HRMDirect President Colin Kingsbury writes on the latest in recruiting and technology.

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John Sumser recently posed two questions: "What is the economy without growth? How would the sacrifice be distributed?"

The answer to the first lies in the answer to the second, which is, "very. very unevenly."

Economists consider an economy-wide growth rate of 3% or more to be very good for the US, while anything north of 5% is white-hot. Likewise, a contraction of greater than 5%, lasting more than a year, would constitute a fairly harsh recession.

Having spent nearly my entire working life in early- to mid-stage software companies, these numbers are a bit striking, because of how small they are. I've never worked for a company whose revenue changed by less than 50% in any 12-month period. We were always printing offer letters or severance packages as fast as we could. A shift of 3% would have been barely perceptible.

While early-stage technology companies are famed for their wild-frontier existence, research shows that this pattern holds true even as we look at the broader economy. An important insight is that while employment as a whole may go up or down by a few percent, the variation within individual companies is much larger. BofA and Citibank, for instance, are laying off tens of thousands of workers, and it is possible that headcount will not be replaced within the next ten years. Conversely, in 1998, Google employed only one of its now over 20,000 employees. Economist Arnold Kling quotes from a paper which noted the following trends from 1990-2005:

...in the third quarter of 2001, 31 percent of establishments contracted during the quarter and so contributed to job destruction. Another 26 percent expanded and so contributed to job creation. Most job destruction, 68 percent, occurred at establishments that contracted by 10 percent or more during the quarter. Perhaps more surprising, 63 percent of job creation occurred at establishments that expanded by 10 percent or more. In fact, the prevalence of such large employment changes is the norm in both booms and busts. Hence, most job destruction cannot be interpreted as the product of modest contractions achieved by normal rates of worker attrition. Neither can most job creation be seen as the outcome of modest establishment-level growth rates. That is, although most establishments experience little or no employment change within a quarter, job flows mainly reflect lumpy employment changes at the establishment level

Just because the economy as a whole is not growing, does not mean that individual companies are not. However, patterns of growth do change: large public companies may grow much more slowly than small private ones, or vice-versa. Industries which were less than vigorous in early 2008 may suffer permanent contractions (e.g. newspapers) while others expand just as rapidly.

So to John's question, I think that "the economy without growth" may not be filled with mortgage agents and hedge fund analysts, but it will not be devoid of growth or the opportunities which growth creates, for both businesses and individuals.

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permalink  |   ( 3 / 536 ) "Now that the media would have us believe we're heading towards the second Great Depression, our decision to go with a lower cost solution is looking even better."

That's a direct quote from an email a client sent to me earlier this week, in response to an email announcing the largest upgrade to the HRMDirect product line in our history, including the immediate release of our onboarding and offboarding modules this month, and the announcement of pricing and availability for the workforce planning and performance management modules coming in Q1 and Q2 of 2009.

Early this year, a very good prospect told us that he had ruled us out because our prices were too low. Ever since we launched our beta product in 2005, various wise persons and experts have asked why we so stubbornly refused to ratchet up our prices and charge the same amount everyone else does for an equivalent, or in many cases, inferior product. "But you're making it harder for yourself to grow," they would say. It's a question we asked ourselves more than once.

Low-Cost Leadership: A Good Idea Then, A Better Idea Now
But no matter how many times "easy" money presented itself in the form of raising prices by two, three, more more times what they are today, we kept going back to our original plan. As a veteran of the 2000-2003 IT spending crash, I saw up close how hard it was to turn a company used to flying first class move down to coach. Pricing expectations drive every aspect of how any business is structured. Business processes which were sustainable with an average $60k customer simply could not be scaled back on a linear basis to work with a $20k customer, any more than Ruth's Chris steakhouse could easily get into the $8 cheeseburger business. Many companies with good people, products, and customers went out of business in that era because they could not adapt.

Already we've begun to see a new emphasis by companies on cost-effectiveness, and for the first time, some of the people who said we were too cheap are starting to appreciate the wisdom of our choice. HRMDirect has always been about a longer-term vision. We chose the name "HRMDirect" because recruiting was the beginning and not just the destination on our roadmap. Likewise, no one is getting out of the talent business. Whether your company is still growing, replacing turnover, or restructuring, our applicant tracking, onboarding, and offboarding modules will help you get your job done faster and cheaper while maintaining compliance and applying best practices for risk reduction. Our performance management module will soon help you build a solid, sophisticated, and easy-to-administer performance review system that measures and maximizes individual achievement. Our workforce planning module will set a new standard for organizational transparency and alignment. Our pricing and subscription structure will make it affordable for every company that wants it. If you're one of them, why wait? It's a great time to save some money and get a more robust solution for your talent needs.

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permalink  |   ( 3 / 606 ) Moises over at the Sourcing Corner asks whether there is some sort of corporate fitness program out there to get businesses into shape:

In another article, by Luke Johnson titled “The truth about the HR department“, Mr. Johnson says: “Companies should start getting fit right now. As Albert Einstein said: “Bureaucracy is the death of any achievement.” When it is a question of survival, there is no room for the non-essential.”

This articles caused my head to spin, thinking; how are we to “take hold of our talent management programs”? How do companies get “fit”? I mean, is there some kind of treadmill for companies?

Well, actually there is--it's called "the competition," and if you don't beat it, it beats you.

Companies, like people, tend to respond more acutely to tangible pain than to abstract future rewards. Most of the people who go to the gym regularly and eat a healthy diet do so because they actually enjoy it. Sure, there's that promise of a longer, healthier life in a more-attractive body, but after a long day dealing with hiring managers, how many of us really look forward to sore muscles and a nice plate of steamed broccoli?

The challenge for managers who wish to be successful is to not wait until they suffer the corporate equivalent of a heart attack to change their ways. Those positions that can take months to fill today? Make that a year, and throw a 10-25% salary increase on there too, because that might be what you need to convince someone to leave a job they're quite happy with to take a chance on you. Change will certainly come when plans to open a new branch office hit a wall, or when you can't bid on new projects because you know you won't be able to staff them.

Now it's possible that in a year or two when this hits your business, those CxOs and hiring managers will admit you were right and start doing what you've been telling them to do all along. The big question is whether you'll be there to enjoy it. When people don't like their burger, they're liable to blame the cook before they blame the cow. OK, sorry, I know I'm preaching to the choir while you're out there trying to convert the heathen. You need a plan, not a pep talk.

The key for you is to draw the problem out into the open and put numbers on it. As Rodney Dangerfield once said, "Want to feel skinny? Hang around with fat people." So, put your hiring managers on the scale. Show them the time-to-hire reports, the number of applicants per position, and the starting salaries over the past two years. Don't put lipstick on the pig and hope that makes them think nicer things about you; roll it in the mud before you bring it into their office. Tell them that you need their support to get your new budget/project approved or else things are going to get really ugly. If management thinks the current numbers are still tolerable enough to shoot you down, ask them what would be intolerable so you know when to come back.

For some companies, the shooting has already begun. Ask our clientTechnip USA, one of the world's premier gas and oil engineering firms, how hard it is to fill many of their most important positions. A recession will definitely make it easier to hire a receptionist or entry-level IT person, but it won't increase the number of Senior Subsea Commissioning Engineers. Whether it's salespeople, tax accountants, AJAX developers, or what have you, there are probably a number of revenue-critical positions in your organization for which a recession will have little to no effect on the supply of talent. The good news is that you're not the only recruiter fighting an uphill battle. Chances are your competitors are mostly doing the same, which means the door is still open for you to gain a key competitive advantage.

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permalink  |   ( 3 / 893 ) The official press release is here. We first met Django in early December when we started looking for a senior-level developer to add to our technical team here in Boston.

When we learned that Django was the original founder of HireAbility, one of the more innovative recruitment echnology companies in the space, we realized we had found someone a lot more valuable. The past month had seen some of our most rapid growth to date, and a continued steady increase in the size of the average new client. Django offered a unique combination of industry experience, deep technical knowledge, and a large helping of enthusiasm for the culture and lifestyle that goes along with a rapid-growth technology business.

One of the great strengths smaller companies have is their ability to match capability with opportunity in recruiting. Large companies flush with cash *should* be able to do this better, but only a special few actually do. When you're trying to fill a square hole, it's can be hard to build a case for an extraordinary round peg, and it's often impossible to do it quickly.

Fortunately, this was one of those times when we were able to bring the stars into necessary alignment, and the result is a mutually exciting opportunity. We have always known that 2008 would be a big year for HRMDirect, but now we look forward to it being truly extraordinary.

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permalink  |   ( 3 / 934 ) Amitai Givertz blogged this ZDNet post by David Berlind on Recruiting.com today predicting how social networks will put an end to the third-party recruiter once and for all. Berlind says,

If you’re a professional recruiter (particularly one that works for a recruiting/headhunting firm), then it’s probably time to start thinking about a career change. The reason? Once money starts talking, the mob of Internet users-cum-recruiters will be impossible to compete against.

His story is based on a single email from a recruiter-turned-CTO who blasted his contact list with an offer of $6000 if you found him someone to take a job and keep it for 90 days. Berlind follows this with a story of how he successfully disintermediated his recruiting department by successfully hiring one person off a Craigslist post and, "So successful was my first ad that I have another one up there right now."

As the old saying goes, "the plural of anecdote is not 'data.'" It's an easy pot shot to take, but anyone pressed to constantly come up with new material is going to occasionally commit the sin of extrapolating a couple of stories into a trend.

This isn't to say markets never experience dramatic change. Most of us can remember when the normal way to buy airline tickets was through a travel agent. The end of commissions forced agencies to find new revenue streams from other services like cruises and more detailed vacation planning. Zillow, an HRMDirect client, is providing consumers with access to data about real estate that was only available to brokers until just a few years ago. Houses aren't the same as cars, but until the past 5-10 years, invoice prices on cars were closely-guarded secrets; knowing the price the dealer paid could save you thousands. Now they're given away on dozens of sites to lure buyers to provide contact info.

Recruiting is partially an information business and companies like ZoomInfo (also an HRMDirect client) are making it easier than ever to find people whose resumes aren't in Monster's database. This space is very hot and between search engines like ZoomInfo and opt-in networks like LinkedIn, my sense is that the simple act of finding a name is going to become just as much of a commodity as buying an airline ticket or finding the dealer price of a Chevrolet is today. But even this will take time--name sourcers can make good money now because too many recruiters can't do their own research, and that problem will actually get worse before it goes away.

What Berlind is really railing against are recruiters who don't recruit. Whether in the HR department or at a large staffing firm, there seems to be no shortage of folks who seem to get paid to carry job descriptions from the managers to the job boards, and then carry the resultant resumes back over. My sense is that this is nothing more remarkable than a cyclical trend we've seen many times before that has little or nothing to do with new technologies.

In the late 90s, a sizable chunk of the economy (here in Boston, anyway) seemed to be made up of IT recruiters who knew nothing about IT or recruiting placing software engineers who knew just as little about engineering or software. By 2002, the only folks left standing in either space were those who went in knowing what they were doing or learned really fast. So in the end you can really restate Berlind's lede as "people who don't do their jobs will probably get canned sooner or later."

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