10 Recruiting Problems You Might Face During Tough Economic Times

During volatile economic times, some things that used to be easy in recruiting and Talent Management become much more difficult. As a result, it’s important to identify and then focus on these new problem areas:

• Hiring freezes. One of the first knee-jerk reactions during tough times are company-wide freezes. Although salary, promotion, and budget freezes negatively impact retention, hiring freezes can decimate a recruiting function. Some tips on fighting hiring freezes can be found in my recent article.
• Stock options are no longer a major motivator. With the stock market constantly going up and down, stock options become less valuable as a motivator both for current employees and for candidates. As a result, you need to shift your sales approach to candidates to emphasize exciting work, flexible work, better benefits, more security, or to focus on cash performance bonuses.
• Job security is king. Economic volatility makes both employees and candidates nervous about their future. This fear among potential candidates causes them to increase their emphasis on security, which will definitely make “drawing away” the currently employed top performer from their current firm much harder. Recruiting needs to re-examine the information that it provides on job security on its website, in position descriptions and in its offers in order to make it more compelling.
• An increased volume of traffic. Normally, all great recruiters focus on the employed candidate (the so-called passive candidates). However, layoffs and high unemployment may mean that some high-quality people are now available among the ranks of the unemployed. Unfortunately, if you actively recruit during tough times, the volume of mediocre but enthusiastic unemployed people who will apply for your jobs will also increase dramatically. This high-volume, low-quality flow means that your screeners will be strained and that your selection process has to be more precise to ensure that you don’t mistakenly hire highly enthusiastic people who turn out to be low performers.
• Relocation issues. Moving people between regions becomes nearly impossible when individuals can’t get new mortgages or sell their existing homes. This problem affects both internal transfers and new hires. Alternatives to consider include focusing on recent college grads who generally rent or consider “narrowing” your recruiting area to a reasonable commuting distance.
• A loss of trust and confidence. Although your firm might not have been involved, the general mistrust of business that has resulted from the economic turmoil means that both your employees and your candidates will likely now have less trust and confidence in anything that you say. In recruiting, this means that your website must be more objective and believable, your interviews need to be more credible and your offers will need to be stronger, if you expect to convince the cynical.
• Managers will focus less on recruiting. Few managers have ever really enjoyed recruiting. But their interest in it will likely even decrease further during tough times as the stress from their business workload increases, while their available staff decreases. Their interest in recruiting will decrease because they certainly won’t be doing it as often but also because of the increased frustration that invariably occurs when many of their “active searches” are never be completed because of frequent “surprise” hiring or budget freezes. Their lack of interest in reading resumes and interviews will invariably mean a dramatically slower average “time to fill” at your firm.
• Layoffs. Although you probably can’t stop layoffs from happening, you should certainly fight to minimize their impact on your employment brand image. Work with PR to ensure that layoffs by your firm don’t become front-page news for potential applicants to see and worry over.
• Technology budgets. Almost invariably during tight economic times, any budget resources available for buying new technology (ATS systems or new software) are likely to disappear. So either make your purchases immediately or be prepared to live with what you have for a while.
• Recruiting budget cuts. Almost everyone gets their budget cut during business downturns but there’s no reason for recruiting’s budget to be cut any deeper than others. The key to maintaining your budget is to build a strong business case demonstrating that cutting recruiting has more negative business impacts than the limited cost savings that these cuts generate. Also utilize split samples to demonstrate your impact. When possible, work with powerful executives in growth businesses to get them to “champion” your cause or to directly fund recruiting initiatives that impact their business unit. Also, work with the CFO’s office to quantify the dollar impact of low quality and bad hires, as well as the revenues lost as a result of position vacancies in revenue-generating and revenue impact positions.

Finally, focus on winning external recruiting and “Best Place To Work” awards to increase your visibility and credibility among executives.

Source: Managing Recruiting During an Economic Downturn: The Top 10 Action Steps to Take
by Dr. John Sullivan Oct 20, 2008, 6:00 am ET

Will Hiring Freezes Decimate Recruiting?

Whenever there is a downturn in economic conditions, one of the first knee-jerk reactions that many CFOs and senior managers take is placing a freeze on all hiring, pay raises, budgets, and promotions.

The effect of long-term hiring freezes is particularly damaging to the recruiting function, because “no hiring” generally means that a majority of recruiters will be laid off. Historically, budgets for recruiting have been cut so low that the function is literally decimated, making it rather difficult for companies to resurrect a decent function when the economy swings up.

Many executives think that the decision to institute some sort of resource freeze is one that helps the organization because it contains costs; however, the opposite is more often the case. Poorly thought-out freezes that impact talent acquisition and other talent-management activities may actually harm the organization by:

• Driving increases or vacancies in revenue producing/impacting roles that decrease revenues beyond any cost savings.
• Driving increases in employee burnout/turnover.
• Missing out on new talent opportunities (i.e., not be able to hire a superstar that becomes available).
• Decreasing an organization’s capability/capacity to innovate.
• Damaging the employer brand making hiring more difficult when the economy returns.

Rather than waiting for the inevitable announcement of a freeze, recruiters need to be proactive and preempt any such silliness long before it occurs by making the business case for leveraging this time to re-architect the talent acquisition function, upgrade its strategic programs, and trade up the talent population while salaries and vendor costs can be negotiated down significantly.

Source: The Economic Downturn Means That Hiring Freezes Will Soon Decimate Recruiting
by Dr. John Sullivan, Oct 13, 2008, 6:28 am ET