Initial claims for jobless benefits clicked higher once again, with 627,000 newly unemployed reported for the week ended June 20. But amidst that grim news there are hopeful signs that the employment picture may soon improve. Executive recruiters and Human Resources professionals say signs of an upturn are beginning to emerge.
Recruiters tend to fill the higher paying employment categories, including management as well as sales and marketing professionals and industrial specialists. HR execs have an even broader view of employment since they typically oversee a company's entire workforce.
Even as these hiring professionals slog through the recession, they are increasingly optimistic about 2010. Two-thirds of companies that have imposed hiring freezes expect to lift them next year, according to a new survey conducted by global HR consulting firm Watson Wyatt. "Things have started to stabilize," says Watson Wyatt executive Laura Sejen, summarizing HR survey responses. "The outlook is fairly promising."
Recruiters are likewise admitting to better vibes. "We're starting to see some of those famous green shoots," says Peter Felix, President of the Association of Executive Search Consultants. The $11 billion executive search industry took a dive in the first quarter of the year, with average net revenues tumbling 38% from 2008. But now that things have hit rock bottom for headhunters, they're seeing companies once again ask for help in filling crucial top spots. "There's a limit to how long you can hold your breath," says Felix. "Things are beginning to ease up a bit. Companies are taking a hard look at the quality of their management and coming to the conclusion that not everyone there is up to the task."
Many mid-market employers are focusing their recruiting efforts on general management positions as well as sales and marketing, says Mickey Matthews, who directs North American operations for Stanton Chase, a Dallas-based recruiting firm with 2008 revenues of $65 million. "Eighteen months ago companies might have been looking at supply chain management or their global procurement team," says Matthews, "but now they're looking for lead sales and marketing people. Most clients feel we're going to be out of this [recession] by the end of the year, and they want to have the right sales leadership so they're well-positioned when consumers come back spending."
Three quarters of the HR leaders who responded to the Watson Wyatt survey expect their business to improve by the end of this year. There's some good news on the salary front, too. A new survey from Mercer, a global HR consulting firm, found that average base salary has actually risen over the past year by an average of 3%. Mercer's compensation survey covered about a million workers at some 1,000 firms across various industries. Among HR administrators at firms that have frozen salaries, 69% expect such freezes to end over the next 12 months.
But even as pay improves a bit, the perks are dwindling. "The landscape may be permanently changed in terms of what American employers are able to provide in total rewards," says Sejen. "Many employees will be looking at permanently reduced levels of compensation and benefits." The areas where HR officials don't expect to restore spending to pre-recession levels include company health-care insurance contributions, travel reimbursements and retirement savings matches.
Even as the climate for recruiting starts to pick up, headhunters are noting a few trends that make this job cycle different. One is increased risk aversion. As vulnerable companies go belly-up, potential hires are hesitant about giving up stable positions to join firms on questionable footing.
For their part, employers are demanding better talent and faster service. Given the broader pool of talent on the market, recruiters are expected to serve up a mix of candidates that's superior to a typical pre-recession pool. Clients also expect searches to be completed more quickly. Instead of waiting 75 or 90 days from the start of a search to its conclusion, many clients want a candidate in place within 60 days.
Finally, for both job seekers and employers, the web is the new power tool. In addition to sites like LinkedIn, where a growing number of companies are looking to poach top candidates without the need for executive search consultants, many high-level executives are using high-end services such as Bluesteps.com, where more than 50,000 members pay $269 or more to be part of an exclusive online recruiting bank drawn on by 6,000 recruiting firms.