Recessional Recruiting

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1 I. Introduction The current economic turmoil presents arguably the biggest challenge the HR community has faced for a generation. Meeting the short- and long-term needs of a business and its staff represents a delicate balancing act. The bottom line may demand job cuts, but will that leave a company without the skills and experience it needs in these challenging times? Would companies actually be better off investing in more staff, with a specific view to riding out the recession? And what about the effect hard-headed business decisions have on staff morale and productivity, especially if the recession has given workers financial worries? This report, from Jobsite.co.uk, one of the UK s leading online recruiters, examines the attitudes and opinions of the UK s employees and HR community on recruitment in a recession. It s based on the views of more than 4, employees and HR managers from companies of different sizes, providing a real insight into both sides of the equation. How concerned are you about the recession in relation to your company? 42% II. A gloomy outlook? Firstly, what is the outlook for UK businesses in this downturn, according to the HR community? 13% 1% 3% 2% Over half of HR managers ( per cent) are concerned about the effect of the recession on their company with a quarter (2 per cent) even worried that their business may collapse. As well as business-related concerns, regarding having to take on debt, for instance, there are specific concerns about recruitment and retention in a recession. Two fifths of HR managers (41 per cent) have reservations about retaining staff, while a quarter (26 per cent) are worried about being able to take on new recruits. Very concerned Fairly concerned Neither concerned nor unconcerned Fairly unconcerned Very unconcerned Don t know Yet others are more confident 37 per cent think their company is robust enough to weather the storm, while a fifth (21 per cent) claim that they will, in fact, grow during the downturn.

2 Do you agree with the following statements about the economy? I am concerned that my business will collapse 41% I am worried about keeping on all staff members 26% I am worried about not being able to recruit for vacant positions 36% 37% I am worried about taking on debt I am not worried as my business is strong enough despite the slowing economy 21% My business grows during economic times like these A further cause for confidence comes from the level of experience in the HR community. Three in (28 per cent) have previously run a company s HR function during a recession, suggesting that UK plc is in good hands. Even HR managers who don t have previous experience should be able to tap into the expertise of their peers through trade bodies and professional associations. III. Market confidence? So, what of the candidate pool? All markets rely on confidence and the jobs market is no exception. With the news dominated by high-profile redundancy announcements, one could be forgiven for assuming that confidence is at an all-time low. Yet the reality is a little more encouraging. There appears to be considerable positivity among employees about the buoyancy of the jobs market and job security, with a fifth (18 per cent) claiming to be confident and a further seven per cent very confident. How confident do you currently feel with the UK jobs market and your job security? 7. Very Confident 18.42% % This is reflected in the large proportion of employees still looking to move jobs. Over half of the workforce (2 per cent) are looking for a new position, with only the minority (16 per cent) doing so because they have been made redundant or have concerns over redundancy. The remaining 36 per cent are job hunting to pursue their ambitions, undaunted by the downturn good news for HR managers who are looking to recruit. IV. Recruit? Confident Nevertheless, just because the supply of staff is there, has the recession ruled out the demand? Neither confident nor unconfident Not confident 2

3 In fact, one in three firms (36 per cent) have not changed their recruitment strategy approximately the same as the proportion of firms who are confident that they will weather the economic storm. Of those who have changed their approach in the face of the downturn, the most common responses are to: Only take on critical hires those crucial for the immediate survival of the business Become more risk-averse with hires Freeze recruitment No longer hire people in managerial positions How, if at all, have you and your organisation changed your recruitment strategy in light of the economic downturn? % 1% % 36% 23% 22% 17% 16% 11% 6% % % % 1% The research therefore reveals that, unsurprisingly, the economic downturn has created a recruitment slowdown but the good news is that it s not as great as one might expect. Just over half of firms (3 per cent) are still hiring neatly reflecting the proportion of the workforce looking to find a new job with the overwhelming majority of hires (8 per cent) in the shape of permanent, full-time staff. Does your organisation as a whole require staff for permanent, temporary or contract positions? Permanent full-time 28% Permanent part-time Contract Temporary 4% Don t know Haven t changed our recruitment strategy Only recruiting critical hires Extra cautious with recruitment Have put a freeze on recruitment No longer hiring for managerial positions Hiring more temporary workers Don t know Specifically recruiting to help us ride out the recession Changed our recruitment methods Have recruited to help us ride out the recession Outsourced HR The most popular recruitment requirements are for admin staff (33 per cent of firms looking to hire), middle management (29 per cent), and graduate entries (27 per cent), with staff, such as IT support (14 per cent) and skilled manual workers (13 per cent), the hardest to find. For those looking to hire, it s likely that they ll get a quality recruit for less than they would have pre-recession, as candidates have adopted a more flexible approach to finding work. This includes a reduction in salary, hours and bonus expectations, as well as a rise in those seeking temporary contracts. 3

4 How have you changed/how are you planning to change your job hunting strategy in light of the economic downturn? Choice % I haven t changed my job hunting strategy 6.2 I'm more flexible I ll take any job I can 8.97 I've reduced my salary expectations 7.71 I'm applying for temporary vacancies 6.6 I'm applying for lower-skilled jobs 6.44 I'm considering jobs with reduced working hours 6.4 I'm planning to switch careers to an industry I believe to be recession proof/more secure I've reduced my expectations for a good benefits package e.g. less holiday allowance I'm planning to switch roles to one I believe to be recession proof/more secure Other 3.82 I've reduced my bonus expectations 3.41 I'm looking for jobs in areas with low unemployment 2. I've moved house to increase my employability.93 Perhaps unsurprisingly, the automotive ( per cent), construction (32 per cent) and hospitality ( per cent) sectors are the worst hit. More of a surprise, then, is that 13 per cent of charities, 2 per cent of media, sales and publishing organisations and 13 per cent of telecommunication firms have also put their recruitment on ice. However, a recruitment freeze still requires careful management to stop it from having a negative impact on remaining staff. In fact, the research reveals that the biggest concern in the HR community is that freezing recruitment will impact negatively on staff morale (38 per cent). Moreover, a freeze prevents a company from reacting to the challenges of the recession. Many HR staff are concerned that a freeze could leave them top heavy (13 per cent) or affect their company s growth (22 per cent), productivity (16 per cent) or performance (1 per cent) which could have a serious impact on their company long-term, especially in such a competitive economic climate. Thinking about your recruitment freeze, do you anticipate any difficulties ahead? Whilst workers lowered expectations present employers with opportunities to take on talented staff at knocked down prices, an air of caution is advised. A recruit willing to accept a job with a lower salary than their skill set would ordinarily demand may not be so willing to remain on such a contract long-term, once the recovery takes place. They may also continue job hunting whilst in their probation period and jump ship if a better paying opportunity comes along. Best practice advice would always be to reward top talent - both financially and with career development opportunities - so that they stay with you long-term. This should be heeded whether in a recession or otherwise. Aside from the possible financial benefits, more than half of HR managers also believe that the larger candidate pool will allow them to be more selective and potentially plunder rivals for their brightest staff. V. Freeze? Nevertheless, nearly one in two firms aren t recruiting. Of those, just over half (3 per cent) have brought in recruitment freezes, while the remainder simply have no need for more staff at the moment % % 8% Having the right people to get through the recession Having too many junior staff 13% 8% Having too many senior staff Having an aging workforce with no young recruits 38% 22% 16% 1% 9% 11% 9% The growth of my business A negative impact on productivity A negative impact on competitiveness A negative impact on innovation A negative impact on performance A negative impact on staff morale A negative inpact on retention 21% I anticipate no difficulties ahead 4

5 VI. Restructure? Unfortunately for some, freezing recruitment isn t enough. Hard times mean hard decisions, with one in four firms (23 per cent) forced to restructure and a fifth letting staff go ( per cent). This looks set to rise, with two fifths of HR managers (41 per cent) having concerns about being able to retain staff. In some cases, companies are hoping that this can be done through so-called natural wastage that is, not replacing those who leave (21 per cent) or by not hiring new staff ( per cent). However, it s important not to underestimate the impact this can have on staff morale. Although one in seven HR managers (14 per cent) believe that the downturn has negatively affected workers outlook, just seven per cent admit that they are treating their remaining staff better. In such a competitive environment, having the best staff, and getting the best out of them, can be the difference between survival and collapse. Although extra remuneration or bonuses may not be viable as budgets are squeezed, identify critical staff who won t necessarily be senior management and ensure they have their career development or personal needs met. Take a creative approach to finding cost-effective ways to keep your staff happy and productive. business strategist to ensure staff are effectively deployed, or someone with a specific recruitment/retention remit. Adding to your wage budget may seem unaffordable shortterm, but carefully assess what extra revenue a key hire could bring in over the mid- and long-term. Is it a case of Can I afford to hire a business strategist? or Can I afford not to? These hires may also better position you for more rapid recovery once the economy starts to improve. Try to monitor if your competitors are following this approach as that may have an even greater bearing on the long term success of your business. Which, if any, of the following is your organisation looking to hire to help ride out the recession? 2 1 1% % 27% 22% 19% 1% 14% 13% 13% 7% 7% 7% VII. Key hires An alternative approach to a recruitment freeze or restructure is to actually take on more staff investing in critical hires, with a specific remit to helping a company navigate difficult waters. One in companies are currently hiring staff to help them ride out the recession, with another one in seven (14 per cent) considering taking on recession-busting staff. The top hires are: Sales managers to help bring in more revenue New business staff to help bring in more clients Office managers to maximise a business efficiency A sales manager A new business person to attract clients An office manager Secretarial staff An accountant IT/technical support None of the above An online guru Someone to support staff morale Someone focused on recruiting/retaining the best staff A strategic consultant focused on efficiency In addition, significant numbers of HR managers are looking to invest in their current employees by bringing in staff to help them work more effectively. One in 14 (seven per cent) are looking to take on someone to support morale, a

6 VIII. Winning confidence One consequence of uncertain times is that myths and rumours can spread rapidly. HR staff should ensure that they have clear and open lines of communication with all staff to prevent this. Source: Research was carried out with 4,192 UK adults in full-time employment by 72 Point in Spring 9. Research was carried out among 43 HR managers and others responsible for recruiting by PCP Market Research in Spring 9. The research found that close to one in three employees ( per cent) believe that there is a stigma from potential employers or recruiters about candidates who have been made redundant from other positions. At least some of this may be due to the experiences or perceived experiences of workers or their friends in the past. One in employees (five per cent) claim to have had potential employers or recruiters look down on them because they had been made redundant. As economists predict unemployment is likely to hit three million this year, more and more workers are growing increasingly concerned over the security of their jobs. According to the research, one in five workers. million people 1 are concerned about being made redundant from their current position, while one in eight employees (12 per cent) believe that companies will take a last-in, first out approach to redundancies. In any downturn, staff can lose trust in employers. Honesty and openness is therefore paramount in winning confidence across organisations. Having motivated and inspired staff is crucial in maintaining a positive climate. This can be achieved by encouraging internal communication, including an open door policy and talking to people one-on-one across your organisation. Tools such as the company intranet, staff noticeboard, anonymous suggestion box and off the record hour should also be utilised to help staff feel that they are valued and are being kept informed. For many businesses, the skills, experience and commitment of their staff is their only resource. By managing this with care and intelligence, more firms will ensure they are equipped to ride out the recession and be well placed to take advantage of the green shoots of recovery when they do, inevitably, emerge. 1 There are million Britons in employment (ONS). Of these, 19 per cent are concerned about being made redundant (72 Point). Therefore: 29,1, x.19 =,,9 or. million workers. 6