The Downturn with a Difference

On the one hand, the present downturn has followed a classic economic pattern. An overheated and over-valued segment of the economy – aka the “New Economy” – expanded until it burst, triggering widespread stock sell-offs, market losses, margin calls, declining savings and net worth, reduced consumer confidence, lower demand for goods and services of all kinds and corresponding corporate cutbacks in plants, equipment, inventories and personnel.

That whole pattern is generally referred to as the “economic cycle,” which means that we’ve seen it before and will see it again. Of course, because the most recent recession ended in early 1993, about a quarter of the workforce has not seen it before. Some of those first-timers, as dot-coms have become dot-gones, actually have had to buy a suit and learn enough table manners to survive an interview at an Old Economy company. (Who knows, maybe Brooks Brothers will rise again!)

Companies, on the other hand, which are generally run by folks old enough to recall a recession or two, have learned from past mistakes. Across-the-board job reductions and hiring freezes have been replaced this time around with selective cuts that trim fat without reducing muscle. Thus, the corporate travel department may bite the dust, while the customer relationship management (CRM) unit survives unscathed and may even add to staff.

Likewise, most employers are taking great care to communicate their intentions clearly, so as not to immobilize the entire workforce. The employee who believes that his or her company is acting rationally is far more likely to be supportive of organizational change.

Last but not least, a growing number of companies are realizing that, while good times require good people, bad times require really good people. Thus, few organizations have curtailed all hiring. Strategic hiring is more the norm – as evidenced, for example, by the recent trend in cutting-edge companies to designate “Chief Talent Officers” to guide the effort.

The Gun-Shy Employee

Let’s remember one thing: March’s 4.3-percent unemployment rate is still within most economists’ definition of statistical full employment. Yes indeed, 86,000 newly unemployed people are nothing to sneeze at. But many will find work within four to six months, while the others are scattered across the country, represent all income levels and come from a broad range of industries and occupations. By definition, few would fall under their former employers’ definitions of “keepers.”

The huge majority of the workforce still employed would just as soon remain that way until the economy shows clear signs of recovery – and “safe” chances can be taken once again. Many, especially on the lower job rungs, are fearful of the LIFO principle (last in, first out) should they change jobs. With economists of all stripes predicting an end to the downturn during the third or fourth quarter of this year, postponement of major career decisions for a few more months does not seem like a major burden to risk-aversive employees. Better the devil one knows than the devil one does not.

The strategic employer, of course, does not set its sights on the huge majority of the workforce – that portion which search consultants refer to as “low-hanging fruit.” In fact, companies that have critical position openings and/or want to build share in down markets can’t afford to wait for conditions to improve. They need to act now, and they seek neither the safely employed nor the desperately unemployed. Instead, they seek the aggressive individual who can recognize an extraordinary opportunity and seize it. Sanford Rose Associates calls such individuals the “people who make a difference” in their organization’s performance.

The Executive Search Consultant’s Role

During the mid- to late 1990s, numerous people entered the search and staffing business with two beliefs: (1) that employers’ demand for candidates had become – and would remain – insatiable; and (2) that the Internet would become an inexhaustible source of their supply. Finding superior talent the old-fashioned way – one person at a time – was predicted to become a relic of the past.

Of course, the New Economy bubble burst, and those millions of “active” candidates on the Web started acting amazingly passive. In addition, employers began to question what value was being added by the mindless processing and forwarding of candidates from this or that job board. If this was all there was to filling position openings with truly qualified people, why couldn’t companies do it themselves and eliminate the middleman?

(The decision of a well-known recruiting firm to post its search for the next CEO of Yahoo! on the firm’s website recently caused a commotion within the search community. Even though the decision was very with-it, was that the way to fill a multi-million-dollar position? Moreover, was the firm conducting a real search or simply advertising on Yahoo’s behalf?)

Electronic recruiting will remain an important weapon in the search industry’s arsenal, especially as it advances beyond database searches, but it is only one of many weapons. It may demonstrate the necessary degree of cool when recruiting the next leader of a major Internet search engine, but it may be next to useless in locating the right person to fix a smokestack company teetering on the edge of bankruptcy.

In surveys conducted over the last two years by a major business publication and by an industry association, employers have emphasized that the one thing they want the most from outside search consultants is the added value that comes from personal commitment, expert knowledge and sound advice.

Avoiding False Starts and Wrong Turns

“It was a dark and foggy night.”

While the economy indeed is murky, and the word has come down from the highest levels to control expenses, you still may be in the market for a few strategic hires. You need the very best people you can find, but where to look?

Discuss your problems with a trusted search consultant. Take advantage of the consultant’s knowledge of the market, where the “keepers” are hiding and what it will take for them to make a move. Be candid about any restrictions or budget limitations that you may have. Make the consultant your business partner and authorize him or her to speak on your behalf – with full knowledge of your needs and the position’s opportunities. Expect your consultant to know the candidate’s situation well enough to practice “no surprises recruiting.”

There are indeed really good people available, but they are in short supply and often not readily apparent. Empower your search consultant to find them – before your competition does.

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2001 SRA International, Inc. All rights reserved, including electronic reproduction or alteration. This SRA Update is published for the clients of Sanford Rose Associates – now in its 42^nd year of “Finding People Who Make a Difference.”