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The Recession’s Lasting Legacy for Recruiting

by
John Zappe
May 26, 2010, 5:34 am ET

As the nation and the world emerge from the depths of the recession, labor economists tell us that this recovery will be slower and bumpier than most Americans living today can remember. Like the Great Depression of the 1930s, this one will leave its scars on the economy and the national psyche. Employers will feel its consequences rippling through their workforce and their recruiting efforts, with effects lasting for years, if not an entire generation.

What are the consequences for employers? What are the long-lasting changes the recession has wrought on the recruiting and retention of workers? There are several, say industry leaders, vendors, suppliers and individual recruiters.

Foremost, probably predictably, is the need to rebuild recruiting programs. Beyond that, there are almost as many opinions concerning the recession’s impacts as there are people I asked about it. Some predict that the cuts to job board spending will be permanent; others say social media recruiting will become a key sourcing tool, others suspect it will never amount to more than a minor tool; most expect that recruiting will be held to a higher standard of performance and economy.

Out of all the predictions and expectations — those I solicited and those I came across in discussions and blog posts and even tweets — I distilled four broad trends. You can read about these in more depth in the July issue of the Journal of Corporate Recruiting Leadership. For now, here’s a brief look at these trends.

More will be demanded of recruiting efforts as employers focus on ROI.

The data shows that worker productivity rose during the recession even in the face of such demoralizing necessities as layoffs, wage freezes, and cut or limited benefits. Recruiters will be pushed to hire more of the kind of workers who can maintain the momentum, and will be increasingly judged on the performance of their hires. The emphasis to control costs won’t abate, sending recruiters looking for alternatives to traditional sourcing channels. Among the beneficiaries will be pay-for-performance job posting, SEO, and corporate career sites.

Reliance on RPOs and staffing firms will grow.

This is a controversial trend in that there’s not general agreement it has longevity. The RPOs right now are flush, as employers who gutted their recruiting departments suddenly find themselves in a hiring bind. Smaller companies, who may have relied on a generalist to handle recruiting, are making first time calls to RPOs. Mary Delaney, CEO of Personified, CareerBuilder’s RPO and recruitment consultancy, says the agency’s revenues jumped dramatically in the first quarter as her 120 recruiters conducted an ever-increasing number of searches.

The question is: can the RPOs hang on to the new business and gain acceptance as a replacement for in-house recruiters, or are the services destined to be mostly supplemental?

Assessment usage will expand as companies struggle to make better hiring choices.

Whether it’s done in house or outsourced, candidates are undergoing reviews that are more rigorous and demanding. And as the stakes get greater, so does the testing. Forbes reported this week that “psychological scrutiny and rigorous simulations are fast becoming a requisite part of the interview process.” The magazine said that a two-day CEO assessment can cost as much as $25,000 per candidate.

Retaining and promoting talented workers will present unique problems as senior staff delays retirement.

Mark Mather, associate vice president of the Population Reference Bureau, says boomers are now expecting to work beyond the traditional retirement age of 65. A Rand study says that the proportion of workers ages 65-75 is expected to rise to 25 percent this year, up from 17 percent 20 years ago.

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. Valentino Martinez

    The good and bad thing about harsh recessions is that they tends to cull the workforce. How that fact relates to recruiting is this–top performers, who are politically astute, will be embraced and these astute top performers will define future leadership.

    All too often in major layoffs, and I’ve been around to see many, top performers are retained, as long as they are not “boat rockers”–and so is a strong percentage of “hangers-on”, or employees who are connected, protected, beautiful, senior and/or lucky. Harsh recessions eventually expose these characters and position many of them for the boot (though some, like cockroaches, will survive even a recession as bad as this one).

    So the words to the wise for getting and keeping the jobs of the future is: Average performance is the new BAD and Above Average performers are the new GOOD. Therefore thriving in the new Millenium will require one’s performance to be EXCELLENT and consistent, because being good now and then will not be good enough.

  2. Brian Kevin Johnston

    John- Thank you for your article…

    “As the nation and the world emerge from the depths of the recession, labor economists tell us that this recovery will be slower and bumpier”

    I agree, however having been through 2 major recessions (and Thrived), and still having my faith, family, friends, finances etc. in tact, I sort of feel “bullet proof” because our process works… its called HARDWORK, and SERVICE.. two terms our “entitled” culture has lost our way in… “Those who serve will survive!” Best, Brian-

  3. Keith Halperin

    Keith Sez:

    Wake me when the Great Recession is over!
    When is that? I think it’s when the unemployment rate stays below 7% for three straight months. How’d I come up with that? It’s splitting the difference between the peak UE rate of 6.3% in 6/2003 during the Dot Bomb Recession (Could it really have been that low? Naah!) and the peak UE rate of 7.8% in 6/1992 during the GWI Recession. (It was most recently at that level 11/2008.)

    In human terms and not just cold numbers: it means to me that fair-to-middling recruiters can do all right for themselves, not just the superstars. I don’t expect to see that again for awhile, but I hope I’m way wrong…

    Cheers,

    Keith

  4. Illiana Murray

    re: comment from Valentino–

    Your comments are spot on. The recession has raised the bar and employers are now “making a list and checking twice”. Being the average employee is now a liability.

    Regards,
    Illiana

  5. Mike Hard

    John – nice article and POV. Lots of nooks & crannies to dig into, but I noted your prediction that “as employers who gutted their recruiting departments suddenly find themselves in a hiring bind”. RPO’s will be the beneficiaries of this trend, as will contingent recruiters in general. BountyJobs, which tracks 3rd party recruiting activity, saw hires made thru their headhunter marketplace jump sharply starting in March – rising 40% for Mar/April/May vs. the tepid results in the 3 months earlier. The good news for headhunters: employers are saying recruiting staff is so tight (and job board performance so limited) that 3rd party search is very alive and well – for the most critical positions at least.

  6. It may be slow, it may be bummpy, but it’s gonna hurt. Unless….. | Random Musings

    [...] Areas have a positive Outlook for Quarter 3 2010.  According to his May 26th ERE article The Recession’s Lasting Legacy For Recruiting, John Zappe said: “Employers will feel its (the recession’s) consequences rippling [...]

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