I am certainly no eternal optimist about the economy. But I did undergo a great deal of education in economics prior to receiving my Ph.D. This education taught me a great deal about the economic phenomenon called “precursors” or “leading indicators” that alert you to other impending economic events on the near-term horizon. Leading indicators exist for almost every form of economic activity you can imagine. For instance, many of you have probably heard via various news reports that dramatic increases in oil prices have historically indicated that a recession was approaching the U.S. economy. Regardless, for some time now, I have been forecasting the onset of a serious hiring expansion near the end of the first quarter of next year. Events in the last month have further convinced me that we are right on track for an explosion of recruiting and retention work. One of the primary indicators I have come to rely on with regards to forecasting future job growth is the number of calls I receive from executive search firms seeking recommendations for high-level placement. Three years ago, the number of incoming calls and emails started to slow, and eventually worked their way down to just a few a month in the last year. But suddenly that has all changed. The floodgates have opened, and within recent weeks I have received nearly four times the volume of calls I had come to expect. Within the last week alone I received three separate requests for recommendations for VP/director of recruitment positions with nationally recognized employers in the pharmaceutical, finance, and high-tech industries. Other Trusted Precursors Indicating the Economy Is Improving I’ve seen several other promising indicators that convince me that the pre-boom has begun. For example, several of the major management consulting firms I work with from time to time have once again begun to recruit thousands of new consultants for next year. Management consultants are data experts, and wouldn’t be hiring and training expensive new consultants unless they knew that the coming explosive growth would fuel a major jump in the demand for consulting services. Capital spending has also begun to loosen up at many major firms, which is another precursor that hiring will begin within six to eight months. On a more personal note, the number of requests that I receive to speak at Fortune 500 firms has increased, indicating that frozen funds are being freed up to develop the HR talent that has languished during the down economy. Another good sign that there is growing demand for advanced HR strategies and tools is indicated by the number of hits on my own website (www.drjohnsullivan.com), which has seen traffic grow nearly fourfold in recent months to more than 400,000 visits a month by more than 32,000 distinct individuals. Subscriptions to our VP-of-HR Newsletter have also markedly increased. Why The Pre-Boom Comes First All of this is exciting news on its own rights, but it’s important to realize that these are indications of the pre-boom. The actual boom will not begin for a few more months. The actual “recruiting boom” will occur early next year, because it takes several months for major firms to ramp up from “zero recruiting” to normal recruiting operations. The message that these precursors are sending is that companies have just now begun to realize that they have decimated their HR, recruiting, and retention leadership ranks and, as a result, must now act to fill these critical HR leadership positions. These top positions must be filled right away, so that strategies can be put in place, the systems and processes can be updated, and the hiring of recruiters (who will be needed when the rehiring boom actually begins next year) can begin shortly. Why This Boom Is Going To Be a Hell of a Ride During the last economic boom, the corresponding boom in recruitment became commonly known as the “war for talent.” That war grew gradually throughout the late 1990s. The next one in the year 2004 won’t be so subtle. Here are some of the reasons why:
- It appears that every man, woman, and child is ready to quit their current job at the first opportunity! I have been making an effort to ask corporate employees what percentage of them will begin looking for a job when job opportunities begin to open up. The response has been, well, overwhelming. Similar surveys by major corporations and other organizations have found the same thing. I predict that as few as 20% and as many as 50% of currently employed professionals will begin surfing the net for jobs by mid-2004. Most companies currently have taken no action to prepare for this onslaught. Those firms that are anticipating having to hire only 5% to 10% more employees to meet shrinking inventories and growth demands are in for a shock. They may actually need closer to 20%. Unfortunately, there just aren’t enough currently trained recruiting managers and recruiters on the planet to fill that kind of need.
- Loyalty is a thing of the past. You might ask why this explosion is going to be so sudden and so large. One of the primary reasons is that during the beginning of the last talent boom, most employees still felt a high degree of loyalty to their firms. During the last three years however, most employees lost any remaining company loyalty as a result of the way they were treated during the downturn and layoff periods. The absence of job opportunities has led to a type of “forced” loyalty during the last three-plus years. Any appearance of loyalty will evaporate rapidly once job openings begin to appear. After that, the onslaught will begin.
- An easier job search. During the last boom, most people were not connected to the web, and even those who were felt uncomfortable using it. Obviously, for professionals, that’s no longer true. In fact, it has become ridiculously easy to find and apply for multiple job openings due to the new sophistication of Internet job boards and corporate job sites. Because of the easy access to job opportunities and the ease-of-use of these tools, the number of current employees who will find the time to look for an outside opportunity on the Internet will be triple what it was at the beginning of the last boom.
- Outsourcing and offshoring fears. Even professional employees are now beginning to fear that their jobs will be offshored or outsourced. Whether there is a boom or not, these individuals will begin to consider shifting to smaller- and medium-sized firms, where offshoring and outsourcing are less likely to occur.
A Caveat Unfortunately, there are some jobs and individuals that won’t be positively touched by the boom. Manufacturing jobs, call centers, order fulfillment jobs, and a good number of the less complicated programming jobs will join steel and textile jobs overseas. In a global economy, U.S. firms no longer have a choice; they must learn to rapidly shift jobs to the lowest labor cost area if they are to remain price competitive. It’s also important to note that even though many companies will be rapidly hiring, the people they are looking for will differ dramatically from those they sought out in the past. This is because managers have learned to expect the kind of productivity improvement that the U.S. workforce has produced during the last few years as a result of our heavy reliance on technology. Managers have forever learned the lesson that technology is an essential element for dramatic improvements in productivity. As a result, they will never again have even the slightest interest in individuals in any business function or process who cannot adapt rapidly to change and who are not well versed in the latest available technologies in their chosen functional area. Hallelujah! The War for Talent II is just around the corner. But alas, the day of fighting a war for talent with conventional weapons has also passed. It’s time for corporate leadership to question whether they have the “smart” weapons, tools, and strategies necessary to fight a 21st-century war for talent.