Recruitment Lessons for a Downturn

All businesses have cycles but when a recession hits, recruitment plans will naturally be affected. So how should firms approach recruitment during a downturn?

A recession may seem an odd time to talk about recruitment. Since the start of the downturn in December 2007, 4.4 million jobs have been lost, with more than half the losses coming during the past four months; 651,000 workers lost their jobs in February alone, the third straight month in which more than 650,000 people were made redundant. The fact that unemployment has climbed to 8.1 percent is only the latest sign that the economic crisis is getting worse.

But traditional layoffs and hiring freezes – the most obvious recruitment responses to a recession – may not necessarily be those that will help a firm most. All businesses have cycles – periods of sustained growth followed by downturns and periods of quiet – and it is how you manage through these cycles with an eye to emerging stronger and more agile that sets you apart from the competition. And in fact, experts insist that a carefully considered recruitment strategy is integral to surviving the difficulties of a downturn.

As CEO of Heidrick & Struggles, the world’s largest executive recruitment firm, Kevin Kelly sees his fair share of corporate staffing plans up close. His verdict? “I think firms need to look at this as an opportunity to rebuild their talent pipeline,” he asserts. “For instance, we’re seeing the best organizations moving out those individuals that, long-term, aren’t necessarily going to get them where they need to go in terms of their strategy; they’re upgrading their reserves of talent, rather than simply laying people off.”

It all comes down to productivity, and ensuring the people you have are the best candidates for the job. “Even if you let go a certain number of individuals, in the current climate you could probably rehire senior level individuals who are more productive than some of the individuals you let go,” says Kelly.

Such an approach means that companies need to focus more closely on identifying where their top talent lies, and incentivizing those with the right skills to stay and contribute to the future success of the firm. According to Kelly, it’s about demonstrating to your employees that you are committed to whatever strategy you have embarked upon. “Show them a clear future and how they are a part of that future,” he says. “You can’t hide in a bunker right now; get out to your offices and talk about the future of the firm, what it looks like, what you’re planning to do as an organization and how you want to get through the next 12-18 months.”

For Kelly’s firm, it means a growing emphasis is being placed on retention and loyalty strategies as opposed to just executive search. “We’re seeing a fundamental shift in terms of what we’re doing as a firm,” he explains. “When companies come to us today, they no longer just want us to provide them with a shortlist of candidates because in today’s market, candidates are fairly easy to find. Instead, they’re asking us how we can help make their company successful, and what makes a certain person the right fit for their organization. In the recent PricewaterhouseCoopers CEO survey, 95 percent of executives are concerned about retaining their key employees. So we’re focusing more and more on retention, development, assessment and succession planning for those key individuals. It’s not only providing an individual in the first place; it’s helping ensure their success and developing the next generation of leaders.”

He sees clients falling into one of two camps. “Some are being aggressive and using the current climate as an opportunity to go out and upscale and retool their business. Others are going back into the trenches. However, I think those that are focusing on being more proactive – assessing and developing their people and retaining them – are going to be much better off when we finally get out of this downturn.”

It’s one of the great dilemmas whenever we enter a downturn: whether to invest in future growth or hunker down and ride out the storm. So does he see any trends in terms of how companies are responding in different industries? “Biotech, technology and pharma have been more aggressive in using this opportunity, yet you still have some boutique investment banks using this as an opportunity as well,” he says. “The challenge they all have is sifting through the vast number of candidates that are out there. And that’s where firms such as ours come into play, in evaluating all those different candidates and sorting the top talent from the rest.”

Other potential beneficiaries could be current business school students – along with industries outside of the typical consulting/investing sectors they generally serve. “One of the best things business school students could do for themselves is to go out over the next couple of years and get broader experience in a different industry – whether it’s technology, whether it’s renewable energy, the environmental sector – because banking will come back and they’ll be better off for having gained that broader experience.”

He explains how a lot of individuals who find themselves in a leadership role grow up in a silo, whether it be marketing, finance or operations. However, more senior roles require much broader experience and a number of key skills – not least an ability to work well with people. “Around 95 percent of what you learn in business school is operations, finance, accounting, marketing, etc., with only five percent of your time spent on people. Yet when you become a leader in an organization you spend about five percent of your time on operations, finance, marketing, etc. and 95 percent of your time on people. And I think therein lies a huge problem behind some of the leadership problems we are seeing today.”

As such, Kelly believes staff development is going to be an increasing part of his business over the next few years. “There are going to be beneficiaries out of this recession and those companies that are going to do best – and I think history shows this – are those individual organizations that use this as an opportunity to grab market share,” he concludes. “I think globally it’s going to be a very challenging year, yet it provides us as an organization – just like our clients – with a great opportunity to go out and potentially capture a bigger share of the market. And that’s really exciting.”