Article
Two: The Rest of 2008! A Strategy By Steve Finkel
Roughly half the year has passed, and it has certainly been economically tumultuous. Yet despite the much-ballyhood turmoil, the facts are that for most recruiting firms, things are going well. There will always be individual niches in a slump at any given time. Nevertheless, as this is written, most recruitment firms have little reason to complain.
Yet will this continue? What does the future hold for our industry? Ronald Reagan, who held a degree in economics himself, reminded us that “economists are pessimists, and have infallibly predicted eight of the last three recessions”.
However will the grim economic forecasts be borne out? If so, how long will it last? And what do we do about it right now?
The Three Markets
Consider that when one speaks of “the market”, one could actually be referring to three markets, which do not move in tandem.
First, we have the stock market. This is the first to fall in a serious down market. While stock busts have occurred and not led to a broader downturn, they are the infallible harbinger of those that do occur.
Secondly, there is the general economy at large. This revolves around both consumer and business purchases, and consequent earnings. Historically, such downturns follow the stock market by 6-8 months.
Finally, we have what really concerns us, which is the employment market. The average Recession in the US and the UK actually lasts ten months. However, once this hits and the Recession runs its course, employment generally lags the economic (not stock) recovery by a year, if we are speaking of a full return to normality. Post-Recession, companies must not only sell excess inventory; they must also feel confident about the future, and have their current reduced workforce actually over-worked before they will hire in any quantity beyond replacement. A one-year lag in hiring after a downturn ends is typical, and it may be much longer.
Economic Cycles
The temptation by many — especially those who are naive or politically biased — is to blame a slowdown on a specific administration or policy. A “change” of these is frequently claimed to be needed to correct the problems.
The falseness of this will be evident when one considers that there have been ten post-World War II Recessions in the US, and a not-dissimilar number in the UK. Economic cycles happen, though the past two Recessions have been somewhat briefer than usual.
The likelihood of avoiding another forever is nil.
What to do?
The first thing for any owner/manager to do is not to deny that a Recession can happen to your firm, regardless of your “Recession-resistant” fantasies. The second is to actively plan, obtain information and implement the steps to get you through it.
Following are some suggestions to consider in preparation for navigating a difficult market:
1) Make Your Own Evaluations
The concept of three markets, remembering that the only one which concerns us professionally—employment—is the last to respond, is critical. In the early stages of a Recession, your business may still be quite good. You will believe you can duck it. Wrong. And conducting yourself as though you can will cost you money, and emotion, and possibly even survival. Nor can you necessarily rely on industry sources, who may have certain biases as well. Monitor your own market and make your own evaluations. The article in a recent issue of UK Recruiter entitled
“Predicting the Future: Three Numbers You
Need” will be of great benefit. But better to respond a little too early than to make the possibly fatal error of responding too late.
2) Focus on New Clients
With the exception of a large bank account, the one thing most likely to assist in surviving a slow economy is a substantial quantity of good clients.
Firms or individual consultants still hooked into a candidate-driven mode of operation will find themselves in serious trouble if they do not change their ways. You must focus on developing new clients, even if you have sufficient searches at present.
3) Obtaining Candidates Appropriately
Reliance upon means of obtaining candidates readily available to clients—such as ads or the internet—in a market downturn will gravely compound the error. As large numbers of actively-looking candidates flood the for-free and for-fee job boards and as internet “trainers” continue to assist our clients in utilizing internet strategies to find their own candidates, the phrase of “Live by the Tech; Die by the Tech” will be even more accurate. In a slow and slow-to recover market, only True Direct Recruiting will get you by.
4) Cut Back on Expansion Plans
During the past years of extreme growth, what were the chances of a new recruiter, division or business succeeding?
Now pause to realize that in a slow market, the likelihood of the success of any of those enterprises becomes much much less.
Firms involved in expansion plans or considering doing so would be well advised to “go slow” for another six months….at least.
5) Increase Time Spent in Role-playing
Do the objections to be overcome change in a poor market? You bet they do! Candidates are harder to move, clients more difficult to obtain, fee objections rise,etc. Make a list of most-frequently-heard objections, another list of the answers, and role-play to practice. If your firm doesn’t improve selling skills to reflect a changing market, you really will be trying to do business today with yesterday’s tools. Correct role-playing is the way to do it. A complete article on this subject may be found at
www.stevefinkel.com.
6) Identify Niches and Sub-niches
To blindly attempt to work precisely the same market in bad economic conditions as in a boom market is business suicide. You may mistakenly believe your area of specialization is “Recession-proof”. But hundreds of failed search consultants flooding into your market because theirs isn’t, will change your mind quickly!
Identify a narrow sub-niche right now where Demand exceeds Supply, and which maximizes your industry knowledge and contacts, to work in a Recession. If you believe no such sub-niche exists ( keep looking and asking, it probably does), then pick a closely-allied industry where your knowledge and existing data base of candidates will give you a head start.
7) Implement Sound Management Practices
There are certain standard business practices which have been proven to work in our business. These practices include, but are not limited to, daily written planners, keeping track of numbers and analyzing ratios, and regular skills-oriented sales meetings.
The difficulty is that in good times, it is easy to drift away from these time-tested methods. In a poor market, with your staff highly stressed, it will be difficult to tighten controls, no matter how much those controls may be needed.
If business is still good or adequate for your firm, this is an ideal time to re-institute management techniques which will increase production in any market. If it is not, you’d best make some management changes right now if you want to achieve the production to survive.
8) Invest in Real Training
“Training” is not public speaking or the computer equivalent of “webinars”, with their inevitable flaw of “here today, gone tomorrow.” In fact, focusing on hype-and-hustle public speaking, webinars or phone seminars when what is required is genuine training can actually reduce production, due to misdirection, shallow and incorrect information, and time wrongly-utilized.
Real training is presented in a repeatable replicative format. This means videos or DVD’s, audios or CD’s (especially if you commute), books or in-house training…combined with role-playing. “The best investment”, as Ben Franklin wrote, “is in the tools of one’s own trade.” Our tools are our selling skills…and there is no better time to invest than in a questionable market!
9) Consider Altering Intra-Office Split-Fee Arrangements
The old-style 50-50 split fee may have some merit in a candidate-driven boom market. In a market where top-quality clients are in short supply, however, it is downright counter-productive. To motivate your people to develop additional clients, to effectively “work the candidate files” and to recruit properly, consider paying them for doing so with a different split-fee ratio. A complete article on this subject may be found at
www.stevefinkel.com.
10) Recognize Marginal Performers Early…and Take Action
There is much to be said for staying with an initially questionable recruiter in a boom market. A slow or Recessionary economy, however, is a very different matter, and a manager would be well advised to take a more hard-nosed approach. Your best performers will get by, given sufficient time to adjust and some effective training to reflect a different economic climate. Your marginal people, however, will not. If your market heads south, don’t delay in taking appropriate action.
Admitting Reality
This author has the benefit of having exhaustively researched and produced three substantive products for our industry on dealing with a Recession. The first long-ago product involved interviews with scores of highly-experienced people in our industry who had cumulatively experienced hundreds of market downturns. At the end of each recession, additional scores of people are contacted, thoroughly interviewed, notes taken and filed.
The most frequent comment from those who have not done well in a downturn is, “I denied that I was in a recession until it was too late. As a result, while I got through it, my changes were of limited effectiveness”. A well-known franchise adopted the corporate motto in the last one of “there is a Recession, but we refuse to participate”. Over 150 offices were lost as a direct result of this attitude. Possibly Corporate refused to participate — but the franchises certainly did.
Rest assured that if you ignore a Recession, it will most certainly not ignore you!
And In Conclusion….
So is there an answer? Of course. This article addresses some level of management response to a slow market which will occur. Comprehensive information from a recruiter/desk-oriented perspective may be found in multiple chapters of the author’s new book Breakthrough! which specifically addresses this topic. And there is far more to navigating difficult times from a management perspective than can be dealt with here.
Managers who have grown up in our industry during only boom years should give serious thought to how very differently things need to be done in a bad market. But even experienced owners will find it difficult to remember all they knew and did at the time of the last one.
It is no fun to think about a slow market…but it is a lot less fun to encounter one, and not to be prepared for it!
It is all very well to Hope for the Best but good business judgment
dictates that we should also Prepare for the Worst. You may be very glad
that you did. As Winston Churchill said, “Nourish your hopes, but do not overlook realities”.
Acclaimed speaker and trainer, Steve Finkel is a veteran of 30 years and six recessions in our industry. The author of the best-selling book in our industry’s history (now in 25 countries), he has conducted over 400 in-house training programs on five continents for firms of all sizes, with 85% repeat business. Mr. Finkel has been referred to by Personnel Consultant Magazine, published by US National Association of Personnel Services, as possessing “the most in-depth knowledge of search and placement in industry history”. Website:
www.stevefinkel.com
or call (US) 314-991-3177
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