For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

Over half the cost comes from tax cuts for workers and small businesses. The balance is in spending on infrastructure repairs and improvements, especially to schools; at least 35,000 of them, the President said to a joint session of Congress. (The full text of his speech is here.)

He proposed a $4,000 tax credit for hiring long-term unemployed workers, and other credits for hiring veterans. He called for extending unemployment benefits and providing money to states to pay teachers, rather than lay them off.

If adopted, businesses would have the payroll tax breaks adopted in 2010 extended and even expanded to cover not only new hires, but salary increases, too. He also promised that companies doing business with the federal government would get paid faster for their work.

Homeowners will get help refinancing their mortgage to take advantage of low rates that, Obama said, could save them $2,000 a year.

Paying for the cuts and spending, Obama said, will come from adjustments to Medicare and Medicaid spending, elimination of tax loopholes for the richest Americans and the richest companies, as well as reforms to the tax code.

Often in his 32-minute speech, Obama called on Congress to act quickly to adopt the most urgent provisions of what is now called the American Jobs Act. About the payroll tax cuts, teacher funding aid, the unemployment benefits extension, and, indeed, the entire proposal, Obama said,  “You should pass it right away.”

Despite the frequent applause that came from Republicans as well as Democrats, getting the Act through Congress as he outlined it isn’t likely. The Wall Street Journal in its first report on the speech said economists “offered tepid enthusiasm” for the plan because of its small size and emphasis on temporary payroll tax cuts. The paper also noted that even the White House doesn’t expect the plan to survive as presented.

In an unscientific poll coinciding with the President’s appearance, online Journal readers split almost almost exactly between an A and F when asked to grade the speech. A third of the voters were scattered among B,C, and D.

Not since Franklin Roosevelt has a presidential speech to a joint session of the House and Senate on the economy had any effect, regardless of the boldness of the plan or its details.

“It is impossible to trace any recovery to the presidential proposals in almost every case,” says 24/7 Wall St., a financial news and analysis site that conducted a review of presidential speeches to joint sessions since the end of the Great Depression. 24/7 found seven speeches dealing with business and economic issues and concluded “they had virtually no effect on the economy, despite the detailed proposals.”

That alone is bad mojo for a president who needs to hit a homerun. But as hints about what Obama’s plan will contain began to leak, economists were already expressing mixed opinions  about some of the proposals, especially the hiring tax credit. It’s not certain that will be part of the plan; presuming it will be, however, economists were divided about the effect tax credits or exemptions have in spurring hiring.

Last year’s HIRE Act exempted companies from paying payroll tax on every unemployed person they hired. That was an immediate 6.2 percent break (on the individual’s salary). If the person stayed on the payroll for a year, the company also got a $1,000 tax credit.

To some extent, the HIRE Act worked in getting companies to hire the unemployed. The U.S. Treasury Department said in July 2010 that businesses hired some 4.5 million qualified unemployed in the first few months. But Alan Krueger, then the  Treasury Department’s chief economist and now the President’s nominee to be chairman of the White House Council of Economic Advisers, cautioned about attributing the hiring to the Act.

Other economists are much more enthusiastic about payroll tax cuts as a hiring incentive. “By extending the payroll tax cut — and the provision of additional weeks of unemployment benefits to workers who have exhausted their 26 weeks of state-funded UI benefits without finding a job — policymakers can avoid increasing the risk of renewed recession,” the Center on Budget and Policy Priorities wrote in a blog post.

Extending unemployment benefits is expected to be another component of the President’s plan. Extended benefits are due to expire at year’s end unless Congress renews funding. Currently, more than 6 million Americans have been out of work for more than 6 months.

This morning, the Labor Department reported that initial claims for unemployment rose by 2,000 last week to 414,000. Economists had expected a decline. The report also said that almost 3.6 million workers were receiving emergency or extended unemployment benefits.

Without again extending federal unemployment aid, many economists caution that the conditions could worsen, especially in areas where falling real estate prices have left owners underwater on their mortgage. Without extended benefits to prop them up, more homeowners are likely to walk away from their mortgage.

Of course, as with everything, there are those who believe that extending benefits discourages job seeking.

As a final example of the challenges Obama faces some Republicans are threatening to boycott his speech. Enough have announced they’ll be elsewhere tonight that House Speaker John Boehner scolded his fellow Republicans for being discourteous. “We ought to be respectful, and we ought to welcome him.”

If you have questions about the plan, the White House is assembling a panel of Administration economic experts to answer them. You can tweet your question (using #WHChat), or post to the White House Facebook page or via this form.

A Kelly Services survey says  economic necessity, the desire for more freedom and flexibility, and age have driven up the number of workers not tied to a single company for their livelihood. It’s a dramatic change from 2008, when Kelly’s survey found 26 percent of workers describing themselves as free agents.

Also fueling the rise is the increasing reliance of American business on contingent and contract labor, say the authors of a whitepaper detailing the results. Companies, note Jocelyn Lincoln and Megan M. Raftery, “can scale up and down faster and easier by adopting more flexible workforce strategies.”

A significant driver is the economy. Respondents to the 2011 survey were twice as likely as their counterparts in 2008 to say they became free agents because they were laid off or couldn’t find another job.

That suggests, the authors say, that as recovery occurs, some of the newly minted free agents will return to a traditional employee role. However, “the trend toward more free agents is still very strong and is increasing worldwide. Accounting for differences in legislative frameworks and social and cultural norms, we estimate that the global free agent population is at
least 20 – 30% of the entire workforce, and growing.”

Recently, USA Today wrote about the phenomenon of well-established professionals abandoning comfortable jobs to pursue their own interests.  “Employees bid goodbye to corporate America” chronicled several workers, including two recruiters, who quit to follow their own path.

As the Kelly Services report makes clear, the move by knowledge workers to freelancer, contractor, consultant, entrepreneur or other type of free agency is not a generational issue. Gen X workers saw the biggest increase in self-described free agency. In the 2008 survey, 18 percent of the Gen X workforce so described its status. Now, 38 percent do. That’s a 111 percent increase in just three years, far ahead of the 81 percent rise among Baby Boomers and the 74 percent increase for the Silent Generation, all of whom have now reached retirement age.

Numerically, the Boomers and older workers account for the lion’s share of the free agent population. Together, they comprise two-thirds of all free agents, making the free agent group highly experienced and well educated, the authors write, noting:

More than one-third of all free agents have earned a master’s degree or higher, and compared with traditional employees, more free agents (77% compared to 62% for traditional employees) possess technical or professional skill set.

What does this trend mean for American business?

It means there’s a huge pool of available talent in nearly every discipline and industry for employers to tap. But it’s not automatic. Besides knowing how to reach these free agents, businesses need to understand what it is they want. For some, that demands a change in traditional practices.

Write Lincoln and Rafferty, “Organizations have to first learn how to adapt and integrate this flexible workstyle into their business processes and current company culture. This means forgoing traditional perceptions of employment.”

For the workers, money is only part of the equation. The Kelly survey found it’s the type of project and quality of work that most interests free agents, especially those with more experience and maturity. The third factor, after the nature of the job and the money, is the reputation of the company.

For companies wanting to  take advantage of the free agency trend, the authors make these recommendations:

1. Ensure that free agents are included in your overall workforce strategy;
2. Know how you are currently using free agents.
3. Evaluate departments, positions, and projects to see how they would benefit from free agent talent.
4. Understand the importance of your employer brand.
5. Develop options for current employees.
6. Understand the importance of properly classifying free agent workers.
7. Evaluate your workforce solutions partner.

For more podcasts, webinars, and articles on recruiting be sure to check out ERE.net!

Yet despite the disheartening jobs report, news from the field, from the people in the best position to know of hiring plans, continues to point toward recovery.

Monday, The Conference Board released its Employment Trends Index for May, which rose for the ninth month in a row. The Index stands at 95.7, up from April’s 95.2 and up nine percent over the last 12 months.

“The ongoing growth in the Employment Trends Index suggests that the disappointing uptick in payroll employment in May could just be a one-month blip, and that jobs will likely expand further in the next several months,” said Gad Levanon, associate director, Macroeconomic Research at The Conference Board. “However, as some of the components of the ETI have yet to signal robust gains, the pace of recovery in employment may remain moderate.”

Today, Manpower released the results of its quarterly hiring survey, which says 18 percent of the 18,000 employers polled plan on hiring in the third quarter of the year. It’s the third consecutive quarter of a positive hiring outlook.

Manpower crunches the results to come up with a Net Employment Outlook. For the upcoming quarter that seasonally adjusted outlook is +6 percent. (From the percent of employers saying they plan to hire more, Manpower subtracts the percent who expect a payroll decrease — 8 percent in the current report. The result is adjusted to smooth seasonal fluctuations.)

“Manpower’s survey results show a positive trend in employers’ hiring plans,” said Jonas Prising, Manpower president of the Americas. “Although we are still facing a difficult labor market, more employers indicate confidence about the direction of their businesses, and with that comes an intention to increase their workforces. We are in the early stages of the jobs recovery, and although we have a long way to go, the job market will continue to improve from here.”

If you’ve mentally done the math, you already know that the bulk of U.S. employers are sitting on the sidelines. Manpower says 70 of the firms say they plan no change in hiring. (Another 4 percent don’t know what they’ll be doing.)

Tempering the positive outlook is the current reality. In case you missed the explanation, while the BLS said the unemployment rate dropped in May to 9.7 percent, that was due to people giving up the job search and the 411,000 temporary census jobs. June is shaping up to be a month to be watched.

Thousands of newly minted college graduates will be joining (or attempting to join) the workforce. As last week’s post reported, far fewer have jobs waiting than in past years. No surprise, therefore, that AfterCollege found 86 percent of the surveyed college students and recent alums reporting the job search is difficult or extremely so.

Considering all the attention social networking sites get from the media, and from recruiters, the survey respondents said job boards and applying directly to a company were the most effective tools for job hunting. Networking with family and friends, and a referral from someone at the company were the next most effective methods.

Using a social networking site such as Facebook was considered effective by only 16 percent of the respondents. Still, that was an improvement over last year’s 11 percent.

The difficulty in finding jobs may be leading some of them to accept summer work of the sort that teenagers would ordinarily do.

Challenger, Gray and Christmas said its own analysis of BLS data suggests that the summer job market for teenagers is off to the slowest start since 1969. “The 6,000 teen jobs added in May, which typically marks the beginning of the summer employment surge for this age group, was 95 percent lower than the 111,000 jobs created for teenagers in May 2009. It is the worst start to the summer hiring season since 1969, when the number of jobs held by teenagers actually fell by 14,000,” says the outplacement firm.

On the other hand, 270,000 20-24 year olds found jobs in May, leading the firm to speculate that employers are hiring up.

“When given the choice between a 16-year-old and a 20-year-old who may have a few years of working experience, an employer is usually going to opt for the more experienced, more mature candidate,” said CEO John Challenger.

The U.S. Bureau of Labor Statistics reported this morning that 431,000 jobs were created last month. That would be a strong signal of a return to historic hiring were it not that 411,000 of those jobs are temporary positions for the U.S. Census.  “Private-sector employment changed little (+41,000),” the BLS blandly stated.

There was improvement in the unemployment rate, which fell to 9.7 percent from 9.9 percent; small consolation when economists were predicting job growth of over half a million, with at least 100,000 from the private sector.

Furthering tempering the jobs numbers was a revision to the March number, decreasing the initial 230,000 estimate to 208,000. April’s increase of 290,000 jobs added was unchanged.

Construction was the big loser, down 35,000 jobs. However, manufacturing added 29,000  jobs for the month, the fifth month in a row of gains. Temp help services was also a big gainer, adding 31,000. The sector is considered a bell cow of recovery on the belief that before employers add full-time workers, they bring in temp help. Since September, the sector has added 362,000 jobs.

Another sign is the continuing growth in the hourly work week. The report said the average week grew to 34.2 hours, up by .1 hour. For manufacturing employees, the workweek increased by .3 hours to an average of 40.5.

Among the unemployed, 46 percent have been out of work for more than six months. That translates into 6.8 million of the 15 million unemployed. Another 8.8 million are working part time because they can’t find anything else. And 2.2 million are counted as “marginally attached” because they have looked for work, but can’t find anything. They don’t officially get counted as unemployed because they didn’t seek work during the four weeks prior to the BLS survey.

Private-sector em-
ployment changed little (+41,000)

Heartening, if not full-speed-ahead news? That would seem a reasonable conclusion, except on Wall Street where traders behaved as if the news should have been better. On the initial enthusiasm, the Dow rose quickly, only to give back all the early gains and drop 57 points by lunchtime.

Nevertheless, tomorrow’s jobs numbers from the U.S. Bureau of Labor Statistics is the most anticipated of the monthly labor reports. Economists expect the report will show somewhere around 513,000 jobs were added in May. Most of the jobs — somewhat more than 300,000 is the estimate — are likely to be temporary workers hired by the Census Bureau.

Dow Jones Newswires says its poll of economists puts the average of their estimates of new, private sector, nonfarm jobs in May at 188,000. Other estimates for the overall number of new jobs range from 225,000 to 635,000.

The ADP report said small and medium sized businesses in the service sector did most of the new hiring last month. The sector added 78,000 jobs overall; large firms, those with more than 500 employees, accounted for only 4,000 of the positions.

The goods-producing sector lost 23,000 jobs overall; employers with less than 50 workers shed 24,000 positions.

One other report, actually a revision of a previous report, was released this morning that points to potential future hiring. The BLS revised its Productivity and Costs report to say that productivity increased in the first quarter of the year by 2.8 percent, rather than the preliminary estimate of 3.6 percent.

Productivity has been rising significantly throughout 2009, which, in the fourth quarter alone, saw productivity increase by 6.3 percent.

The drop in quarterly productivity may be a sign that employers won’t be able to count on increasing per worker output much and may need to hire to fill orders and serve customers.

“When the recovery first started, businesses could get more out of their existing workforces, but that’s becoming more and more difficult,” Gus Faucher, director of macroeconomics for Moody’s Analytics told Reuters.

“We are starting to see employment pick up, so we expect to see productivity growth weaken and job growth pick up as a result.”

No less than the President himself said the employment report from the U.S. Bureau of Labor Statistics would not only be positive, but strongly so. “We expect to see strong jobs growth in Friday’s report,” Obama said in a speech in Pittsburgh today. “This economy is getting stronger by the day.”

The expectation is that the report will show unemployment down from 9.9 to 9.8 percent, while jobs grew by about 513,000, a sizable chunk of that due to government hiring for the census.

The anticipation of that report, plus a stronger-than-expected home sales report boosted stock buying today, sending the Dow up 226 points by the close. It also helped that a layoff report from Challenger, Gray & Christmas said announced cuts were only slightly higher than those announced in April. April’s 38,326 planned layoffs was the lowest in four years.

We’ll get a preview of the strength of the jobs growth tomorrow when the ADP National Employment Report is released. ADP and its partner Macroeconomic Advisers compile a jobs change report monthly based on the payrolls ADP processes. The numbers don’t include government jobs, and don’t always move in sync with the BLS report, but the report offers a foreshadowing of the numbers.

The ADP report is expected to show an increase of 51,000 jobs, according to Reuters, which also reported a more conservative 425,000 job growth estimate for the Friday labor report.

The weekly report of new jobless claims is also due out tomorrow and it is expected to show a decline of about 10,000. That will help fuel the optimism that, though slow and more sluggish than in previous recoveries, the economy is rebounding.

Confidence in the recovery is evident in the improving Consumer Confidence Index from The Conference Board. The index rose to 63.3 in May, up from an adjusted 57.7 the month before.

For the unemployed, the numbers are nowhere near as important as the actual job postings to which they can apply. There, reports The Conference Board, little has changed since April. Its Help Wanted OnLine Data Series said there were 4,149,000 jobs posted on career sites and job boards in the U.S. in May, a decline of 300,000.

The report says job postings were down in every region except in the Northeast, which saw an increase of 5,500 advertised vacancies. Some states saw significant gains, among them California, Massachusetts, Maryland, and Virginia.

A second job posting report — the Monster Employment Index — is also due Thursday.

A survey of graduating seniors found only a quarter of those in the Class of 2010 who applied for a job had one waiting. Conducted by the National Association of Colleges and Employers, this year’s results, certainly discouraging if you’re one of the grads or a parent, are an improvement over 2009, when only 19.7 percent had jobs waiting.

The ever-so-slowly improving economy is one reason for the better numbers. Another is savvier job hunting. “A greater number of Class of 2010 graduates accepted the jobs they were offered,” says Marilyn Mackes, NACE executive director. Last year, 45 percent of the students offered jobs accepted them; this year the acceptance rate rose to 59 percent.

Since the survey was conducted a couple months ago the numbers no doubt have improved. Still, the demand for recent college graduates mirrors the national economic picture. While the unemployment rate for those with bachelor degrees of all ages was 4.9 percent in April, the rate for those under 25 was 8 percent. Better than the national 9.9 percent, the unemployment rate for young degreed workers has been steadily rising. In April 2009 it was 6.8 percent and in April 2008 it was 3.1 percent.

Even the most prestigious schools report their graduates are having a difficult time finding work. Harvard, last year, said only 33 percent of its 2009 seniors had a job at graduation, down from 51 percent the year before. While this year’s numbers aren’t yet available, one sign of the times is the university’s launch in March of a jobs mailing list. In two days 1,000 students had signed up.

The NACE Job Outlook 2010 Spring Update projected college graduate hiring to be up 5.3 percent over 2009. Not a huge improvement, but better than last fall’s prediction by the Michigan State University 2009-2010 Recruiting Trends survey, which had recruiting flat for the college year.

Data like this, and the monthly U.S. Bureau of Labor Statistics reports showing that among all 20-24 year-olds the unemployment rate was 17.2 percent in April, has promoted concern from both industry and government.

The U.S. Congress Joint Economic Committee inventoried the plight of younger workers, saying that the 19.6 percent unemployment rate for  workers 16-24 is the highest ever in the 63 years the data has been tracked. For those without a high school diploma, the unemployment rate is 33 percent.

Those who are working tend to be in industries hardest hit by the recession. The committee report notes that young workers make up 34 percent of the leisure and hospitality workforce and 20 percent of the wholesale and retail trades workforce. Nationally, workers under 25 comprise 13 percent of the entire labor force.

The biggest share of those workers are teenagers. Nevertheless, those 20-24 — where the young, college educated fall — still account for almost 20 percent of the workers in each of those two groups and close to that percentage in education and health services.

Northeastern University economics Professor Andrew Sum found that 51 percent of young graduates were working in jobs requiring a college degree. That’s a 13.6 percent decrease since 2000.

When they do find jobs in their field, it’s often at a reduced salary. A NACE survey found the average salary offer for grads with a B.A. is $47,673, a 1.7 percent decline from last year. Liberal arts majors took the biggest hit, with salary offers averaging $33,540, an 8.9 percent decline over last year. Grads with computer science degrees saw a 5.8 percent increase to $58,746.

The tough job market and declining first-year salaries are no doubt behind the increasing number of recent graduates moving back home. A survey by CollegeGrad.com found that 80 percent of the 2009 grads moved back. In 2006, only 67 percent did.

Several months ago Intel announced an Invest in America Alliance to funnel $3.5 billion to U.S. tech companies in all fields, including information and biotech, over the next two years. That will help spur hiring, especially for new college graduates in emerging fields and sciences. But in addition, the 17 partner firms in the alliance pledged to increase their hiring of graduating seniors to an estimated 10,500 this year alone.

The implications of the recession for newly minted graduates will extend into the future. Yale economist Lisa Kahn who has been following the impact of recessions on the careers of young workers found that for every one point increase in the national unemployment rate, starting salaries for new, white male graduates declined 7-8 percent. The effect persisted for years, she found. After 18 years of employment, those who graduated at the height of the recession in the 1980s earned, on average, 2 percent less than those who graduated into a more robust economy.

The U.S. Bureau of Labor Statistics also revised its reports for November and December. In November, the BLS now says the economy gained 64,000 jobs, up from its previous estimate of a 4,000 job gain.

That improvement was more than offset by the bureau’s revision to its December number. Instead of the 85,000 job loss it first reported, the BLS now says 150,000 jobs were actually lost.

The report prompted Morgan Stanley’s David Greenlaw to tell Marketwatch, “All in all, we see encouraging signs of progress in labor market conditions and expect to see much better payroll performance in coming months.”

Economists had been expecting a job gain in January, but also a slight worsening of the unemployment rate. A Reuters survey said the average of the economist predictions was for a gain of 5,000 jobs. Marketwatch’s survey put the job growth at 25,000.

The BLS report was complicated by adjustments the bureau made to its data and the introduction of expanded reports, including reports detailing the labor situation of veterans, individuals with disabilities, and the foreign born, and more depth in other areas.

The data revisions adjusted the size of the labor force back to January 2009, which meant that the monthly job changes as first reported were too low. The revisions added 617,000 more lost jobs to the 2009 totals, making the official count for the year a loss of 4.78 million jobs. And the December number is subject to still further revision.

The BLS also reported that the number of unemployed persons by reason of job loss decreased by 378,000 to 9.3 million. Nearly all of this decline occurred among permanent job losers (which, according to the BLS, means “persons whose employment ended involuntarily and who began looking for work”). However, the long-term unemployed (those jobless for 27 weeks and over) was up in January to 6.3 million. Since the start of the recession in December 2007, the number of long-term unemployed has risen by 5.0 million.

Other indices reflected essentially the same yin-yang as the BLS. The Monster Employment Index was down 1 point, while The Conference Board’s count of new, online jobs, showed a gain of 381,800 over December. That’s the biggest jump in new online postings since the Help Wanted OnLine Data Series began in May 2005. But the total number of jobs posted online is still lower than every month in 2008 except for December.

The Consumer Confidence Index also ticked upwards slightly, mostly due to consumers’ more positive outlook for the short term. (The Consumer Confidence Index is a composite of multiple indices derived from a monthly survey conducted by The Conference Board.)

Says Lynn Franco, director of The Conference Board Consumer Research Center, “Consumer Confidence rose for the third consecutive month, primarily the result of an improvement in present-day conditions. Consumers’ short-term outlook, while moderately more positive, does not suggest any significant pickup in activity in the coming months. Regarding their financial situation, while consumers were less dire about their income prospects than in December, the number of pessimists continues to outnumber the optimists.”

A Bloomberg survey also says economists expect the unemployment rate to rise to 9.8 percent, the highest since 1983. An ADP report released this morning foreshadows the lower, yet still continuing job loss. The ADP National Employment Report says the U.S. lost 254,000 private, nonfarm jobs in September, a drop of 23,000 from the revised August jobs report. It’s the lowest drop that ADP has recorded since August 2008.

Government economic reports released today showed the tentativeness of the U.S. recovery. A Commerce Department report said consumer spending in August was up 1.3 points, the biggest rise in eight years, and the fourth increase in a row. But fueled as it was by the Cash for Clunkers program, economists warn not to expect anything similar when the September results are reported at the end of this month.

Meanwhile, the Monster Employment Index, also released this morning, was down two points from September, while yet another report, this one from the Labor Department today, said 551,000 first-time claims for unemployment were filed last week, 17,000 more than the previous week and 20,000 more than the consensus of the 41 economists polled by Bloomberg.

Then there is the report from Challenger, Gray & Christmas which says fewer layoffs were announced in September than in any month since March 2008. The 66,404 layoffs tallied in the report are 10,000 fewer than in August and 30 percent lower than in September last year.

Today’s reports prompted the New York Times to start its story this way:

“A fusillade of economic reports released Thursday showed the economy’s rebound off the bottom seems to be leveling off, and that any recovery may come in fits and starts over the rest of the year.”

That seems to precisely describe what most of us have been sensing instinctively: Things may not be getting much worse, but they don’t seem to be getting better either.

In separate conversations with two attendees of this week’s HR Tech show in Chicago, both mentioned that they had been told by vendors who sell overseas and recruiters who work globally that Europe and Asia are recovering more rapidly than the U.S.

There’s a much greater hesitancy to commit (to purchases or hires) here than in the rest of the world, one of the two offered.

That feeling seems evident in the Consumer Confidence Index released by The Conference Board Tuesday. The Index was off by 1.3 points, a small decline, to be sure, but part of a pattern that began in May.

After rising almost 30 points between February and May, the Index has leveled off, hovering right around 50.0. The Index is a measure of how consumer confidence compares to 1985, when the Index was set to 100. So while confidence isn’t dropping much, it isn’t improving either.

Reporting the numbers, Lynn Franco, director of The Conference Board Consumer Research Center, said, “While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. With the holiday season quickly approaching, this is not very encouraging news.”

An economist quoted in the Bloomberg story summed up conditions this way,

“The economy is on track for a jobless recovery, and unemployment will likely remain high well into next year,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “We’re just not seeing a pickup in hiring. It means a long road to full recovery.”

If so, it’s important that you start planning your recruiting activity and resource needs for this worst-case situation.

To take a stab at this complex issue, imagine you’re in the boardroom with your company’s senior executive team discussing the impact of the prolonged economic slowdown on your current business strategy and the current year’s annual operating plan.

Your input involves your employees’ morale and productivity, the company’s organization structure, all of the organizational development plans underway and proposed, and the overall hiring outlook.

The Big Picture: Impact on the Company

While I’m no expert at this, I suspect the initial discussions last year at the initial executive confab, right after black September 2008, focused on massive short-term expense control. Hopefully, you were part of this planning session to make your views known.

Most likely, the results of this session included a hiring freeze, a companywide expense reduction program, and a huge RIF. It’s now recognized this was a bit of a knee-jerk reaction, but typical when business conditions quickly turn south.

Moving forward, when the executive team realized it overreacted (sometime in the first quarter of 2009) these expenses cuts were fine-tuned. If you were in the meeting, you would have said, “I told you so.”

It normally takes about three to six months to realize that reactive expense cuts are too deep and not targeted enough. Based on this, some relief was provided for critical projects, but some appropriate, important deeper cuts were made.

Now moving on to the second quarter of 2009. This is when companies started preliminary planning for the recovery and started to release RFIs and RFQs for projects that were just shelved six months earlier.

As part of this, everyone responsible for approving these projects, especially purchasing, was in expense-control mode, ensuring they’re negotiating very hard, and getting the best price possible for everything.

Nine months later though (July 2009), there is a big shift in the conversations at these board meetings. As long as you are a participant, you know all about these and are a critical part of the go-forward planning. As you’re aware, this talk doesn’t just involve recovery planning and short-term tactical moves; there is an ominous feeling that things just might not return to normal.

One question most executive teams are now considering is what happens if the tepid recovery peters out. Or, what if there’s a short-term bump, followed by an inflation-fueled bust?

These are significant strategic issues, without easy answers.

Whenever there’s a fundamental shift in business conditions, as we’re possibly seeing today, a corresponding shift in business strategy and operational direction is required to ensure long-term company viability.

This is much bigger than budget cuts and hiring freezes. Ultimately, decisions made under this dark cloud will affect every aspect of business, including product and marketing strategy, operational performance, and financing.

Of course, it affects the recruiting department and what it will be doing over the next three to nine months.

Impact on the Recruiting Department

While I have no clue as to how the recovery or non-recovery will affect your company, I have no doubt your company will be affected. Here are some things your executive team is probably considering, and the impact of these on the recruiting department.

With the major expense reductions already implemented, the near-term outlook will most likely focus on improvements in operational efficiency. This will involve major process reengineering efforts in every function and department, including some type of significant reorganization. The goal of all of these programs will be to extract long-term cost savings and increased flexibility. This will allow a company to better react to whatever the economy has in store for it.

These efforts will affect the recruiting department in at least three ways. First, on the hiring front, making sure that the right people are available to conduct whatever reengineering effort is underway. Second, if there’s a reorganization, the recruiting department will need to help move some people out and add a few here and there. Third, and most important, is a reengineering of the recruiting department itself.

From what I’ve seen in just about every company in the Fortune 1000, huge operational efficiency opportunities are available to increase both recruiting department and individual recruiter productivity. One important example is the idea of eliminating requisitions and using a hub-and-spoke sourcing model powered by a robust CRM instead.

Here’s a recent article that describes this approach in more detail, plus some other sourcing ideas that can profoundly increase recruiting department productivity.

Other ideas to increase recruiting department productivity include having recruiters partner much more closely with hiring managers to eliminate wasted effort, overhauling the role of hiring managers to be totally responsible for hiring, implementing a rolling workforce plan to minimize costly reactive sourcing programs, and leveraging the employee referral program to target A-level passive candidates.

All of this needs to be based on a detailed process flow map highlighting inefficiencies and bottlenecks. At a minimum, this will help prioritize your process reengineering efforts. (Email me if you’d like to see a sample of this type of process flow map.)

On a worst-case basis, assuming an extremely shallow recovery, some companies will need to undergo a massive restructuring to have a chance of long-term survival — think GM, Chrysler, many banks, and perhaps some units at GE, to highlight a few.

This restructuring includes disposing of non-productive assets, centralization of core functions, a huge downsizing effort, and possible consolidations with industry rivals. Offsetting this will be increased focus on new product development in combination with alternative marketing and distribution efforts.

In some cases, the recruiting department will be the one being restructured, so it’s important to be part of the solution helping design your organization of the future. This includes being on top of marketing trends, understanding how to implement a flexible and effective sourcing and recruiting program, and having only A-level recruiters on your team.

This is a very high-level view and quite pessimistic, but it’s not out of the range of possibility for many companies. Even if your personal situation isn’t as bad as described, getting prepared and taking some of the actions described will be helpful.

Then the worst-case for you will be the implementation of an extremely productive and efficient recruiting and hiring process for hiring the best talent on the planet. And I think we’d all agree, that’s a pretty good “worst” case.

But maybe you weren’t quite as fortunate, and your crew was heavily loaded with regular staff recruiters, who were going full steam to keep up with the incredible hiring requisition load. Or maybe you have shed the contractors, but even your remaining staff is struggling to stay busy. Unfortunately, now that the economy has gone south, they’re running half the req loads they once did. Not only are they questioning their own job security, but you’re constantly fending off queries from your boss, the rest of HR, and maybe even the CFO as to just what the recruiters are doing, and why should you be maintaining the same staff you had when the current workload has shrunken so dramatically. Sounding familiar?

Hopefully, back in January of this year, you took Lou Adler’s sound advice that “hiring will start to recover in Q2, 2009, and now is the time to rebuild your recruiting team and massively upgrade your sourcing and hiring processes.” Perhaps you’ve done just that, and are now well positioned to address any coming business increase. Or possibly you didn’t get that opportunity, or your business still hasn’t begun to bounce back.

In any event, you do have alternatives — methods you can use to gainfully deploy your staff resources in ways that clearly, and measurably, demonstrate their ongoing value to the business. The challenges will be different, depending on the size of the company you’re in. In a small firm, you are likely to have more latitude in initiating change — but possibly fewer resources available. In a larger firm with more resources, you are likely to need to build a support coalition of colleagues, business partners, or executives to create the right atmosphere for change. But in either situation, it’s critical that you build the “business case” — show the ROI through well-tracked and supportable metrics.

In my more than 20 years of recruiting leadership, predominantly in hi-tech, I’ve had ample opportunity to face this challenge, given the cyclical nature of that business. And as you can imagine, I willingly responded to a blog posting earlier this year asking other recruiting veterans for their experiences in facing the same issue. 13 of us shared our stories, from a variety of industries and backgrounds. The following are a few snapshots of some of the proven practices and strategies that have been successfully implemented by others to preserve their key recruiting assets during previous business slowdowns.

Some of these are creative twists on previous themes, while others represent really out-of-the-box thinking. [NOTE: All of them are predicated on the assumption that you know your staff --- their skills, strengths/weaknesses, and backgrounds. If you're new in the role, you might want to begin with a resume review and light career discussion with each of them.]

I do hope you find some of the suggestions below fascinating, creative, and useful. I will be presenting a seminar/workshop on this very subject, and with a lot of additional detail on implementation, at the upcoming ERE Expo in Florida in September, and we’d love to see you there.

1. (Internal) Outplacement Services: For the regular recruiters, create a corporate career university — in essence a full outplacement program modeled after those offered by external vendors (at ridiculous prices). The recruiting staff would run workshops, on and off-site, such as resume writing, interviewing skills, campaign management, negotiating offers, use of the Internet, etc. This one is very easy to show a solid ROI for.
2. (External) Outplacement Services: Take the same offering “on the road” to college placement offices, state unemployment offices, and even social groups/non-profits, as a community service. It may also be a tax write-off.
3. Business Development: Deploy researchers/sourcers on business development activities. You can gain access to your sales department’s CRM (client/customer relationship management system), and then scan those prospects that had weak or limited knowledge recorded in the database. Then you can create a full Company Profile — sort of like a Dun & Bradstreet Plus workup, and at no cost to the organization.
4. Directed Research: Those same researchers/sourcers, working with the senior admin staff, can get a “heads up” on all planned executive travel that would be visiting customers or prospects. Once you know who they are meeting with, create a “personal dossier” on each of the individuals they will be meeting with, (including home addresses, photos, personal data, etc,), put it in a packet, and give it to the traveling executive the day before departure, as “airplane reading.”
5. Top Grade your Recruiting Staff: Assuming you’ve already reduced your roster of contract recruiters, go through a performance-based ranking of those remaining, with career development as an outcome, (and preparation for further staff reduction if needed).
6. Build a Talent Pool Pipeline: Assess your past “hardest to fill” position, and launch a branding outreach campaign to candidates for future consideration. Be very clear about any available openings, and work from a perspective of building a “friends of (our company)” that you want to stay in touch with. Newsletters can be perfect for this.
7. Train the Hiring Managers: This is something we often never had the time to do, but certainly do now. There are some great programs available in the market — or better yet, create your own.
8. Re-skilling: While you’re in training mode, what could you deliver internally to your own recruiting staff to better equip them for when the market picks up and the “war for talent” resumes? Do they need refreshers on the latest Internet recruiting techniques, or using social networking tools in recruiting? There are some great resources offered right here on the ERE website, or you may even have a resident guru on your own staff.
9. Internal Process Analysis: When was the last time you sat back and closely examined the actual workflow in your recruiting operation? Most any analysis will turn up innumerable inefficient practices, roadblocks, and artifacts of “the way we always did it.” This is a great time, during low volume recruiting, to experiment with new ideas and even some best practices you “borrow” from other firms.
10. Technology Upgrade: It may be a little tough to get resources approved for an upgraded applicant tracking system, but when was the last time you shopped the market? As the competition and functionality has grown, prices in many cases have come down, and if you “upgrade” to a less expensive system, you’re the hero! This also applies to your firm’s recruiting website, which most of us will admit is often out of date.
11. Special Project Work: Thinking outside the walls of recruiting, what special projects may be in need of some of the skills your recruiters can bring to the table? HR has many cyclical programs that roll out throughout the year, such as newsletter releases, career/succession planning, etc. that may lend themselves well to the recruiter’s skill set.
12. Assist HR in Core Services: Recruiters often have two key ingredients that could add value in assisting with employee relations issues (which often escalate during a downturn). Many of them will have previous experience in many aspects of the “HR Generalist” role, and all of them have pre-existing relationships with many of your employees — because they hired them!

In May, there were 250,000 more jobs posted online than in April. The 8 percent increase brought the number of advertised jobs online to 3,367,000. Though modest, the increase dwarfs the 21,000 job posting gain The Conference Board reported in October 2008.

“The May bounce in labor demand is a very welcome sign,” said Gad Levanon, senior economist at The Conference Board. “Labor demand typically leads the trend in both employment and unemployment, so positive signals on labor demand are always important.”

While some of The Conference Board’s four U.S. regions showed more improvement than others, all had more online jobs advertised in May than in April. This extended to the state level where 43 states had more jobs.

With every silver lining there comes the dark cloud. Even with the increase, the number of online vacancies is 1,152,000, or 25 percent, below last year’s advertised openings. Overall in the U.S., as of April there were 4.4 unemployed workers for every online advertised vacancy, according to The Conference Board.

That picture will undoubtedly change Friday when the Bureau of Labor Statistics releases its monthly employment report for May. Wanted Technologies, which gathers the data for The Conference Board’s Help Wanted Index, predicts the BLS will report the U.S. economy gave up 565,000 jobs in the month, a number that is about 6.6 percent higher than what the company says is the consensus of economists.

Economic predicting, however, is a dicey business, bearing more than a passing resemblance to crystal-ball gazing. Besides The Conference Board’s upbeat report this morning, other reports from the Institute of Supply Management and the government showed declines in certain watched indicators, but because they were less than expected, stock prices are up by triple digits.

The ISM reported that manufacturing continued to shrink during May, but by at a rate less than in prior months. A construction report from the government showed spending in April rose for the second month in a row. The increase was the largest in eight months. And, though consumer spending fell in April, the decline was less than had been predicted.

Recruiters are also feeling more confident that we are seeing light at the end of the tunnel. ExecuNet’s Recruiter Confidence Index, released today, surged 16 points during May. It was the the third increase in as many months. The index surveys executive search recruiters who are part of the ExecuNet network on their expectations for increases in search assignments.

Of the 143 executive recruiters surveyed, 57 percent are confident or very confident the executive employment market will improve in the next six months; 67 percent of the survey respondents expect at least a 10 percent increase in corporate search assignments.

“This looks very much like an inflection point,” says Stephen Stanley, chief economist for RBS Securities, who was quoted by Marketwatch this morning. “And the corroborating evidence … all suggest that the pace of layoffs is finally beginning to abate.”

Nevertheless, the 539,000 jobs lost during April pushed the unemployment rate nationally to 8.9 percent. It could have been even higher, but for government hiring in anticipation of the 2010 census.

“It is a sobering toll,” said President Barack Obama, cautioning that, “We should expect further job losses in the months to come.” Still, “The gears of our economic engine do appear to be slowly turning once again,” the President said. “Step by step, we’re beginning to make progress.”

The American people apparently sensed that too. The Conference Board’s consumer confidence Index for April took its biggest jump up in more than year, rising from 26.9 to 39.2. The 5,000 households that were surveyed also showed more optimism about improving business conditions. Those expecting that jobs will continue to decline over the next several months decreased from 41.6 percent to 33.6 percent, while those expecting more jobs increased to 13.9 percent from 7.3 percent.

That confidence was supported by a slight rise in the Monster Index. Though the change is still far below where it was a year ago and not even as high as in February, the Index found that eight of the nine regions in the U.S. had increases. Leisure and hospitality and some increases in banking and finance were the primary drivers to the Monster Index improvement, suggesting that seasonal hiring is probably playing a role in moderating the job losses.

But do you have a plan that will enable you to explode out of box immediately as the downturn ends?

If you don’t have a feasible recruiting turnaround plan, you may be hurting your organization.

Research shows that the majority of recruiting organizations don’t have a documented recruiting strategy, let alone one specifically developed to deal with a recovery of the macro-economy. While one could argue that it’s difficult to plan when you don’t know exactly when things will improve, such an excuse is just that, an excuse.

Scenario planning, or a what-if analysis, prepares you to handle the turnaround no matter when it occurs.

As a recruiting manager, ask yourself — before one of your senior executives asks you first:

“What exactly needs to be done in advance so that when the time comes, the recruiting function has the capacity and capability to dramatically ramp up recruiting?”

Benefits of Having an “Explode Out of the Box” Strategy

Whether the turnaround in your industry comes this year or next, it’s critical that you have an operational plan and strategy to prepare for it when it does come.

The reasons why it’s critical for you to develop this “explode out of the box” strategy include:

• Competitive advantage. During economic recoveries, organizations that can react quickly can pick up market share from competitors not quite as agile. This is especially true if your organization isn’t the largest or the most well-known in your industry.
• “Right time” advantages. The key is to “ramp up” recruiting at the “right time,” rather than being too early or too late. If you start active recruiting too early, you’ll leave a large number of recruits waiting in limbo before you can take action. If you start too late, you’ll miss out on the first movers (i.e., forward-looking talent who is among the first to be willing to assume the risk of a new position and firm).
• Free time. Although your budgets might be lean and hiring may be frozen, this “lull” is a great time to rethink your past approach. Once the frenzy of new hiring begins, there will be little time to think strategically and to develop a workable plan. This lull time will also allow you to identify new and emerging tools (mobile phones, Twitter, social networks, talent communities, etc.) and to adapt them to your company’s needs.
• Recruiter availability. If you plan accurately and act quickly, you’ll have your pick of the top available recruiters. Having a well-designed plan might, by itself, attract some of the best recruiters who have been frustrated when they had to operate in an ad-hoc environment.
• Lower costs. If you plan in advance, you will be able to attract some of the best recruiters at relatively low salaries. In addition, you might be able to secure low-cost deals with vendors before increased demand drives up their prices and limits implementation availability.
• Training and education. It is certainly true that hiring managers and some of your recruiters might be a little rusty. A great plan will allow you to improve your training and education processes so that everyone “gets up-to-speed” precisely at the right time.
• It’s a global competition. If your company is one of the many that has a global reach, it’s likely that the talent wars will heat up in certain geographic regions (or product areas) long before an overall turnaround occurs. If your plan includes elements that allow you to “explode out of the box” in these hot areas, you can help your company much sooner. You can also use these micro-targeted areas as a testing ground for your new plan.
• Strategic image. By being forward-looking, you might improve recruiting’s image as a strategic function.

Elements of an Effective “Explode Out of the Box” Recruiting Plan

If you’ve been a manager in recruiting for any significant period, you’ve already been through one or more up-and-down cycles. I’ve been through a half-dozen of them and from my experience, it is relatively easy to identify the elements that must be upgraded following a prolonged downturn. The key elements of a great turnaround plan include:

• Strategic goals. Revisit your current recruiting goals and make them more business-like. That means narrowing your goals and making them more focused on business impacts. These goals should include ramping up from little activity to maximum capability in 30 to 60 days; prioritizing jobs based on their business impact; hiring more top performers and innovators; improving the employer brand; and making managers more effective at hiring while reducing the time they must devote to it. Whatever goals you develop, make sure they are strategic and measurable.
• Strategic metrics. Shift the recruiting department’s focus away from operational metrics and toward business-impact metrics. You will need a metric for each strategic goal that you have set. Focus on these six strategic business-impact metrics: Quality of hire; innovation from new-hires; revenue loss due to position vacancies; the cost of new-hire turnover; diversity in management positions; and employer brand impact (you can’t attract the very best without a consciously developed and effective brand image).
• Executive buy in. Because recruiting doesn’t operate in a vacuum, recruiting leaders must realize that their plan needs to be developed with input from HR, executives, and hiring managers. Of all the executives, the CFO and COO are the most important because they control requisition freezes and recruiting budgets. The CFO must also be involved in developing the process to calculate the potential revenue loss that could result if the recruiting function is not adequately prepared with an “explode out of the box” plan.
• Prioritize positions. When hiring is “unfrozen,” it unfortunately often follows an illogical pattern. In some cases, the number of “low business impact” positions that are opened up may exceed the number of mission-critical openings. If this happens, it’s imperative that you have already prioritized business units and positions to ensure that you focus the most resources and your best recruiters on the high-impact positions. If you do this in advance and make it well-known, politics and loud “whining” will have less of an impact on your efforts.
• Competitive analysis. A critical part of the plan is to analyze your “talent competitors.” This includes forecasting when they are likely to ramp up, which jobs are likely to initially focus on identifying, and what tools they are likely to use.
• A timetable. An effective plan includes a timeline with key milestones and accountabilities. As a result, everyone knows “what to do” and “when to do it” after the “explode out of the box” recruiting plan is activated.
• Prepared managers. Even though recruiting designs the hiring process, it is a fact that managers do the actual hiring. If you expect your managers to be more effective at hiring, include an element that demonstrates the dollar impact of weak hiring. Once you get their attention, you need a process and support material that painlessly educates them about best practices among hiring managers; they will have their own “turnaround” issues in addition to recruiting, so begin this effort before the turnaround begins.
• Identify precursors to a turnaround. Part of your turnaround plan should be examining past turnarounds in order to identify warning signs which would allow recruiting to more accurately predict when hiring within your firm is most likely to open up. Work with the CFO and COO to identify those early warning signs.
• Identify applicants’ expectations. Any economic downturn can have a measurable impact on the expectations of potential applicants. It’s a mistake to assume that their expectations and their “decision criteria” for selecting a job have remained the same. Instead, survey a sample of the most desirable potential applicants to identify their current wants, needs, and expectations.
• Retention. Include a retention component in your plan because as the economy opens up, you are likely to experience as much as 50% increase in employee turnover as a result of your competitor’s expanded recruiting efforts. This means that you need to identify the specific employees that are most “at risk” of leaving. Then you must develop both a retention and a “blocking” strategy to directly counter your competitor’s recruiting and branding efforts.
• Rebuild your brand. There is no more powerful recruiting tool than building your external employer brand image. Under this plan, your branding efforts should be an ongoing process that “virally” spreads your message by having your managers and your best employees talk about the aspects that make your firm a great place to work. Develop plans to spread your message on the Internet, as well as at professional conferences and in the media.
• Re-energize your referral program. There is no more effective way of rapidly ramping up your recruiting capability than by convincing your employees to become 24/7 “talent scouts” as part of your employee referral program. The best referral programs focus on proactively seeking out top performers for referrals and on educating their employees on how and where to identify the best. The best also change the focus away from monetary rewards and toward reinforcing your employee’s critical role in helping to “build the team,” so that both they and their colleagues have a continuous opportunity to work alongside the very best.
• Build a talent pool. After branding and referrals, the next most powerful tool for preparing for an upturn is to build a talent pool for key positions. This means pre-identifying potential applicants and building relationships with them, so that when a position opens up, you already have a list of names of individuals that are both qualified and interested in your firm.
• Your recruiters and tools. Develop the capability of rapidly increasing the number of recruiters you have available. This element of the plan might include options for utilizing contract recruiters, outsourcing options, the use of agencies, and finally, by getting other HR professionals within your firm to contribute a few hours per week to the recruiting effort. In addition, the plans should be “scalable” to meet the different levels of recruiting volume that you might face. You will also need to “up-skill” your recruiters, so that they know how to utilize the many emerging Web 2.0 and marketing based recruiting tools. You might also need to plan for “new” positions within the recruiting function, including experts in building talent communities, metrics/analytics, employer branding, social networking, and mobile phone recruiting.
• Recruiting territory. The current mobility of the U.S. population is the lowest that it has been in 60 years. As the turnaround begins, more individuals will be willing and able to physically move to get a great job. As a result, your plan should expand the geographic scope of your recruiting beyond what is currently feasible.
• Budget and resources. There is a significant time lag between when recruiting has to dramatically increase its capabilities and the point in time where the CFO gets around to fully funding those recruiting activities. So include numerous cheap and no-cost options for branding, sourcing, screening, and making convincing offers. Part of the plan should include leveraging other people’s time, so that your firm’s employees and managers can initially pick up some of the recruiting load (i.e., employer referrals, social networking, recruiting at professional events, and boomerang hires).

Final Thoughts

The current lull in recruiting activity is a great opportunity to develop an “explode out of the box” recruiting plan that gives you the capability to ramp-up recruiting from nearly zero to extremely high levels almost overnight. It’s inevitable that you will need this type of plan, so the only remaining question is when is the best time to develop it?

In my experience, if you wait until the day when requisitions begin to be unfrozen, it will be too late to do an adequate job. Also, don’t wait until you have sufficient budget resources to hire a consultant to help you; just having a plan will build you instant credibility within HR and among senior managers. If you develop a really effective plan, you will actually prevent a great deal of stress on both yourself and your recruiting team because you will be well prepared for any problems that might occur during the turnaround.

I’ve outlined the key elements that you need to include in the plan, so the next step is up to you. The time to act is now!

Classical Economist Adam Smith

Leading economist Dr. Robert Genetski joined us on April 1 at the ERE Expo 2009 Spring to share his wisdom regarding the current state of the economy.

Genetski began by explaining the classical principles of economics and the factors that dictate how the economy works in modern day society. From there, he proceeded to explain issues that have contributed to our current economic downtown, illuminating exactly how things became as serious as they did.

Of most interest to the audience were Genetski’s predictions on how the economy would affect labor markets in the coming months, the challenges we can still expect to face, and an idea of when we will begin to see the economy recover. Watch these highlights and prepare yourself to take advantage of the inevitable economic recovery.