Hiring to Hit Downturn in 2008

March 12, 2008

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With debate raging over whether the U.S. economy will slide into a recession or has already reached one, it comes as little surprise that many companies across industries are planning to hire fewer employees in 2008 than they did last year. Is there light at the end of the tunnel?

The most convincing data that points to a downturn in hiring comes from CareerXRoads, a recruiting consultancy firm that recently released its annual Source of Hire Study (SoH). In order to gather timely data for its SoH study, CareerXRoads invited contacts in more than 200 large [5,000+ employees], high-profile, name-brand firms to participate in the study by supplying the firm with their source of hire data. The survey included 49 employers that made 303,000 hires in 2007.

An interesting self-imposed mandate of quality prefaces the CareerXRoads SoH study:

As with all our work, we seek to stimulate discussion about staffing issues rather than encourage blind acceptance of data at face value – ours included. We are often publicly critical of surveys conducted by others and would be remiss if we were any less critical of our own work. This survey is less about benchmarks and more about SOH practices.

That said, the most remarkable bit of data from the study indicates that almost 35 percent of SoH respondents predicted they would have fewer hires in 2008, compared with 32 percent in 2007. Forty-four percent of respondents said the number of hires will remain the same. Only 22 percent of participants predicted more new hires.

And regarding practices found in SoH, the leading methods for enacting all new hires is internal transfers and promotions, which falls in line with last year's results. Here's how the supporting data shakes out:

Internal transfers and promotions accounted for 30 percent of the hires that survey participants made in 2007; Some respondents said that as much as 50 percent of their hires were derived from internal transfers and promotions; Referrals make up 28.7 percent of all external hires; and Twenty (20) percent of survey respondents said one out of two employee referrals result in a hire.

Despite these highly appealing practices, the SoH study finds that companies are doing very little to promote them to potential employees. One of the CareerXRoads SoH's authors, Gerry Crispin, says this is a missed opportunity because career development is one of the key factors that prospects take into account when evaluating a job offer.

Perhaps the decline in hiring can be directly attributed to third-party placement agencies, or lack thereof, as they now bring in a scant 3.3 percent of hires, according to SoH survey participants. This has been declining steadily, from 5.2 percent in 2005 and 4.8 percent in 2006. Naturally, the less people are recruiting, the less new hires.

The latest national Manpower Employment Outlook Survey also paints a rather bleak picture as it relates to hiring.

Manpower's quarterly survey of hiring plans, which covers about 14,000 U.S. companies, revealed a net 14 percent expecting to hire in the second quarter of this year, down from 17 percent in the first quarter (both seasonally adjusted).

Jonas Prising, president of Manpower North America, characterized employers' hiring plans for the upcoming quarter as "softening" and that the decline is far less severe than the steep drops seen at the beginning of the decade.

"This curve doesn't look anything like the curves that we have seen when things have gone into recession," Prising said at MarketWatch. "Some [employers] have decided to stop hiring, but you're not seeing a massive shift, you're not seeing a huge jump. Some are more cautious and that's why you get a softer declining trend and not such a dramatic fall-off."

Manpower's seasonally adjusted net-employment numbers are based on the following question posed to participants: "How do you anticipate total employment at your location to change in the three months to the end of June 2008 as compared to the current quarter?"

Here are the net-employment outlooks for each of the 10 industries tracked by Manpower:

Durable-goods manufacturers — 13 percent, down from 17 percent; Nondurables manufacturers — 13 percent, down from 15 percent; Construction — 3 percent, down from 10 percent who planned to hire in the first quarter; Mining — 20 percent, down from 25 percent; Transportation and public utilities — 18 percent, up from 15 percent; Public administration — 10 percent, down from 14 percent; Finance, insurance and real estate — 12 percent, down from 13 percent; Wholesale and retail trade — 14 percent, down from 19 percent; and Services — 19 percent, down from 20 percent.

Leave it to Monster.com to find the silver lining within the hiring decline. The online job posting site's Employment Outlook 2008 paints a far rosier picture as it relates to hiring.

Monster predicts that workers involved in quantitative analysis will be in high demand in 2008. Specifically:

We have the entire range of creative workers who excel in the logical and mathematical in mind, for they are in intense and increasing demand in fields like systems design, electronic engineering, accounting and, yes, finance.

Other encouraging statistics from the Monster article include these:

Offshoring of some programming work notwithstanding, prospects for information technology employment in 2008 are basically strong; Data warehousing and mining, IT security, networking, virtual computing and VOIP will be hot specialties in 2008; and A business unit leader for Kelly Engineering Resources says the firm's customers in civil and petrochemical engineering are hiring well into 2008.

But Monster.com isn't all positive, pointing out the troubling fact that folks who do not possess the aforementioned quantitative skills, the job market looks a little bit thin: "…for the tens of millions of us who still assemble products, build buildings and sell and service stuff, next year holds uncertainties. Even the quants can't tell us which statistical categories of employment each of us will fall into in 2008."

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