Brian-

  11. bill josephson

    I’m a realist

    1. concern for fact or reality and rejection of the impractical and visionary

    2 a doctrine that universals exist outside the mind specifically the conception that an abstract term names an independent and unitary reality b. b a theory that objects of sense perception or cognition exist independently of the mind compare nominalism

    3. the theory or practice of fidelity in art and literature to nature or to real life and to accurate representation without idealization

    Bill

  12. John Hennessy

    and I’m an optimistic cynic!

    I’ve been part of some great things and my colleagues would say a key player. I’ve also seen those great things destroyed and noted the abilities of the destroyers. I live in hope that I will get to do the great things again, to hear once more a junior colleague say “this is the best place to work ever” after she has done a string of unpaid overtime. However, I also recognise that many of the readers here would class me as a c-player and that they may stand between me and a job where I can contribute!

    John

  13. Keith Halperin

    “Here, here,” Bill. I like to think of myself as a meliorist- which means I believe things can be improved. I also think that more often than not, meaningful change is slow, hard, and with frequent setbacks, but that doesn’t mean we should give up- on the contrary.

    When I was younger, I was taught that people are deeply rational beings, and that presenting them with the objective facts is sufficient to have them make correct decisions. Over the past several years, Behavioral Economics and the recent *Behavioral Recruiting (not “Behavioral Interviewing”) is showing that we as decision makers are subject to substantial numbers of hard-wired prejudices and biases, which can’t be eliminated, but rather ACKNOWLEDGED AND WORKED WITH. I suggest we deal with people (in a positive and respectful manner) as they really are, rather than as we would wish them to be.

    Cheers,

    Keith keithsrj@sbcglobal.net

    *The application of Behavioral Economics to Recruiting

  14. bill josephson

    Couldn’t agree more, Keith. I stay positive and respectful with candidates dealing with them as they really are not what I wish them to be giving realistic/credible perspectives to assist them. If I’m talking up this economy with “we’re on the verge of a breakout recovery” they won’t take me seriously figuring I’m a sheister selling them a bill of goods.

    Just because I have a client or position or two and as a 3rd party recruiter hence ‘employed” doesn’t therefore mean the economy is generally roaring. Candidates, I find, specially the passive invisible candidates I speak with appreciate a real world approach.

    Bill

  15. Keith Halperin

    Thanks, Bill. I fear that the hype will continue as long as there are slick hucksters ready to sell the latest recruiting snake oil panacea to desperate and not-yet insolvent recruiters and their superiors *who fail to recognize that in most cases they are futilely “rearranging the deckchairs on the Titanic” of the elimination, automation, or outsourcing of the majority of their duties. Of course, there’s nobody remotely like that on ERE.

    Cheers,

    Keith

    *http://www.sing365.com/music/lyric.nsf/Won%27t-Get-Fooled-Again-lyrics-The-Who/761EF79AAB42FA9C48256977002E72F9

  16. Brian Kevin Johnston

    “The world is a great mirror. It reflects back to you what you are. If you are loving, if you are friendly, if you are helpful, the world will prove loving and friendly and helpful to you. The world is what you are.”

    Best,
    Brian-

  17. Jeremy Langhans

    i am an A-Player Talent.
    i am a regular guy.
    and, at times, i am an utopian ★

    * of or pertaining to or resembling a utopia; an idealistic (but usually impractical) social reformer; “a Utopian believes in the ultimate perfectibility of man”
    * characterized by or aspiring to impracticable perfection; “the dim utopian future”; “utopian idealists”; “recognized the utopian nature of his hopes”

  18. John Hennessy

    I must say this is fun. The Who and Thomas Moore turning up in the same discussion. Utopia itself, of course is a work of cynicism paralleled only by The Prince.

  19. Allison Boyce

    I am addicted to Fast Company – the magazine. Page 66, November 2009 – “A Run on the Bankers” – Private Bancorp individually poaches 160 LaSalle bankers who were affected by the BofA acquisition. From Ralph Mandell, their co-founder and chairman, “I thought to myself, This is going to be a once in a lifetime opportunity.” He could hire his way to the top. From the article, ‘Mandell says he is a little surprised how smoothly the big poach has gone…it has been “Transformational”.

    What he did – build a talent map – who I want at LaSalle, found a sourcer/recruiter who could call and say, “Don’t Hang Up, Just Listen.” and what he got – total Midwest banking dominance. In a sea of unimaginative naysayers, this IS being done and with disruptive results.

  20. Keith Halperin

    Thank you, Allison. I may be too skeptical, but it doesn’t seem all that hard to talk to a bunch of folks likely to lose their jobs or who thought they might.

    As it says at http://www.despair.com:

    “HAZARDS
    There is an island of opportunity in the middle of every difficulty. Miss that, though, and you’re pretty much doomed.”

    :)

    P.S. Please don’t call me unimaginative!
    ;)

    -kh

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