Why is Unemployment So High, and How to Emerge a Winner

Feb 5, 2009
This article is part of a series called News & Trends.

Why is unemployment higher than it has been for decades and massive layoffs announced daily? Is something going on that is deeper than a recession? In past recessions the general reason for layoffs is twofold. The first reason is to use the recession as an excuse to remove the less-productive employees. Every organization has employees who perform marginally, but are not bad enough to discharge outright in normal times. The second reason is because customer demand for the products or services has declined and there is no need for workers who have nothing to do. The underlying assumption is that at some point customers will return and the workers will be re-employed as before. That’s the reason unemployment insurance (in the United States) is limited to a few weeks. The expectation is that workers will be brought back or rehired elsewhere in a short time.

On the other hand, recruiters and hiring managers still report that it is exceedingly difficult to find workers for certain key jobs which include computer-security experts, computer engineers, pharmacists, health workers, and even senior-level executives. The time it takes to fill open positions seems to have increased, and hiring managers frequently complain that they have to settle for “second best.”

Is there something we don’t understand going on?

Panic, Job Markets, and Emerging Work

I believe there are several factors influencing us. The first is simply panic. Corporate leaders are just reacting and playing the lemming game: They are thinking, “If one company is laying people off then I probably should be as well.” Despite market information or sales data, they view layoffs as an insurance policy against future shareholder complaints and against possible market downturns. They do not factor in employee morale or the effect such actions have on key workers, nor do they realize that by their actions they signal that things must be bad and thereby potentially influence customer behavior.

Most of us do not understand how deeply the job market is changing. We are in the midst of a global redefinition of what a job is and how it should be performed. The Internet and the virtual worlds it has made possible, combined with video technologies and virtual-presence capabilities means that thousands of traditional jobs are going to disappear permanently.

We will need thousands of people newly skilled in occupations that are being invented right now. Jobs such virtual community managers, collaboration experts, globally skilled sales consultants, and web designers with a mix of graphic language and human interface skills are just a sampling. No one knows what all of these jobs are, but we do know that many will be performed virtually. Many will be augmented with mobile devices and will require a blending of old skills with emerging ones.

One emerging example is in hospitals where doctors and nurses will be equipped with mobile, wireless information devices. These devices will read a barcode or RFID chip on a patient and get that person’s full medical history. Doctors can examine a patient virtually using remote sensors connected to this device and subsequently order drugs and start treatments virtually. These devices are already in use and are getting more sophisticated each year. Congress is about to focus on digital medical records, and this is a keystone in every discussion about national health care. These devices will eliminate many current jobs by reducing the need for record departments, accountants (the devices track all procedures and drugs and automatically generate invoices that can be directly sent to insurance companies) and a host of other occupations, but they will create many new jobs.

Every profession is the midst, whether they realize or not, of a similar transformation. Tools, technologies, processes, and traditional assumptions about how people work are changing at a very fast rate. This is the cause of many layoffs. Most employers are followers, not leaders, and rather than take a chance at defining the future, they are using the time offered them by the slow economy to wait and see what the trend becomes.

In many cases the layoffs are triggered by human resource and recruiting functions that very narrowly define jobs and lack imagination about how a traditional occupation might be transformed with training and a new focus. We set up expectations and define jobs based on yesterday’s needs.

Education and Learning Models

Corporate training and recruiting functions have a lot to offer in these recessionary times. They can be showcasing the emerging jobs and educating management about which jobs are in demand and which are declining in interest. Job postings and a variety of analysts offer this kind of information. For occupations where demand is growing, the learning functions can concentrate on developing those skills. The best firms are building learning portals and guiding employees to explore and learn around areas of emerging need — even if specific jobs are not yet defined.

Successful firms accept that they have a responsibility and a business need to develop the people they need. Unfortunately most of us — or most of our employers, anyway — would rather spend money on search fees, agency fees, administrative overhead, and advertising rather than on finding the right balance between recruiting new people and intensively training those employees who have decent basic skills. After all, it is very hard to find people when the skills you may need are vague or not clearly defined. On the other hand, development programs can be much more general and strive to create an adaptable and flexible employee with the technical skills needed for 21st century success. Waiting for the school system or the government to do your job for you has never been a very good strategy.

As recruiters, we need to become coaches to our managers, as I have mentioned in previous columns. It is very difficult, I know, to convince a hiring manager that the kind of person he is looking for is better developed in-house than found externally. But I think it is to your credit if you can convince them. As a recruiter you need to develop a relationship with them that is good enough and strong enough that they will listen to you. In a slow economy, you can use the time to build the relationship and redefine your role as a talent adviser rather than just a recruiter.

I constantly argue for integrated staffing and development because I believe the two functions are inextricably intertwined. It is very difficult to do one without doing the other. If we are to look at recruiting as a process, we are going to have to incorporate development into our staffing thinking and staffing into our training thinking.

Whether this is done by merging departments or whether it is done simply through good collaboration doesn’t really matter. What is critical is that there is a dialogue between the two functions. If you work in a small company where there are no separate training and recruiting functions, then this becomes even easier to do.

Layoffs are unavoidable, but understanding why they are occurring and having a strategy to deal with them and with the demands that will face you as we recover from the recession will keep you sane, safe, and successful.

This article is part of a series called News & Trends.