-An Outlook for Recruiting

The global economic downturn we’re in will have long-term consequences for employment and consequently recruiting. The world is seeing the biggest increase in unemployment in decades. Employment is a consequential indicator of problems in the wider economy, so unemployment will continue to rise even if economies start to recover today. The consensus estimate among economists is that in the developed world average unemployment will exceed 10% before the end of 2010.

Changes in Employment in Different Sectors
Regardless of when we emerge from this global financial crisis, there are some major changes in the employment landscape that will change recruiting in terms of where it occurs and how it is done. Where recruiting occurs will depend on where there is growth. If you work in an industry in China that’s heavily dependent on exports, then don’t expect an upturn soon either, as overseas markets contract, and foreign countries strive to protect their own domestic industries. It’s all going to lead to further reduction in the need for imports.
Areas of Growth
A recovery will be weak: losses in asset values and the need to reduce debt and costs will all but ensure that. The areas of growth will be largely in infrastructure, IT, education, healthcare, and energy.
Infrastructure  will be an early winner because so much stimulus and other funds are being directed at it. In particular, China is channeling around 200 billion yuan at infrastructure projects to both boost employment and enhance economic activity. That means industries that support infrastructure — heavy equipment, construction, architecture, cement, and safety equipment, will see strong upturn in demand.

IT and engineering are perennial job creators, and will remain a source of employment for recruiters. For the simple reason that supply cannot match demand. In China, compensation in IT is estimated to increase this year by 8%-10% because of the extreme shortage of qualified professionals.

Education will see jobs growth because of two major factors: 1) a massive expansion in funding for education as part of the government’s stimulus package; and 2) large increases in enrollment in higher education by people unable to find work. Healthcare is another engine of job growth.

Energy in general and green/renewable energy in particular will see significant growth. Biofuels, wind and solar energy all will benefit from new investments and tax incentives. Consequently jobs that are related to this space in research, infrastructure, maintenance, and sales can expect to benefit. However, the number of jobs in these industries is small to begin with, so the overall impact may not be much.

“One impact of an economic downturn is that more people start businesses”
Much of the increase in employment is expected to occur in small businesses and startups. One impact of an economic downturn is that more people start businesses because they can’t find work. Recruiting will become more difficult in this new landscape that emerges. Unemployment is not evenly distributed, and for many of the industries mentioned above there is not an abundance of unemployed talent. The employed are also less interested in changing jobs and become more cautious in an uncertain economic climate and this will likely remain so for the foreseeable future. Correspondingly, companies are becoming increasingly cautious and conservative in their hiring needs and decision-making.
Recruitment Trends

Changes in how recruiting is done are harder to predict, but some trends can be predicted. Given that a recovery will be weak, employers are more likely to turn to part-time and contract staff to seek ways to minimize costs and have the flexibility to control the term of employment. This will be reinforced because much of the growth in jobs is expected to occur in small and medium-size businesses that have no need or cannot support full-time staff.

Recruiters will place more emphasis on working with or referring work to established partners and partnerships. Working closely with partners may mean sharing fees or fee splits and referral fees. This will result in lower revenues but at least it results in income during these challenging times. A noticeable trend in business development is a movement away from targeting the top Fortune 500 companies to targeting small medium sized enterprises (SMEs). The SMEs are not listed companies, so are not at the mercy of plunges in share prices and company values or by demanding and maybe disgruntled shareholders. These SME’s are likely to be family owned and operated and more flexible in their decision-making. As a result there are more recruiting opportunities in these types of companies than their listed counterparts.

“Technology will play an increasing role in recruiting and in particular the use of web based search engines in searching for candidates.”

Technology will play an increasing role in recruiting and in particular the use of web based search engines in searching for candidates. Technology will continue to adapt and will link these web based search engines to recruiters’ databases. More and more recruiters are using social network web sites for searching candidates and companies for business development purposes and for making the cold calls as part of the executive search process. It’s likely that products and services targeting small-businesses will be where we see most changes in recruiting technology.

Areas that will see changes in recruiting in China are the further localization of senior management roles. As companies look at ways to save costs then the first and usually the major cost category for a company are labour costs, so expensive and burgeoning expatriate packages are replaced by local talents at a significant cost saving. Apart from localizing expatriate staff, lay-offs occur particularly, of non-performing staff. A resultant reaction from lay-offs to cut costs and help the bottom line are how to motivate and retain the remaining staff whose morale will have taken a hit. Retention programs to keep qualified staff are a hot topic for companies.

Depending on the industry if the need for skilled or experienced talent is not so necessary then companies will use interns and lower paid graduates. Such companies do not see talent acquisition as a concern as there are estimated to be more than 5 million graduates in 2009 looking for work.

“…there are estimated to be more than 5 million graduates in 2009 looking for work.”
In these challenging times many companies use the down-time in business to train and develop staff with on-job coaching programs. Another major impact on recruitment in China is the new China Labour Law, which has affected HR policies and in particular hiring strategies as the new labour law is more protective to employees particularly in terms of dismissal situations where there are higher costs for companies and stricter enforcement of probation periods.
Conclusion
There are opportunities for recruiters in this challenging environment. It means that to find the opportunities recruiters will have to be more creative, more flexible and follow trends in growth industry sectors. Recruiters should look to established partners and partnerships, and re-focus the product offer to cross-sell other services such as temporary and/or contract staffing services. Recruiters who use and take advantage of the latest technology trends will succeed. The change in the recruiting landscape will mean that there will be a shake-up of the players and the inflexible will fall, while the adaptable will survive and be better off for it.