Gentle Advice About Career Management and Recessions
It struck me the other day that a large part of the professional working population has never experienced a recession. From an employment standpoint, the 2008-2009 recession was over by 2010. For the most part, those who started their working career in 2010 or later have experienced a world that continuously provided more jobs and more employment options. But that is not normal. Usually recessions happen every 10 years or so. In my career, they have come in 1982, 1991, 2001 and 2008. I don’t expect one soon and am certainly not rooting for one, but I can guarantee that we will have one again, undoubtedly within the next 5 years. Recessions are a fact of life.
There is a lot of career advice out there. None of it ever mentions a recession. This is not a happy topic, but it is important, nonetheless. You can prevent a recession driven career disaster with a bit of knowledge and forethought. That is the purpose of this White Paper.
It used to be said that a recession is when your neighbor loses his job and a depression is when you lose your job. That’s a cute phrase but hides some basic facts. Let’s look at how a possible recession in 2022, to pick a date, can affect you. First, we will talk in generalities and then go to specific disciplines and industries that may be affected more than others.
During a recession, let’s assume that 10% of the people you work with will be laid off. Doesn’t sound so bad. You are not in the lowest percentile, so you won’t be affected. And your boss likes you. No worries. Wrong. Here are the realities.
The axe can fall in unpredictable ways. A plant closure can result in all people, strong as well as weak performers, losing their job. Some departments are cut in half and others are not cut at all. Projects can end and business plans can evaporate. Great employees on discarded projects find themselves looking for a rare ongoing project that needs help. It is like playing musical chairs on the Titanic. The staffing cuts required by a recession are often made by someone miles away who does not know you personally. You are a line item.
As far as your boss protecting you – your boss could be gone too. He or she is worried about their job. Don’t expect much protection there. The larger the company, the more political and calculated the thinking. If you are in a company going through layoffs, don’t count on personal relationships to save your job.
OK….so you get laid off. You will just find another job. No problem.
Well, please remember that recessions are not specific events that affect one company. They affect every company. There are fewer companies hiring in a recession, and those that are hiring have more options. Instead of interviewing 2-3 people, they interview 8-10. There are fewer jobs and they are harder to get. That is why it can easily take 3-6 months to get another job in a recession. This can have serious financial and psychological effects. I remember placing a guy into J&J as an engineer in 1982. He had been out of work for a year and was losing hope. When I called him to make the offer, he dropped the phone. Literally. His wife picked it up and said that he dropped the phone because he was so relieved that he started crying. He had not slept for a full night in months. This gave him his identity back.
I promise I will end up giving you some advice. But first, there are some specific groups of people who are most likely to be affected. If you are in these categories, please pay attention.
1) Corporate Talent Acquisition Professionals- Over the last 5 years companies have created large TA staffs to fill internal needs. But, with no or minimal internal hiring needs, why keep an internal TA effort? Those departments are fixed costs and fixed costs are the first to be cut. In the 2001 IT/dotcom recession, 90% of those jobs were eliminated. A VP of Talent Acquisition once told me that every internal recruiter in her department was using it as a springboard to a traditional HR career. If that is you, try to make that move quickly.
2) Job Hoppers – If you have made 4 job changes in 5 years, a recession will be the time that it catches up with you. If you are in a 5-person department, you will probably be one of the most expensive people and, frankly, will be seen as an outsider. Please consider this, if you do get laid off, your prior work experience will work against you. No one cares about frequent job changes in a 3% unemployment market. They do in an 8% market. Try to put some roots down now to help protect yourself.
3) Any Director reporting to a VP – If a VP gets a mandate to eliminate x dollars in salary, you are in the line of fire. A VP can probably eliminate $500k in salary and benefits by eliminating two Director slots and taking on the direct reports themselves for a year or so. The problem with having a high salary is that you become a large potential saving for an employer.
4) Anyone assigned to a new speculative project is at risk. Those are often the first projects to lose funding in a downturn. When the project goes away, your job goes away.
5) Anyone in a skill specific industry – What does that mean? There are industries that require industry specific skills and knowledge: construction, automotive, electrical connectors and defense, for example. These industries usually hire from other competitors rather than externally. Here is an example from real life.
The Harrisburg, PA region has always been a center for the electrical connector industry. It is a spinoff from a company called AMP, based near there. Over decades, more and more connector companies have opened in that region because the industry base was there. Back in 2001, there was a telecom crash along with a dotcom crash. Telecom companies like AT&T and Lucent were major buyers of connectors and these companies cut purchases dramatically. Of course, that led to thousands of layoffs in one region. Since this affected the whole industry, there were no potential employers for most of those people. The downturn was very prolonged for them.
Now for the advice part…
1) I am not your father, and this may be too personal, but you should have savings. That’s no joke. You may or may not get a severance, but if you do, it always runs out quicker than you think.
2) If you are a two-income couple and both work at the same company, one of you should at least consider a job change. Much like you want a diversified investment portfolio, you should seek a diversified family income stream. Two people losing jobs simultaneously can be catastrophic.
3) If you are working at a major employer in a small town, at least consider moving now. If the worst happens and your employer lays people off, you may have to move for a new job. But, if many people are laid off in your small town, you will be trying to sell your home along with many others in the same boat. A lack of personal mobility can be a very limiting factor in a job search.
4) Don’t be an aggressive negotiator at review time. A squeaky wheel in a recession does not get grease. It gets hammered into submission.
5) If the worst happens, remember one thing. Recessions end. During every recession, I have always had to remind people that, as bad as it seems now, they will find a job. In a few years, their career will be back on track and the experience will be a bad but distant memory. That is almost always true.