Recruitment and the global slow down
There’s been a lot of speculation over when the downturn will affect recruitment companies. It’s fascinating to watch analysts cut this year’s earnings forecasts only to be wrong-footed by better than expected performances from the quality players.
In the USA, notwithstanding the slowdown over the last twelve months, the impact on quality recruitment groups with global exposure has not been as severe as most feared, in fact our own experience in that market has positively surprised investors as they were fearing the worst.
Some time ago I wrote on my blog that inflation and the economic climate would increase turnover of staff and make it more difficult to retain top talent. I put forward my personal view that low unemployment, growth in emerging markets (in other words, globalization) and the increased mobility of professional skills and talent will continue to feed the employment market. Baby boomers are retiring or starting to take it easy, portfolio careers are in fashion and traveling the world on a fifty-something career break is all the rage right now. 50 is the new 40. Politicians are waking up to the challenge of attracting highly skilled people from around the globe. Australia led the way in the last decade and Europe is introducing a similar system.
The impact on remuneration and wages cannot be underestimated. Experienced management is getting scarcer, see how many young professionals are being recruited as CEOs for FTSE 100 companies. A generational change is occurring in every area of professional life. BT, Glaxo and BP are recent examples. Barack Obama represents the new generation of politicians, very Generation X and almost Generation Y. Then there is the inflation issue which is also putting pressure on disposable income, another driver of wage inflation and employee churn.
So it comes as no surprise that despite the economic downturn, UK employers are still experiencing difficulties in recruiting and retaining staff. A recent survey reported that workers are shunning company loyalty in favor of high pay. Apparently less than 60% of employees had been in their job less then two years and 68% were planning to move jobs in the next six months. The most common reasons for changing jobs were cited as pay, employer’s culture and ethics, and lack of training.
Staff turnover rates in organizations had escalated from 30% per annum in 2007 to 42%. I took some comfort that at Harvey Nash our training and leadership development budget has doubled and our emphasis on core values, culture and ethical trading has never been stronger.
Recruitment companies generally prosper in markets with strong demand for talent and high churn rates. It seems obvious to me that while unemployment is such a low risk in our core markets, talent will still be hard to find and even harder to retain.
Whether Wall Street and the City of London can adjust their pessimistic forecasts and doomsday scenarios to reflect this, remains to be seen.
July 15, 2008 11:23 AM | Permalink