2009 Predictions with Jeff Weidner

I think 2009 is going to be a great an interesting year. The thing about recruiting is that in good years you can do much better than almost most anything you are qualified to do and in bad years, well it goes the other way sometimes. It's the good years though that keep the lips smiling and the warm and fuzzies in your gut. In the tough times, it's real important to remember the good. Sometimes it's not so easy but nevertheless it's necessary and certainly we need to think always about the next 365 days - good or bad.

I was talking to Jeff Weidner and we were talking about some of this stuff before you know it, we had a plan so instead of me continuing, Jeff is going to take the floor here with this post.

There is no doubt that the end of 2008 definitely made an impact on a lot of people. And since the holidays fell in the middle of the week, plenty of people have had time to look back and reflect on everything that went on throughout the year. There was plenty to remember, 2008 was a busy year. If December is the time of year to look back and reflect on the year that has just gone by then January is definitely the time to look forward. It has been promised that 2009 will be year for “Hope and Change” and I’d like to share my predictions for 2009.

Prediction # 1

Recruiters that built their social network originally to locate and identify potential candidates will be looking for more ways to leverage those relationships and turn them into job orders and placement fees. So if you are a member on any social network, you can expect to get a lot more phone calls, e-mails, resumes and forward requests from the contacts you've made off all your social networks. Recruiters will be utilizing those networks more efficiently not only to locate and identify potential candidates but also customers. They’ll also be looking for new and innovative ways to reach out and engage with their networks as email campaigns are only so effective and it’s the organizations that can not only attract the membership base but also keep them engaged and coming back that will eventually retain the business.

Prediction # 2

Recruiting and Sourcing fees will decline. Fees will be reduced by two main factors:

a. The first factor will be competition, as it becomes more competitive in the marketplace recruiting firms will become more aggressive in their pricing strategies to win business away from their competitors.

b. The second factor will be a matter of candidate supply and demand. As the candidate supply goes up companies will inevitably lower salaries and contingent fees based on those lower salaries will follow that trend. In most markets, I’d expect about a 5% drop in salaries but it could be as high as 10-15% in some of the most competitive markets. Contributing factors will be A) fewer positions available in the marketplace and B) because of a big increase in highly skilled and qualified candidate to fill the positions due to layoffs. Consequently, those companies that are hiring will have the pick of the litter at a much lower salary cost per employee hired as compared to a few years ago.

Prediction # 3

Since the financial crisis facing the USA is also one that is hitting the entire global community across all sectors and industries I’d expect to see some consolidation/M&A activity of recruiting companies that have a good client and asset base in late spring to early summer. Expansion at the earliest signs of a recovery will be largely dependent on loosening of financing strings that are currently tying up markets but could provide a lot of benefit in stabilizing the marketplace.

Prediction # 4

The baby boomer retirement wave that many recruiting firms (and future retirees) have been waiting for will be delayed at least 1-2 years. The Social Security Administration stated that the first set of baby boomers became eligible for retirement benefits in 2008. But with the financial market vaporizing stock and mutual fund retirement portfolios many baby boomers will have to delay retirement a few years to catch up risk locking in those losses when they rebalance their accounts in preparation for retirement. Many baby boomers that were not prepared for the financial meltdown may need to obtain part time work during their retirement, at least for a time, to offset major losses in the market. This could actually help US corporations that are willing to implement flexible schedules for their aging workforces.

So there are my predictions for 2009. Please remember 2008 is in the past, all things in life are temporary and it’s up to us to create that new life in 2009 that is full of “Hope and Change”! On behalf of HTC Research Corp I’d personally like to wish you a happy and prosperous 2009!

What do you think will be in 2009

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Replies to This Discussion

Permalink Reply by Barbara Goldman on January 8, 2009 at 12:14pm

I agree, firms are lowering their fees. Why do it? I've been recruiting for 25 years. In the beginning of the recession, clients receive a lot of resumes on their own. Underqualified, overqualified, neverqualified, etc. Qualified candidates hold onto their jobs like glue in a recession. The underqualified are laid off, the underproducing are let go. Focus on recruiting harder, marketing for better job orders, and selling your services to people who need them. Lowering fees does nothing but lower the value of our product. If our product is worth 15% now, why is it worth 30% when times are good? We create our own problems by undervaluing ourselves. This is a hard job. We deserve what we make.

How can you build a firm on 15%? You can't. Nobody will work for you because they can't make a living that gives them enough money to hang in there through the lean first years. 20% makes my stomach ache, and I take 25% only on negotiation. Don't get me wrong, I'm taking 20%, but only if it's going to be a fast deal for my firm.

Recruiting is changing because inside recruiters are resume shuffling. It cracks me up when they check our resume against their database. As if that makes a placement. 30 years ago, (I took 5 years off as a stockbroker) my first placement was a technical director that the client had tried to recruit themselves, but the candidate declined. I recruited the candidate, closed him to relocate, and the client paid the fee. Of course, I was working with the President of the company. Had I worked with someone in HR, there would have been no interview, but "checking against the files". The President was impressed that I landed the candidate.

Fees go down, and recruiting changes because we allow it. It is OUR service, not theirs. I'd like to see recruiters stop being so afraid, go back to the basics, and teach companies how to purchase our service. Recruiting is changing, but it is because we are being pushed around by Corporate HR. Don't let it happen to you. The candidate is king, no matter what the economy is doing. If the candidate is no longer king in your sector, change. I spent years recruiting in chemical, when chemical went dry in the early 90s, I went to other markets. Believe in yourselves.

Internal recruiters will always fill the easy spots in a corporation. Stay away from those. Go for the hard stuff. Sharpen your skills. You deserve a good living. Forget the economy. They need us. And never forget, it is YOUR service you are selling, you set the price, not the client.

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Permalink Reply by Ken Olney on January 8, 2009 at 12:56pm

Thank You very much , Barbara !!! I couldn't have said it better myself . You hit the nail perfectly on the head . We , as recruiters , work hard for our clients ( often , harder than they do ) & we deserve our " fair share / fee " . I too have accepted 20% fees .. but .. only when the positions are " quick fills " .. or .. there's an opportunity for bigger & better things ( openings ) down the road . As Independent Recruiters , we provide a cost effective & time-saving service ; therefore it's up to us to set the " fair Market value " for that service .

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Permalink Reply by Jeff Weidner on January 8, 2009 at 5:03pm

Barbara,
Not to belabor the point, but that was not my prediction that "recruiters will their lower fees", I predicted that recruiting fees would be lower due to the lower salaries. That being said I also do think there are enough recruiters out there that will lower their fees just to win business, whether you or I agree with the strategy or not is irrelevant. I also have spoken with several companies, while doing my biz dev calls, where the Hiring Manager was "bragging" that they are putting caps or flat fees out there for hires from all their recruiting firms and in many cases as low as $4000 or 4% of the salary. Why? because they know they can.

On another point you ask. " If our product is worth 15% now, why is it worth 30% when times are good?"

Ultimately it's worth what the market will pay for it. Laws of Economics Supply and Demand come into play. Right now the Law is not on our side of the equation:-(

Jeff Weidner

Barbara Goldman said:

Lowering fees does nothing but lower the value of our product. If our product is worth 15% now, why is it worth 30% when times are good? We create our own problems by undervaluing ourselves.

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Permalink Reply by Jeff Weidner on January 8, 2009 at 5:53pm

Ken and Robin,
Funny enough, I almost made the same prediction in my original post and I think that trend may be true for some industries (such as Healthcare where margins are thin) but I think overall across all industries The Recruiting Dept and the HR Dept will never recombine. HR and Recruiting depts have been on diverging paths for the past 10-15+ years and I don't see that changing except in very specific circumstances.

Staffing Departments, especially in Silicon Valley, have finally extricated themselves from HR and earned a seat at the table.I doubt many Dir or VPs of Staffing would be willing to give up that seat. If for no other reason than because they are a major cost center of most larger corporations they were "expelled "by HR because HR did not want to manage the budget:-). Instead Staffing Depts they will find new ways of being more cost effective and more efficient.

HR has been more of a avenue to side step costly litigation and liability surrounding employee issues and recruiting has always been a big drain on the purse. This is obviously over simplifying things and certainly not meant to stereotype anyone or devalue their contribution just trying to make a point. That HR and Recruiting at most larger companies were split for very specific reasons, a few of which I point out here, but if a company is still hiring and has plans for growth then splitting out HR and Staffing in most (maybe not all cases) does make sense.

Which kinda brings me to the final point that I'd like to put out there and that is if the argument you are making for recombining HR and Recruiting Dept is reliant upon longer term workforce planning then why are many companies creating new departments specifically to address Talent Management, Workforce Planning and Organizational Development.

It seems to me that it's becoming more and more commonplace for larger companies' HR departments to be split once again creating 3 separate and distinct departments.
1) HR
2) Staffing/Recruiting and
3) TM, WFP and OD ( I'm not writing all that out again:-)

And I think that if it can be justified either through a cost analysis or a employee skill set analysis or through hiring/retirment projections then it makes perfect sense. TM, WFP and OD will have a mach larger seat at the table as baby boomers retire en mass, but if you refer to my Prediction # 4 I think that baby boomer retirement will be postponed a bit.

Also this split between HR and Recruiting is taking place much the same way that the split between Recruiting and Sourcing has happened. Many companies are setting up Sourcing groups within their Staffing department in an effort to reduce costs.

So my final analysis is I didn't include the prediction cause though I believe it may be a financially needed and plausible outcome I don't think it will be adopted across all sectors and industries. No doubt, some will be early and adamant adopters of "Combine or Recombine HR with Staffing Strategy" but ultimately I don't see it as being very viable long term for most corporations across industry sectors.

Interesting twist though thanks for adding that...it may actually come down to how deep and bad the recession turns out to be. Companies may have their hands forced and without longterm plans for recruiting in place (due to layoffs) they may opt to fold them back in to HR. Time will tell.

Jeff Weidner

Robin Gillman said:

If I were to add a 5th prediction, Ken's would be it. My reasoning for this is not only efficiency, but the need to go from stop gap recruiting to more long term workforce planning.

After all is said and done and the playing field is cleared (all the layoffs) and everything settles, companies will be asking questions like: .... This trend , I believe , will cross all industry lines ... with HR having more of a say in how recruitment , by outside firms , is conducted & compensated .

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Permalink Reply by Jim Durbin on January 8, 2009 at 5:54pm

I know that some recruiters are lowering fees, and some hiring managers are gloating, but in the case, there are Laws that supercede Supply and Demand.

Show me a recruiter working 15%, 4%, or $4,000 flat fees and I'll show you someone who won't be in business in 2010. If you're hiring call center workers through cattle calls, $4,000 fees can work. If you're hiring quality workers, there's just no way to make up for it in volume.

And while companies are hiring at lower salary levels, I wonder if the jobs that recruiters are given are going to be that affected. The real turmoil is going to be the public staffing firms, who have GPM requirements and don't have that much fat or even meat to cut.

I left my firm in 2006 because it was going to be harder to make the same amount of money the next year. Three years later, I can't imagine that it is easier.

I do wonder if firms that ease up on restrictions and allow salespeople to get creative will do better. One thing they must do, is focus on selling profitable business, and not just business. Way to many national deals are revenue drivers, but killer on the internal staff. hmmm, there's a blogpost in that.

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Permalink Reply by Thad Greer on January 9, 2009 at 1:43pm

I agree with everything you say Jeff. To think that placement fees and salaries are not going to drop is to live in absolute and total denial. To say something is "standard" is ridiculous because nothing is "standard" anymore. These are unique times the likes of which we have never seen in our modern business culture.

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Permalink Reply by Heather Gardner on January 9, 2009 at 1:50pm

Jeff,
I'm enjoying all the comments you've received from everyone! For those of us that have been in recruiting for any length of time, we realize that everything changes. The recruiter's who are adaptable, creative and offer good quality services will thrive and move forward in the coming year(s). The economy would be in much better shape with more forum discussions like this, rather than what the current media is offering the public - doom and gloom. Great stuff, thanks for sharing your predictions and creating a good productive commentary on recruiting in 2009!
Best,
Heather

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Permalink Reply by Harvey Clay on January 9, 2009 at 1:56pm

Really good, Jeff. Thanks for your insight. I just "Tweeted" the link to this Post. Hopefully that will get you some Traffic, too.
I had an interesting discussion yesterday with a few Gov't folks who also commented on the predicted "end" of the Baby Boomer wave which will also be delayed due to people putting off retirement.
This changes the outlook for a whole host of service companies and industries set up to cater to the retiring Boomers!
Wishing you a prosperous 2009! FollowMe http://www.twitter.com/harveyclay

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Permalink Reply by Keith Halperin on January 9, 2009 at 2:11pm

Who can predict when or how the recovery will take place? Will it be in six months or three years? Will it be sharp or gradual? What completely random and unpredictable factors may influence it for better or for worse? What we CAN predict is what we can do right now or in the near future:
1) Analyze your recruitment processes, better yet- have the people actually doing the work analyze your recruitment processes- they know what's REALLY going on.
2) Determine what areas are the most valuable uses of your staff's time.
3) Eliminate, automate, or outsource the least valuable parts of recruiting- for example, you shouldn’t have to pay more than about $3500 per month for high quality, cold-call telephone sourcing to identify candidates or hiring managers in companies with a gatekeeper/”name generation,” $1250 per month for internet sourcing, or $800 per month for interview scheduling and coordinating between candidates and the hiring team.
4) If your people can’t effectively do the high value-add work remains, consider training them.
5) If there isn’t enough work remaining to go around, consider reduction-in-work before reduction-in-force. (Those who object to the former are good candidates to for the latter.)
6) As conditions improve, continue following Steps 1-5- don’t go back to paying “*guru” salaries to folks to do lots of “grunt” work.

Cheers,
Keith Halperin keithsrj@sbcglobal.net

* High-touch, high-skill, high-value add, creative work.
** Low-touch, low-skill, low-value add, routine work.

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Permalink Reply by Peter Clayton on January 9, 2009 at 2:22pm

As a member of the baby boomer generation, I'm continually puzzled by all of this talk of baby boomer retirement by HR folks and cable news talking heads.
Here's the reality:
1. We all waited to have kids until we were in our 30's or 40's - I still have 3 kids to get through college.
2. Many of us refinanced our homes to pay for college, and are now upside down on these "investments."
3. Lots of us bought 2nd homes or invested in condos in Florida. Good luck with those for the next 10-15 years.
4. Personally, I have no interest in driving a Winnebago. I don't want to beep when I back up.
5. Retirement account? What retirement account?
6. I never enjoyed golf.
7. Mall walking is not very appealing, either.
8. Traveling has lost its romance: Having to partially disrobe and get scanned, find everything you've just placed in little plastic dishes, and then sit in an airline seat retrofitted for munchkins, has no relationship to enjoyment.
9. Yes, I've planned my retirement.
10. It will happen when I drop dead.

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Permalink Reply by Jeff Weidner on January 9, 2009 at 2:49pm

Peter,
Classic, thanks for the perspective no matter how aged it is;-)

Peter Clayton said:

9. Yes, I've planned my retirement.
10. It will happen when I drop dead.

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Permalink Reply by Jim Durbin on January 9, 2009 at 3:08pm

9. Yes, I've planned my retirement.
10. It will happen when I drop dead.

For most people, planning number 9 often leads to number 10. About Schmidt was a terrible movie, but the actuarial tables show that when a man stops working, he dies.

You can stave it off with volunteer work and projects, but considering the uncertainty of pensions, stocks, and SS, not to mention the advanced mental alertness of those in their 60's, 70's, and even 80's will alter the idea behind work.

It's a must for the economy. If Boomers tried to retire, our taxes would shoot up to 70% and more to pay for the deadweight as they vote themselves more benefits. Hire a Boomer, save your marginal tax rate is my motto.