Wednesday, August 5, 2009

Talent Strategy: The Recession is over a year old. Can we start hiring now?

I'm no economist.  But, I do know that historically by the time our government can officially declare that the US economy is in recession, it's nearly over.  So, it's been going on for twelve months.  How much longer?  Will it worsen?  Is it foolish to start hiring and recruiting in this economic climate?

Some companies have not stopped hiring.  In fact, some small to mid-sized employers actually believe that this is a great time to grow.  And, these strategic growth companies have well thought out talent acquisition strategies that focus on corporate recruiting, executive recruiting, and talent selection which opportunistically takes advantage of the fact that their larger competitors are reeling from the seizing of the capital markets.

The uncertainty in the economy is certainly impacting movement of passive candidates.  Many professionals, especially in financial services, are just happy to have jobs.  But, the untold story by the national, doom and gloom mongering media is that some segments of the economy are growing.  And that means, that talent recruitment and hiring has not stopped.  It's just not being reported since it won't sell stories.

How does the recession and the national economy play out in Indiana?  Inside Indiana Business's interview with Ball State University Director of Business Research highlights that this is the "first recession where the economy grew", but then predicts "future bad news" with no explanation of where the growth while in recession came from.

For more insight into the capital markets' meltdown, its impact on the local economy, and Indianapolis recruiting and hiring, here is more of a discussion with Greg Hahn, CFA, Chief Investment Officer of Winthrop Capital and formerly Chief Investment Officer with Conseco Capital Management:

“We should have seen a contraction back in 2002 but the rebound in financial services in mortgage and securitization just lead to a reallocation of bodies and the bubble kept growing.  I think we’re experiencing a more dramatic correction that we should have seen back in 2002.  If there had been more regulatory oversight of the mortgage lending business we would have had more of a contraction.

Our local economy is more service based than manufacturing, I think.  Healthcare and legal are big here.  Bankruptcies will keep the legal industry going and M&A will pick up next year.  But I see some law firms that are retrenching right now.

In banking, there is a real opportunity for competition.  Whenever there is consolidation, the dislocation that occurs in a company as it trickles to the consumer is an opportunity for competition.  People get tired of the mergers.  And, Citigroup’s layoff is an example of twenty-five year talent being asked to leave abruptly,” which could be a talent acquisition opportunity for smaller banks.

The dollar became a primary player late last year and early this year because it drove exports to keep the economy going.  But, I think the dollar is the secondary player right now in terms of what’s driving economic growth right now….Well, nothing’s driving growth right now.  The consumer retrenched last year and the corporate sector filled the gap but not dollar for dollar.  The government sector has had some reasonable fiscal controls but we just threw all that out with the TARP plan.

The war in Iraq was $400 billion dollars.  The TARP plan makes that look like nothing.  We have tapped our government’s financial statement.  As it relates to us, we are living beyond our means.  In our community, all the Keystone Project and roundabouts, we can’t afford that.  The only way we can afford that is with increased taxes.

Early in the election process Obama was saying that we need fiscal responsibility and the only way we get it is increasing taxes.  He’s right.  Now, I’m not agreeing with his platform.  But, I agree conceptually if you want to balance our budget at the local and federal level you’ve got to increase income.  When you go out to a restaurant now, you’re taxed.  You’re paying for the Lucas Stadium when you go out to eat…9%.  Back in 1983, we had a sales tax of 4.5%.  So taxes have increased but not as an income tax.  In the broad picture, we are living beyond our means in our personal lives, in our communities, and at a fiscal level.  

So what do you do?  If you say let increase savings.  You’ve got a consumer who’s in debt.  A corporate sector that is just trying to tread water.  And, the fiscal part is Keynesian stimulus from the government to pump money into the economy to produce job is eventually inflationary.  We’ve had deficit spending up to this point and now we’re about to blow the lights out,” with the TARP plan.

Indiana’s better than many places.  Philadelphia, Phoenix, and Atlanta approached the federal government about accessing the TARP program.  Here’s the big problem.  In New York, all of the jobs being cut are high paying jobs.  So I think their tax revenue is expected to decline by 10% but their fixed costs haven’t declined.  I would predict that next year New York and California go to get emergency federal funding.”

So from Greg's discussion, you can tell that there will be impact in our local economy.  But, not all businesses will be brought to a grinding halt.  Career Solutions Group actually had our highest number of permanent offers of employment and interviews for the year in November.  We're finding that the best corporate recruiting strategy in a down economy continues its talent acquisition strategy by utilizing custom recruiting solutions to target passive candidate talent.

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