Recruiting Predictions for 2009

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We’re already a week into 2009, and everyone else has already published their predictions for the year. In the spirit of better late then never, here are a few of mine:

  1. 2009 will be a painful year for recruiters. It’s obvious, but how could I leave this off the list? We’re in a recession, and as employment numbers continue to fall it will get worse for recruiters before it gets better. When will the turnaround come? Hiring typically lags behind corporate profits, so don’t expect recruiting activity to pick up again until after companies’ profits start rising again.
  2. There will be less of us. As was pointed out to me today on the Recruiting Animal Show, I’m an old salt in the recruiting world at the not-so-tender age of 34. The last time I saw our profession contract was in the recession of 2001, when we simply had too many recruiters trying to fill too few open positions and thousands of professionals moved on to greener pastures. The strong and the lucky will once again survive, and those who are not at the top of their games will move on. In the last recession, many went into real estate. This time it will be different.
  3. Recruiting stocks will rebound. As an industry, the public companies whose businesses connect people with employment opportunities will rebound before the year is through, including Monster, Taleo, DICE Holdings, Kenexa, Manpower, and Spherion, barring any issues specific to the individual companies. If the economy is so scary, why predict a rebound? The stock market is a forward-looking discounting mechanism, and in the next few months I expect the worst expectations to be priced into the stocks of these companies, and for investors to begin to look forward to better results in the future. On the other hand, Workstream will finally be delisted.
  4. Social Media will play an ever-increasing role in our personal and professional lives. Yeah, this is a safe one. There are still plenty of people whose lives have not been touched by Facebook, LinkedIn, Twitter, and others, but there are less every day. More and more, it’s where people, young and old, are communicating and managing relationships, and smart recruiters always fish where the fish are. Also, the pace of innovation in Social Media will not slow down any time soon. Why? Because even though venture capital money is drying up, it does not take much capital to build these things. (BTW, I’ve linked above to my profile on each of these social networks, so be my friend!)
  5. Social media overload/backlash. With social media innovation continuing at a blistering pace, we are constantly being barraged with new, cool-sounding social tools and networks. There are only so many hours in the day, and we are forced to pick and choose the services that best meet our lifestyles and objectives. In the fight to stand out from the pack, implicit promises are being made about why every single service is the best. Inevitably, people are going to be disappointed with those that do not live up to expectations. The best will continue to grow, while the ones that do not stand out from the crowd will quietly go away.
  6. Social networks will make finding a business model their top priority. They’ve proven that they can attract huge audiences, but here’s a pop quiz — which of the following social networks made money in the last year — YouTube, Facebook, or Twitter? Not a single one. And in this economy, not even Google, YouTube’s parent company, can afford to have a money-losing property. Finding a solid revenue source to sustain their torrential growth will be the goal of every major social network.
  7. …and the medium-sized players won’t make it. The biggest networks have or will raise enough investment money to give them time to find workable revenue models. The truly tiny social networks will find their niches and targetted advertising dollars will follow. It’s the medium-sized services — the Facebook wannabes — that are going to fall by the wayside, being snapped up on the cheap by acquirors or simply going out of business.
  8. Vendor shakeout. It’s not only the social networks that will see a shakeout. This year will be brutal on the vendors that serve our profession. Less hiring = less recruitment spending = less business. Layoffs, consolidation, and bankruptcies will be norm until things stabilize later in the year. The strongest, and those with the best relationships with their customers, will survive.
  9. Recruiters will try to shift towards the most cost-effective tools. Not the cheapest, but the ones with the most return on investment. Of course, recruiting departments do a notoriously poor job at measuring their own results, so I expect to see a lot more focus on metrics and measurement. Expect plenty of debate over how to properly evaluate recruiter performance and industry metrics in the next few months.

Reading back over my list, I am struck by how almost every single prediction hinges on the state of the economy, and I guess that sounds right to me. I can think of nothing that will be an bigger influence on our professional lives in the coming year.

I know this all sounds gloomy, but it’s always darkest before the dawn. We’re already a year into this recession, and nothing lasts forever. When the smoke clears, we’ll be back in the growth part of the economic cycle — and they are always boom times in recruiting.

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What do you think the new year will bring? Let’s hear it in the comments!

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  • http://socialmediaheadhunter.com James Durbin

    Is that a picture of you starting your second company? From what I heard yesterday, the age is about right…

  • http://www.susanstrayer.com Susan Strayer

    Dave, you’re right on in most cases. A few additional thoughts:

    “Recruiters will try to shift towards the most cost-effective tools.” I think this is true but with a caveat. recruiters will try to shift to doing more themselves. What some experts who don’t work in big corporations don’t understand is that executive teams tell you to cut X% and they don’t care how you do it. So the more you can do yourself the better.

    The other piece I would add is something I am already seeing: vendors are becoming desparate. They will email you 2-3x a day even when you explain you aren’t in the market for what you are selling. And they are becoming increasingly unprofessional. I personally won’t work with someone who treats me poorly b/c I always try to be polite even if I am not interested in a vendor’s service.

  • http://www.bridgetbits.com Bridget Bits

    Good article. Thank you.
    As dismal as issue #2 and #8 sound, there is a small ray of hope for the survivors. I have started to hear positive rumblings from people in another contracted industry: mortgages. With fewer competitors some operations are already experiencing increases in production and revenues. Obviously this doesn’t mean a sustained turn around but isn’t it nice to hear some good news once in a while!

  • http://www.passivecast.com Steve Gilbert

    David,

    Thank you for this bold article. I especially liked your take on Social Media in 2009.

    Because you asked, here are my predictions for 2009 from the perspective of a retained search firm professional committed to seeing the other side of this downturn.

    1. A temporary spike in sales positions in May 2009. A substantial piece of my practice involves recruiting Sales Professionals and Sales Leaders and I predict a temporary spike in May 2009 for these types of positions due to turnover…both voluntary and due to performance.
    Current sales team members will be under more pressure in early 2009 and this will lead to some turnover in March and April. The hiring of each new sales team member will have to be approved by senior executive management. The position will stay vacant during this needs analysis. This brings us to May 2009.

    2. Pricing pressure on retained search firms. More competition for each search. Many unknown search firms calling into your clients offering the same service at a reduced fee. Clients may be under tremendous pressure to cut costs, as David mentions in the article, and they very well may start trying out other firms with the hopes of cutting costs. Of course, costs may increase if the less expensive firm fails to deliver and they come back to you to pick up the pieces.

    3. Clients may become unwilling to pay retainers due to lack of budget but may be willing to engage a search firm on a contingency basis only. Search firms will hear “There are many great people out there looking so why do I need to pay a retainer?”

    4. Search firms will need to at least double their outreach to passive candidates in order to create enough demand for the position. If you used to call 100 passive candidates get ready to call 250. In these times, passive candidates hold on with white knuckles to the position they currently have and do not want to join a company and be the new person if the company runs into tough times. In other words, a passive candidate’s tenure in their current role is very valuable to them in these times.

    5. Company stability and brand reputation will be a major currency when engaging passive candidates about an opportunity. The best bet may be to call on high performing candidates from smaller companies to join larger, more well-known companies…not the other way around.

    I look forward to reading everyone’s predictions and to tracking if any of our predictions ring true.

    Thanks again for the article.
    Steve
    steve.gilbert@passivecast.com
    twitter.com/stevengilbert

  • Keith Halperin

    Who can predict when or how the recovery will take place? Will it be in six months or three years? Will it be sharp or gradual? What completely random and unpredictable factors may influence it for better or for worse? What we CAN predict is what can be done right now or in the near future:
    1) Analyze your recruitment processes, better yet- have the people actually doing the work analyze your recruitment processes- they know what’s REALLY going on.
    2) Determine what areas are the most valuable uses of your staff’s time.
    3) Eliminate, automate, or outsource the least valuable parts of recruiting- for example, you shouldn’t have to pay more than about $3500 per month for high quality, cold-call telephone sourcing to identify candidates or hiring managers in companies with a gatekeeper/”name generation,” $1250 per month for internet sourcing, or $800 per month for interview scheduling and coordinating between candidates and the hiring team.
    4) If your people can’t effectively do the high value-add work remains, consider training them.
    5) If there isn’t enough work remaining to go around, consider reduction-in-work before reduction-in-force. (Those who object to the former are good candidates to for the latter.)
    6) As conditions improve, continue following Steps 1-5- don’t go back to paying “*guru” salaries to folks to do lots of “grunt” work.

    Cheers,
    Keith Halperin keithsrj@sbcglobal.net

    * High-touch, high-skill, high-value add, creative work.
    ** Low-touch, low-skill, low-value add, routine work.

  • Keith Halperin

    “Who can predict when or how the recovery will take place? Will it be in six months or three years? Will it be sharp or gradual?”

    Well, I stand corrected- some people CAN or at least TRY to….

    Nobel Prize-winning Economist Paul Krugman (usually thought of as liberal) says in his blog http://krugman.blogs.nytimes.com/:

    ……………………………………………………………………………………………………………….

    January 11, 2009, 12:54 pm

    More on Romer/Bernstein

    Still picking over the Romer/Bernstein official evaluation of the Obama economic plan. Again, kudos to the team for producing such a clear, honest assessment. But the more I look at the report, the more I wonder why anyone in the Obama team thinks the plan is adequate.
    Here’s one way to look at it: R/B show the effects of the plan rapidly fading out during 2011. Yet at the end of 2011 the unemployment rate is still 6.3%. Meanwhile, the CBO estimates the natural rate, aka “full employment,” at just 4.8%. Why does the plan go away with the job undone?
    Add: By my calculations, the Obama plan is supposed to reduce average unemployment over the next two years from 8.7% to 7.6%; over the next three years, it reduces average unemployment from 8.4% to 7.3%. So it closes around a third of the gap between actual unemployment and the natural rate. Plus, an average rate of unemployment 2.5 percentage points above the natural rate for 3 years, starting with a core inflation rate of 2.5, looks like deflation city to me — and remember, that’s the projection with the Obama plan.

    ……………………………………………………………………………………………………………….

    If Krugman is right, then the average rate of unemployment with the stimulus plan is 0.1% HIGHER than it is this month, (1.2% higher than it is this month without the plan), and 0.4% higher with the plan (and 1.5% without the plan) over the next two years.
    Your thoughts….

    Keith keithsrj@sbcglobal.net

  • Leif Wennerstrom

    I have been in recruiting for 13 years. This recession is worse than the 2001-2002 and we’ll see many recruiters leave this business in 2009.. for good. The barrier for entry into this industry is so low that anyone can be in business with very little training and investment.

    The recruiters still employed next January will create value through their relationships rather than just information. Social networks/online communities have allowed professional managers to know and connect with talent in their space. Making a living finding names to contact will slip away in this market..

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