The workforce landscape is facing a level of instability that will require constant agility on the part of HR departments and staffing firms. The not-so-successful "gig economy" is taking shape as a "free-agent economy" in which workers broker themselves with schedule and location flexibility ranking higher than salary. Meanwhile, the resurgence of unions will radically change the face of 20th Century startups that are rapidly becoming legacy establishment companies. We see constant movement from candidate-driven to employer-driven environments along with shifts in work models (hybrid, remote) and significant cultural shifts resulting from the "back to the future" pandemic effect. Disruption is now not just a strategy for startups, but a normal business environment for everyone.
"Every investing strategy works in a bull market, and every business strategy seems brilliant during an economic boom."
Recruiting firms, recruiting trainers, and support products for recruiting agencies including coaching programs and tech tools have grown at the rate of 120% in the past decade. But how many will survive a deep recession? Right now every employer is desperate for hiring assistance. What happens to your firm when no one is hiring? During the last recession, 63% of recruiting firms went out of business.
While financial and business experts continue to practice public denial, the facts are these:
"Risk is a big topic during a recession, but the time to do risk assessment is during the boom."
Companies get "fat" during a boom and pride themselves on their success, not realizing that it is the boom – not exclusively their brilliant business strategy – that produced the results.
AI/ML will continue to dominate. When seen as enhancements to efficiency these are essential, but don't rely on them to actually land candidates – this requires humans.
Massive layoffs are coming. The focus will shift from client development to candidate development as we will need to shift our emphasis to enabling workers to make the cut. During the last recession, unemployment hit 10%, which would be almost three times the current level.
Diversify your client roster. Somebody is always hiring, but if your sector takes a hit it is best to have a backup. Now is the time to get started, before you need to make money in a new niche. As with the pandemic, most companies will take a "wait and see" approach until it is too late to pivot.
Shift from hiring to consulting. If no one is hiring, what other services and expertise can you market? Build that capacity and expertise now, before you need to generate alternate income. Financial services and luxury goods typically take a severe hit during a recession. Healthcare and sales tend to be more resistant, especially if you can offer the top performers. How fast can you retool?
Shift from quantity to quality. With a reduced labor pool, companies will need to focus on having the best, and search firms who can deliver the top 10% are the ones that will win. Jeff Colvin, writing with the 20/20 vision of hindsight after the last recession, says: "During a boom, no one focuses on hiring the best because everyone seems to be performing well. During a boom, it is easy for people to appear like rockstars, so evaluations become less rigorous. Companies cut back on training and development even though they can afford it because it seems unnecessary. Every one of these sins will come back to haunt a company in a downturn." Recruiting firms need to prepare for when these failures hit the fan and real top performers are critical.
Adults don't change unless they have to, and neither do companies. The advent of a crisis is a catalyst for change which can be good or bad depending on how you respond to it. Companies that anticipate change early are the winners – along with companies that are prepared to take advantage of the upturn when it comes.
Our boutique firm lost hundreds of thousands of dollars during the last recession. Nearly half the recruiting firms in the U.S. went out of business and 33% of staffing firm employees lost their jobs. In response we did what might have seemed foolish at the time – we invested lavishly in technology. The move now appears prescient. Almost any technology related to recruiting, i.e. job boards and social media, was just taking off at the time and reached its peak in 2010-2012. As a result, we were able to hit the ground running when the recovery began and were out ahead of larger firms that were behind the curve technologically. In fact, we sold data to some of the largest firms coming out of the recession.
Take a lesson from hockey legend Wayne Gretzky: "I skate to where the puck is going to be, not where it has been."
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