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Stanton Chase: Insights on the 9.7% Unemployment Rate
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The unemployment rate hit a 26-year high, reaching 9.7% in August.
That’s even more disappointing news considering that in July, the unemployment rate fell for the first time in 15 months. Perhaps the only bit of good news — if you can call it that — is employers cut fewer jobs in August than they did the month before.
The Labor Department said that August job cuts totaled 216,000. The industries hardest hit were manufacturing and construction, losing 50,000 and 65,000, respectively.
Looking forward, where do we go from here? What does the remainder of 2009 look like?
Will there be more cuts? When will things start to improve?
To get a national perspective into what’s taking place, here are some thoughts from several of the managing directors from global executive search firm Stanton Chase.
Although most corporations have reduced employment through RIFs (Reductions in Force), many of our larger clients are aware that as they look at their succession planning, there are some significant areas where the loss of one individual in a key position might have major implications to them. As a result, even with some of our clients who have indicated they have put in place a “hiring freeze,” they have come to us to help them recruit for some key positions where they find themselves vulnerable. Some examples are national sales managers/V.P. of sales, as well as key financial positions.
We also are finding some major clients are realizing they have been too introspective in their hiring only from the industry in which they operate, and have come to the conclusion they need to reach outside their specific industry to bring new thinking to their organization while they try to successfully compete against their major competitors.
When the jobs are added it will be a huge domino effect, as many employees/managers are unhappy but lacking options of where they might go next. Those with success stories of delivering results/turnarounds will have a competitive edge in being considered for new opportunities.
Those who have been successful managing in the white spaces — in matrixed organizations with retinues of outsourced resources will have an edge in creating new initiatives and delivering new results in their current companies, and possibly “inventing” new operations to run.
Watch the oil industry as bellwether, big M&A, big find in Gulf. Watch for leveraging technology to break new barriers. High potentials with strong pedigree plus operational and international experience will be in high demand in recovery, as companies fill voids in talent pipelines and focus on succession planning. Trends of precision hiring will continue as companies requiring hand-in-glove fit with the requirements they specify. Those wanting a slot will have to build their case for consideration. CEOs and entrepreneurs will start to reconfigure their leadership teams seeking fresh market views and “extraordinary warriors” who have delivered victories in a seemingly impossible business environment.
From what I can tell, there are two sectors that are continuing to experience some hiring: healthcare and education.
Financial services, real estate, construction, and everything related are continuing to experience lay-offs yet at a slower pace than before. Also, despite some positive news in the lower ends of the housing industry, a lot of people are very concerned about the commercial real estate market as that shoe has not entirely dropped yet. It could be a real shake-up yet to come.
While the unemployment rate is high, there are indications that companies may experience unexpected turnover among current employees.
A recent survey that tracks trends in both job satisfaction and job hunting activity indicates that there is a pent-up demand for better jobs and salary increases among fully employed people. At the same time, there is an increase in job hunting activity. The two trends predict an increase in employee turnover within the next month or two that will have a ripple effect on the employment market.
Companies only looking at unemployment numbers may be caught off guard by this trend, particularly if they have downsized their recruiting teams. It will be interesting to follow this phenomenon.