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Today's Baffling Employment Market Explained
A Right Recruiting White Paper, 9/2010
I’ve been recruiting since 1979 and have never seen an employment market as unusual as this one. This is the most perplexing economy I have ever experienced. Notice I used the words perplexing and baffling, not good or bad. It’s just, well, hard to understand.
In this White Paper, I am going to explore why. But first, I’d like to apologize to anyone who I may inadvertently offend. It’s the same apology I make at the beginning of my speeches to outplaced executives. It goes like this - I am going to speak candidly about situations, skills and job specifications. Many people say they like my approach because I am straightforward. However, the popularity of my straightforward approach sometimes drops as soon as I say something that people don’t want to hear. At that point I mysteriously morph from someone with a direct and honest manner into a pompous jerk. The intent of all this is to explore, inform and advise. To employers and candidates stuck in a bad situation, the road to a better future begins with an understanding of your current location. I will try to describe the current market and where it’s headed.
Let’s start with a snapshot of Right Recruiting because, after all, we are in the market daily. There are two things that make us unique. One thing is time. I have worked through 5 recessions. I can draw on those experiences and see commonalities among all. However, later in this paper, I will also show some oddities to this recession that may have ramifications moving forward. The second thing that makes us unique is our client base and the types of positions we fill. No recruiter sees a more diverse project portfolio than I do.
Our clients themselves represent America. I don’t mean that in a patriotic sense. I mean that they are a reflection of the US economy. They are small to mid-sized manufacturing firms, usually privately held. They range from a $5 million architectural products manufacturer to a $200 million electrical component manufacturer to a $7 billion consumer products firm, with a lot of $80 million capital equipment firms thrown into the mix as well. Our clients represent the engine room of the American economy. They are the companies that Ivy League MBA’s and Wall Street financial firms sneer at because they are too small, too vanilla and too invisible. They never get mentioned in the Inquirer. Our clients usually they tend to their own knitting, make money and employ people. I don’t think any of them have a PR department. They are the best of America.
We fill a wide variety of jobs. Because of the way we run our business, we are retained to fill jobs from the senior to the junior level. As an example, here are some of the jobs we’ve filled in the last 6 months;
1) Director of Marketing for a $200,000,000 Delaware Valley manufacturer
2) Director of Operations for a $250,000,000 Lancaster manufacturer
3) Production Manager for a 1,000,000 sq foot manufacturing facility
4) Senior Mechanical Design Engineer for a Lancaster area capital equipment company
5) Business Development Manager for a Delaware Valley medical equipment manufacturer
6) Entry-level Inside Salesperson near Lancaster
7) Quality Engineer in Philadelphia
8) HR Manager in South Jersey
9) Design Engineer for a South Jersey consumer products firm
10) Buyer for a divisional headquarters of a billion dollar manufacturer
I think you get the idea. In other words, our clients are diverse and hire a wide variety of people. Our retained base gives us a wide angle view of what is going on in the world. Here is what we see right now. After a description of this baffling world in which we live, we will move on to possible explanations.
To begin with, this year has been a surprise for Right Recruiting. Frankly, this is our best year ever. Not only has it been significantly better than all others, it has brought us a large number of new clients. These are companies that actively sought us out. They are not companies that we solicited. So, while it’s nice that our revenue has increased, our client base has also increased. That’s even more important. This means something larger than Right Recruiting’s revenues. It tells us something about the state of the market.
While it’s not surprising that 2010 should be better than 2009, it is surprising that this year is better than 2008 or 2007. Those were years when hiring was booming and unemployment was low. The first issue on the table is to explore why our year has progressed so well.
Despite what people may tell you, I am not arrogant enough to believe that our good fortune is due to my infinite wisdom and impeccable leadership skills. There must be a good explanation as to why, in this economy, we regularly get calls that go like this - “Hi, my name is John Smith. I am the President of ABC Corporation and we have been seeking a Quality Manager for the last 3 months with no luck. I found your web site on-line and would like to know if you can help us.” Obviously, the job title and type of company can change, but those calls have been consistent since early this year.
I often visit the company. I take notes and, inevitably, all my notes say the same thing - the client has a history of recent growth, is very optimistic about the future, has looked at hundreds of resumes and has found no one close to their job spe. These firms are in different markets and are seeking different types of people. The only common element is that they are frustrated and surprised. They just can’t find good people.
Often, when I tell people this, they respond by saying that these companies must have low salaries or ridiculously tight specs. After all, with all the people who are out of work, filling any job must be easy now. That sounds reasonable but it’s just not true. When I accept a project I also analyze the job spec. Basically, I don’t accept an assignment unless there is a reasonable chance of filling the job as it’s described. These were all normal openings.
We are talking about 11 situations like this. On a national basis that may not sound like a lot. But please keep in mind that these were companies that had to seek me out and may be just the tip of the iceberg. For every company that contacted me, there could be 10 companies that contacted another recruiter or who continued their own frustrating process.
In other words, there are a lot of companies that want to hire and that are actively trying to hire. Recent national numbers and statements add credence to that premise. For example, according to the Department of Labor, last month saw a 6% increase in job openings and a 3% decrease in jobs filled. That confirms our impressions. Employers are trying to hire and they want to hire. They can’t find the right people.
About 2 months ago the Wall Street Journal ran an article on this very subject. They found that a surprisingly large number of firms were trying to identify people for key roles and many of those firms were getting frustrated. As one HR person put it, “When we try to hire, we are usually looking for a needle in a haystack. The only problem now is that the haystack is bigger. It’s harder to find the needle.”
To reinforce that, a few months ago one of the members of the Federal Reserve gave a speech in which she said something interesting. Based upon her calculations, what used to be a flexible labor force has become more rigid. A combination of things, from a lack of ability to relocate on the part of a candidate to the increasing sophistication and specificity embedded in many of today’s jobs, creates a gap between candidate skills and employer needs. She calculated that, once that is backed out of the equation, the corresponding unemployment rate would drop by 3 percentage points. A second member also mentioned that possibility last week. This may indeed be a structural problem.
There are many explanations. The depressed housing market in some areas makes it tougher for some people to sell their home in Detroit, for example, and move for a job in Malvern. The inability of our educational system to give an average student anything approaching a marketable toolkit of skills is a major issue as well. To amplify on that, I met with the owner of a small manufacturing company in Montgomery County last week. He was complaining that he couldn’t find any skilled tradesmen or machinists. Neither of us could understand why our local community college, in their recent very large capital expansion, saw the need to add a rooftop astronomical observatory to their facility rather than a machine shop to teach marketable trades. I would hazard a guess that there are more machinists needed in Montgomery County than astronomers. But, hey, what do I know?
Employers also hire less on potential and more on skills now. I don’t blame them. Part of that is a reaction to the shortfall in our educational system that I mentioned above. An employer who hires on potential and invests in training faces the reality of losing the person once they’ve been trained. In affect, they become the final step in our educational system. Why should they bear all the cost and internalize all the risk? Usually, once that occurs to a company, their next job spec will be for someone with very direct experience. Secondary to that, a company that hires someone who lacks skills but shows potential can be in a bad spot if the person does not work out. Every year it gets harder and harder to fire someone who does not perform. Risky hires are riskier now. When you are in your car during the day, listen to the radio. A significant portion of the ads are for law firms trolling for clients. Once again, faced with an increased downside penalty to a mistake, employers have a natural reaction to tighten specs and hire more on actual skills than potential. Risk has very little reward in employment, from a company perspective, and can have a huge downside. That hurts people with good intelligence but very general skills.
So, basically, we are seeing the cumulative reaction to a series of unrelated trends that are coming together to create the gulf between labor pool skills and the business community’s needs. To add insult to injury, this affects professional and trades job more than most. After all, professional jobs are the skills based jobs. Transitioning from a cashier at Wal-Mart to a janitor at McDonalds is much easier than transitioning from an accounting job at one company to an engineering job at another company.
At the beginning of most recoveries, you usually hear them described as “jobless”. I first heard that phrase in 1992 after we had come out of the 1991 recession. I heard it again in 2003. I have always said that there is a deckchair for everyone on the SS United States Economy. In every recession, I would speak to people who had been in the wrong place at the wrong time and been out of work for a year. They would sound hopeless. Inevitably, when I track them down a year later, they would have found a new slot as the economy recovered and gotten back on track. It would be like speaking to a different person. A rising economy, like a rising tide, lifts all boats and all careers. I’ve always felt that way because I’ve seen it happen time and time again.
Now I am not so sure.
I think the disconnect between employer needs and the candidate pool has become too wide for some to swim to the lifeboat of a career track. This is a structural, not cyclical, problem and an improving economy may not raise all boats this time. Some people, maybe because they have worked in stagnant firms for too long or because they mistook having a steady job with having tenure, have been thrust into the market totally unprepared for the turmoil. Instead of waiting for the market to improve, such people need to evaluate skills and attitude as they relate to today’s business needs.
Now this is where some people who get this might think it’s personal. It is not. For those of you who get this and who are unemployed, these descriptions should not be about you. Candidly, the people we add to this list are the people we expect to be marketable. This is not a random list. I select the recipients. However, it is easy for someone with skills to drift into complacency, as we shall see. Also, if some of these descriptions do apply, change your skills and behavior accordingly. Find out what the employer wants and be that person. One truism in life is that things change. What was a marketable skill or attitude 10 years ago, the last time you looked for a job, may be irrelevant now.
We have two types of disconnects in the market, attitude and skills. Let’s explore them separately.
ATTITUDE
Attitude is basically your values and priorities, as they relate to work. I will give you 3 examples of candidate behavior that shows poor attitude.
Mr. Big Shot
I have a Director-level job to fill with a local company. It’s a reasonably large firm with international facilities. Most of the candidates are senior people. Unfortunately, there are always people who confuse past titles with current power.
I got a call last week from someone like that. If you’ve ever called us you know that I usually answer the phone. Clearly, I am not a big shot. Well, that day I answered the phone and on the other end someone says “I need to talk to Jeff Zinger.” Not only was the person yelling into a speaker phone but my last name is Zinser, not Zinger, but, that’s ok. I acknowledge that it is me and ask how I can help. Still on the speaker phone the person tells me that he is perfect for the Director job and wants details about it. I felt like he was speaking to me as if I was an employee and he was demanding results. He was not engaged in the employment process. He was a boss telling me what to do. We talked for a few minutes, well, actually he talked for a few minutes, and I finally asked him to get me a resume. When I got it and looked at it, his background was not close. He had run some small manufacturing firms and had been in President and GM roles. He lacked the specificity of background my client required for the job. I let him know that and, boy, was he angry. No big deal. The point however is that, even if he had been good for the job, the attitude he showed in the initial conversation would undoubtedly have carried over into the interview. A bully is a bully.
Attitude Adjustment Lesson for Mr. Big Shot
The definition of leadership has changed. Authority is not just top-down. It’s consensual. Leaders build teams. They don’t command them. Companies want leaders who can sell their programs internally. In this case, attitude adjustment would have been necessary for him to be a bona fide candidate for almost any job.
Mr. Sneakers.
I had a Production Manager job to fill. It was an unusual job because it required strategic skills while supervising a small group. It required a first line supervisory personality with a second line supervisory intellect. I ran across a fellow who looked good on paper and who sounded good on our phone interview. I sent the resume to the client with my notes. They liked him when they spoke to him on the phone. A physical interview was scheduled. At that point, things got a bit bizarre. He sent a series of badly written emails asking for minor details about the job and company. This candidate had been out of work for six months and had about 30 years of experience. He had changed jobs about 6 times so he should have known how to act. The emails were okay and the questions, though somewhat strange, may have just been a sign of nervousness. The problem was the fellow had no ability to communicate in writing. Many words were misspelled and the grammar was horrendous. This person appeared to be almost illiterate, which is never a plus for a professional level job. It was either that or he never proofread the emails. Of course, that latter doesn’t show attention to detail, for sure.
The icing on the cake was when he showed up for the interview. He was wearing sneakers and a t-shirt. His entire demeanor in the interview was condescending. He was sure he knew my client’s needs better than they did and had no compunction about letting them know that. Of course, he bombed. There is no other way to explain it. In his email to me after the interview, he said he did great and that “he amazed them!”. That might have been true, but not in the way he assumed.
When I looked at his background again, I saw the flaw. Every time he changed jobs prior to this, he went to a company that worked closely with or was connected to a prior employer. He had never really interviewed for a job. He never acquired the proper interview etiquette or written communications skills required to land a job in 2010. He was hired as part of a now non-existent old-boys network. His network had evaporated and he was not smart enough to go back to the basics; wear a suit, shake hands and smile.
Attitude Adjustment Lesson for Mr. Sneakers
Companies are decentralized and most have a lot of matrixed relations in their organization. An employee must be able to work with people outside of their own discipline. In other words, they must be able to swim in many different ponds and act appropriately in each one. For even the most hands-on job, an ability to project professionalism is a key requirement. Sneakers in an interview does not project professionalism. You can’t just rely on your qualifications for the job because an added component to definable skills is your innate ability to work with others. Courtesy and a proper interview demeanor are the best ways the showcase those skills.
Mr. Slacker
This was someone who interviewed for a Junior Salesperson slot at a manufacturing client. They wanted someone trainable in their products and who could travel 25% of the time. The skill set was broad, just a year or two of sales experience and some technical awareness. This was purely a “personality” hire.
Mr. Slacker had background that fit and, in my conversation with him, he seemed motivated. He wanted to move to my client’s location for personal reasons. I thought he had an OK, but not great personality, and that he was close enough to consider. A few days prior to the interview he and I spoke to refresh him on the job and interview process. He seemed a bit casual about the interview. He did seem very excited about the Flyers playoffs coming up and seemed to know quite a bit about NHL players and trivia. Everyone needs a hobby, I guess.
After the interview, when I spoke to the HR person, she actually laughed when describing the interview. He badly bungled some pretty basic questions. The most comical was when she asked him what to describe his strengths and weaknesses. She said he stared blankly for about 30 seconds. He then said that he was asked that question at another interview but couldn’t come up with any answers. He then said that his girlfriend warned him that he would probably get the question again and he should think of an answer. He told the interviewer that he needed more time to answer the question because of the Flyers game the night before.
It went no farther. He was stunned when I told him that they had no interest.. Please keep in mind that this was a college grad with 2 years of sales experience.
Attitude Adjustment Lesson for Mr. Slacker
Not everyone shares your personal priorities. A separate example of this was a fellow I had interviewed 2 years ago. The client said he seemed to have good skills but was very concerned about the working hours because he was a volunteer assistant football coach at the local high school and wanted to maintain that role.
The lesson here is to recognize that the things that may interest you or that your friends think are neat or your spouse adores are not skills that you should be placing before an employer. They want to know if you can do their job and will you be happy in their job. They may not share your enthusiasm for the Flyers/Eagles/Sixers/Phillies, etc. nor your pride at being able to show a 15 year old how to tackle. While many people think that having outside interests make them well rounded, in an interview the operative word is outside, not interest. Keep your personal interests outside the interview. Just like work should not consume your life, your life should not consume work. In the slackers view, his passion for the Flyers made him an interesting guy. To my client, that was static and made him a cute 12 year old.
A good attitude in today’s market is being serious about 3 things. They are:
1) Be serious about yourself. Don’t be Mr. Sneakers.
2) Be serious about your career. Don’t be Mr. Slacker
3) Be serious about others. Don’t be Mr. Big Shot.
In past great employment markets (the late 60’s, late 80’s and late 90’s) a tight market allowed the luxury of an employment counterculture. These countercultures (hippies, grunge slackers, dot.com wannabe’s) were able to create an aura of coolness and otherness. They used that aura to separate themselves from being serious because they were non-conformists to the business world. They were doing us all a favor by working. That was a short term luxury. Business has gotten more competitive and the pace has increased dramatically. Companies will not coddle non-performers and they will not coddle egos. You must demonstrate an attitude of respect in an interview, even if you have the qualifications. Why? Because the attitude of respect is a qualification unto itself. It is as important as education and experience.
Take a gut check of your attitude and the way you are approaching your career, employer, peers and job. Understand that once the economy completes it’s recovery, things will still never be quite the same again. Why, because of skills. That’s the next disconnect in the market.
SKILLS
Skills are the specific academic and employment experiences required to do a job. Remember one thing, the employer gets to determine the required skills, not the candidate.
Let’s break this down and look at academic skills first. This won’t take long.
You need a college degree. Sorry, I don’t care that you have 20 years of experience. So do the people you are competing with and so does the manager and so does the CEO. In fact, both the manager and CEO are now paying for their kids to get a college degree. It is important to them. It should be important to you. There is no excuse for not getting a degree now. On-line programs abound and grants exist. Go to school.
Don’t misunderstand. The degree does not get you the job. It gets you considered. Once you are considered, your success depends on the quality and relevance of your degree and the quality and relevance of your experience. For most jobs, you won’t get considered without the degree. If considered, you will be at a competitive disadvantage against those who have the degree. That’s a fact. Sorry. I didn’t create the world. Go to school. It’s not too late. You can do it from home in your pj’s. There is no excuse. Nada. None. Zip.
Now let’s look at employment experience. Here are the things you need to know.
To do the job for them, an employer will want to know that you have done a similar job for someone else. We all know that. However, they will also want to know that you have done that job well. That’s where a lot of people get tripped up. Companies, at least good companies, have changed the way they manage themselves and that has ramifications for candidates.
In some companies, there used to be primary functions and secondary functions. Secondary functions were necessary but only had a minor effect on the business. In secondary functions, a company could afford a marginal employee in the job because the value added between average and good was minimal, if it existed at all. I call people in those roles, “placeholders”. They perform a function that is necessary but not critical. A historical example would be an old-line quality department. For those of you that can go back 20 years, you might remember a time before Deming, TQM and six-sigma, when Quality Managers reported to Production Managers. Before then, quality was a necessary but not critical area. It added very little value to the product or company. My how things have changed! No company right now, neither manufacturer nor service provider, can ignore quality and it’s not unusual to see someone with a quality background in the upper management suites.
Think about Human Resources. In many small and mid-sized firms, HR, or as it used to be called, Personnel, was almost a clerical function. The Office Manager used to pick up HR functions as the company grew and would report to the CFO. There would be no proactive HR department. It was record keeping. Now, in many of the same sized companies, HR takes a more prominent role. It is not a placeholder role, as it sometimes used to be. It impacts and adds value to every part of the company, from staffing to benefit cost management to legal issues. Over the last two years, we’ve seen quite a few clients come to us seeking to upgrade the HR department and to professionalize the function. Over time, those companies will outperform those that assume that HR, or any function, can be a secondary role.
There are other examples but the point to be made is this, there are no secondary roles now. Every department MUST add value and every person MUST contribute. There are no placeholders anymore.
The problem with this, structurally, is that the same applies to companies. Companies can be placeholders too. They can get comfortable and complacent with their revenue or market share. Companies that have been stagnant and have not upgraded their talent pool will eventually struggle and fail. There is no denying that business is more competitive. For employers with the ability, desire and talent pool to compete, business is better. For those without, it is worse. For candidates with a placeholder background, this creates a vicious cycle. Every year there will be fewer employers that will accept placeholders as candidates.
Even when the market improves, the main thing to remember about job experience is this; it will not be enough to have just done a job to be hired. You must have done it well. Going into an interview, you must be prepared to do more than just list the jobs you’ve had. You must be able to say what you’ve done in those jobs and how you improved company performance. This is important. I said company performance, not department performance. How did your accomplishments affect the business itself? What did you contribute to those outside your area? It’s a bigger world now.
Moving forward, what does this mean for the market and it’s participants?
1) Employers need to be more involved in their community to raise practical educational standards. You need better talent than you are getting. You need to be more vocal and you need to bond together to create change.
2) Candidates need to recognize that a comfortable slot within a static company does them no good. That company will inevitably shrink and fail, leaving them with no record of accomplishment. Every year there will be fewer opportunities for those with suspect skills.
3) Employers need to remember that it is risk that brings reward, not indecision. No matter where we are in the cycle, your choice is not whether or not to invest in your firm. Your choice is what is the best investment to make. If you are not getting better as a company, someone across the country or across the world is. A global economy is a global opportunity. Eat someone else before they eat you.
4) Candidates need to redefine the phrase work/life balance. A recent article asking executives if they turn off their Blackberries at home was interesting. Many talked about work/life balance and the difficulties in managing that equation. The smartest one said that work is part of life and life is part of work. They are inseparable. His family saw that he enjoyed his job and valued his company. They did not see any negatives to a commitment to his job. They saw it gave him joy. A great answer.
If you are a professional in the world today and you don’t enjoy your job, change it. An expanding, successful company needs committed people. The Ozzie and Harriet work/life balance that allowed you to forget your job when you get home is over. Sorry.
5) Employers should constantly have their antennas out for good people. A CEO once complimented me on my staff and asked me how I found them. I said I thought deeply about the type of people that would contribute to my business and was always alert, through my business and personal life, to be sure I identified them when they crossed my path. A bigger haystack requires more work to find the needle.
6) Candidates need to respect the fact that the world is constantly changing. For those in great jobs in great industries now, respect the fact the 20 years from now everything will have changed in unforeseen ways. Industries and companies will reinvent themselves and what is considered fact today will be laughed at as a myth tomorrow. Don’t fall through the cracks
Well, in my typical rambling way, it’s time for the synopsis. Here it is.
For the first time in my career, I know that I am seeing resumes of people who will never get back on track. Let me rephrase that. I am seeing resumes of people who will never get back on track unless they realize the new reality. While many see a rapidly changing world as threatening, they should also see the opportunity. We spoke of the necessity of getting a college degree. The flip side of that is that it’s never been easier to get a college degree. We spoke of industries being stagnant. I am seeing industries and companies that are thriving. We spoke of required attitude adjustments. The corollary is that there is nothing easier than adjusting one’s own attitude. The only variable is yourself. There is no one else to get in the way.
Don’t wait for the economy to rescue you. It may not. The hiring has begun and will continue. Recognize the constancy of change and be sure you reserve your deck chair on SS United States Economy.
As ever, thanks for getting this far and remember Right Recruiting for all your employment needs. Jeff
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