But bad times for some companies mean good times for others with the financial means to fill vacancies with well-qualified candidates or pick up top talent that may not have been available even a few months ago, according to recruiters, executive headhunters and corporate executives who are experiencing the phenomena firsthand.
The exodus of high-level professionals, managers and salespeople from industries hard hit by the economic downturn is proving to be a boon for companies in industries or geographic areas that haven’t been affected—at least not at the same level, the industry watchers say.
Consultant Brad Smart, who helps Fortune 500 executives "topgrade" their workforces through an elaborate screening process to find the best talent, says in the early days of November he was inundated with résumés from people who in September wouldn’t have considered switching jobs. The Wall Street meltdown changed that, says Smart, with Smart & Associates Inc. in Wadsworth, Illinois.
Not only are there more candidates to choose from, but the larger talent pool also increases the likelihood that companies will find someone with the exact skills and experience level they’re seeking. On top of that, companies won’t have to offer the hefty signing bonuses and other extras they would have needed a year or two ago, Smart says.
"Base pay will stay the same, but because it’s likely that a bonus in 2008 isn’t going to be nearly what it was in 2007, you’re getting that talent a whole lot cheaper," he says.
When the market comes back, so will bonuses, Smart says.
"So don’t think of it as saving bucks. Think of it as getting better talent," he says.
High energy prices during the past year meant oil and gas companies had funds for new projects and were snapping up engineers and project managers to work on them, making it difficult for companies needing the same types of workers to fill their own openings, says Jim Cahill, marketing manager at Emerson Process Management.
The $4 billion Austin, Texas, industrial automation manufacturer with 37,000 employees found that as energy prices drop, oil and gas companies aren’t hiring as much, so it takes less time to fill open positions, Cahill says. Next year, though, there could be fewer openings, he adds.
"Like most manufacturers, we see a lot of economic uncertainty in the months ahead, which may have an impact on hiring."
Because Emerson makes automated controls for a variety of industries, from energy to pharmaceuticals to biotechnology, the company has ridden out a number of economic slumps over the years, giving it a strong financial track record, including decades of increasing dividends. That’s not lost on job applicants or employees.
"When times are more uncertain, it becomes a strength," Cahill says. Employees "may be less inclined to jump to a dot-com or startup."
Despite an average overall U.S. unemployment rate of 6.5 percent this fall, demand for well-educated professionals is still high, say Brad Baiocchi, CEO at Global Recruiting Network, a Downers Grove, Illinois, executive placement firm with 180 franchise locations. As of October, the unemployment rate for workers with a college degree or higher was 3 percent, according to the Bureau of Labor Statistics.
"So 97 percent of people with B.A.’s are employed. That’s a tight marketplace. There’s still demand," Baiocchi says.
For industries such as investment banking and real estate, though, 2008 was a "car accident," a traumatic career displacement event that could change their work life forever, Baiocchi says. The lucky ones—people with the most education and experience—will find similar jobs in a different industry. People without as much experience or a degree are the most likely to have a hard time finding comparable work at comparable pay and may have to settle for less, Baiocchi says.
However, companies that think they can pick up talent at a discount when times are bad can hurt themselves in the long run, cautions Debbie Zurow, professional services director at Boly Welch Recruiting, a 26-person Portland, Oregon, firm that places executives in accounting, IT, legal and HR positions in some of the biggest companies in the state. When companies hire skilled talent at less than fair-market rates, "They risk low morale and attrition—all much more costly to an organization than the few dollars saved," Zurow says.
Ultimately, it’s a corporate culture issue, Zurow says. Companies that would eagerly hire someone for $20,000 under what they’d normally make as a quick fix regardless of the effect on morale or their corporate culture "aren’t typically the ones getting the ethics awards," she says.
According to Zurow, demand for professionals in accounting and finance is still strong, especially in the Pacific Northwest. The real benefit of today’s job market isn’t picking up talent on the cheap; it’s being able to shop for the right fit.
"Employers can make sure [candidates] have the credentials or the Rolodex they can bring into the company. They can take their time to find someone they couldn’t find" before, she says.
Even if a company isn’t in the best shape financially, it doesn’t make sense to shut down hiring altogether, Smart says.
"Even if there’s a hiring freeze, if there are key jobs that a company has been unsuccessful getting talent for, they should go ahead" with a search, Smart says. "That’s where the CEO and head of HR come into play—to make those decisions."
Continuing to find enough good talent is going to be corporate America’s biggest challenge in the next 20 years, Baiocchi says. Of those firms not constantly interviewing, attracting and retaining the best people—even during a recession—"You’ll always be No. 2," he says.