Does 'Productivity Down = Hiring Up?' Only Time Will Tell

Many companies have held off hiring new employees for quite some time. The question is how much longer can they continue to do so?

From all indications, not too much longer.

On Tuesday, the Labor Department released its worker productivity numbers for the second quarter. The numbers weren’t that pretty, since they indicated productivity fell 0.9% during the second quarter. That represents the first time that productivity has fallen during the past 18 months.

In other words, companies have been attempting to get the most amount of work done with the least amount of employees . . . and everybody knows you can’t do that forever.

Here are the worker productivity numbers over the past seven quarters:

  • Fourth quarter of 2008—Down 0.1%
  • First quarter of 2009—Up 3.4%
  • Second quarter of 2009—Up 8.4%
  • Third quarter of 2009—Up 7.0%
  • Fourth quarter of 2009—Up 6.0%
  • First quarter of 2010—Up 3.9%
  • Second quarter of 2010—Down 0.9%

Companies slashed their workforce to the bone during the latest recession, and they’ve been resistant to hiring during the current snail-paced recovery. Also during that timeframe, some companies have been able to post profits and save money for a “rainy day.” However, if these recent numbers from the Labor Department are an accurate barometer, then that approach is no longer viable, now or in the near future.

The conclusion? Companies might be ready to pick up their hiring levels. Well, they might not be ready, so to speak . . . they may just be forced to, or face the consequences of falling productivity through worker burnout, among other things.

But will companies actually do the hiring? Or will they keep levels where they are, in the hopes that any dip in productivity is just a glitch and that next month it will rise again?

What are you seeing with your clients right now? Do they need to hire, but just can’t seem to find a way to pull the trigger? Or are they ahead of the curve and have already started adding to their headcount in order to maintain productivity?

I welcome your comments.

(Communications Coordinator Matt Deutsch is a writer for the Top Echelon Recruiter Training Blog.)

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