Just a quick note about a cool new product that hit the scene. Check out HarQen (rhymes with “Darth Vader’s Colleague the Gran Moff Tarkin) product called VoiceScreener at VoiceScreener.com. I demoed it last week and was nicely impressed.

The tool isn’t necessarily groundbreaking in it’s scope, but the execution is quite impressive. In a sentence, they allow you to do automated, recorded, standardized telephone interviews. Essentially you email a link out to a candidate and when they click it, they are instructed to enter their phone number and the system calls them, and records their short answers (3 minutes or less) to several standardized questions.  The system then allows you to replay the recorded answers at will and rank (1-5 stars) the quality of the answer to quickly determine which candidates are worth a more detailed call from a recruiter.

I can imagine a number of uses of this system.  I think it would be great for pre-screening for positions where communication skills and phone presence are very important, and it could also be great for any position where the answer to a single question can make or break a candidate (including technical positions where you could ask something very open like “please describe your experience working in a Ruby on Rails environment).

This candidate-rich environment is perfect for testing out new products and tools to improve the recruitment efficiency of your business.  Pinstripe has been vocal about how well the system is working for them, so it’s definitely worth checking out.  The price starts at $7 per competed screen, but goes down by 2/3 or more with volume.

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I saw an interesting article on the “Infection Greed” blog (http://paul.kedrosky.com/archives/2009/03/has_the_us_layo.html) showing a graph that may appear to show that the growing layoff trend is actually trailing off.  The graph shows layoffs peaking in January and dropping in February.

I’m not quite as rosy as they are in looking at these numbers for two main reasons:

1) The spike in January layoffs from December may be caused by company’s who simply didn’t want to bad Karma (or bad press, or bad feelings) of laying off staff right before the Christmas holiday, and put off the inevitable until January.  This pushed some December layoffs into January, under reporting the December numbers and over reporting the January numbers.  This makes February approximately flat from December and January.  Given that layoffs cost company’s cash in the short term (PTO payouts, termination expenses etc.) I also wonder if the January spike was also an attempt to massage FY08 numbers by pushing those expenses into FY09.

2) Large, public companies (who account for a lot of this layoff activity) tend to be swayed by their stock price and public perception of their performance.  I think everyone got a bit of a free pass for the last few months as investors blamed “the economy” for everything but largely didn’t point the fingers at individual companies.  I think investors are done with that view and are now watching individual companies like hawks and seeing how management is handling the recession.  Management doesn’t have much more time to start acting aggressively to make cuts and return to early 2008 profitability levels.  I expect we are going to see a lot more layoffs in the months to come as management make the tough decisions required to thrive in this economy.

What do you think?  Is the worst over, or are there darker days yet to come?

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I recently listened to the cockpit audio from Flight 1549 which crash landed on the Hudson river last month.  You can find the audio with some video below.  What I find amazing about this is the absolute calmness that the pilot shows.

Given that the recruitment industry as a whole lost power in both engines in November of last year, and the forecast for RPO is pretty bleak throughout the rest of the year, I’ve heard a lot of panic in the voices of various RPO leaders I’ve spoken with.  But now is not the time for panic.  If anything, now is the time for calmness and a blank slate look at your organization.

I’d recommend that the leadership of all providers take a hard look at their business and make the decisions they need to make to ensure the survival of their company.

• Staff - don’t carry excess capacity.  It may be painful, but cut once and cut deep and get your business sized appropriately for what you have coming in right now.
• Expenses - travel, entertainment, cable TV, employee benefits, 401k matching - everything must be on the table for discussion.  Don’t be afraid of your employees.  In this market they aren’t going to quit because you stop sponsoring Beer Fridays or free dry cleaning.
• Sales and Marketing - ramp up expenses in anything that directly leads to new business.  Whether it’s pay-per-click, direct mail, or hiring additional salespeople, if you can tie a dollar spent to a few dollars of revenue, it’s a good investment.
• Vendors - talk to your vendors and see if they can help you control expenses.  Especially if you overbought and now need to ramp down, you have nothing to lose by asking to renegotiate.  Monster.com is notoriously unflexible (yet another reason so many people REALLY hate them, but that’s for another post), but a number of smaller ATS, job board and other companies may be willing to work with you.
• New revenue streams - there may be 50 ways to leave your lover, but there are probably 100 different ways to make money in the recruitment space.  A number of companies are coming into the RPO space to help create additional ways to monetize.  If you haven’t already, take a look at BountyJobs and GetListed.com

Above all, remain calm.  It’s impossible to take an analytical view of your (shrinking) business if you are panicked.

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Without exception, everyone I speak with in the RPO industry experienced a dramatic slowdown in their business starting in October or November of 2008. The consensus seems to be that business dropped off between 25% and 50%, with most companies experiencing a 35-40% drop. Most of these same companies are predicting an upswing starting at the end of 2009 or early 2010, with some more pessimistic companies predicting that a recovery won’t come until 3rd or 4th quarter of 2010.

Since most believe an upswing will occur in the foreseeable future, the strategy for this period has shifted from a growth or even sustaining strategy, to one of survival. I believe that those who will weather the slowdown best are the largest and the smallest providers, while the middle-sized ones will suffer the most.

Obviously the largest providers have the most financial resources and their risk is spread across a largest client base, with a larger spread both in terms of geographic spread and industry. Many of these providers (Adecco, Manpower, Kelly, Spherion) also have diversity in the types of staffing they provide and can focus on other parts of their business like temporary staffing as the RPO market cools.

At the same time, while the smallest providers don’t have the diversity or financial resources of the large ones, they have the ability to be nimble, and turn on a dime. As the market shifts, they can respond most quickly to niche opportunities in the market. Also, the smallest providers tend not to have expensive infrastructure and they can contract primarily by laying off or redeploying staff.

The middle-sized providers (100-300 employees) however, tend to have a more sophisticated (and therefore expensive) infrastructure and enough levels of management that they can no longer turn on a dime. Without the financial strength of the largest providers, they may find themselves struggling the most in this downturn.

As in any downturn, the companies that will thrive will play to their strengths and focus on the parts of their business where they have a sustainable competitive advantage.

In my next post I’ll put forth some ideas for small, medium, and large providers to implement immediately to play to their unique strengths.

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How the stock market crash is good for the recruitment industry

 The staffing industry has been buzzing for at least the last 10 years about the looming labor shortage as baby-boomers retire- in ever increasing numbers.  The worry gripping the industry is that this exodus of talent out of the workforce will leave talent gaps which incoming workers cannot fill. 

 We’ve all experienced the pain caused to a business when Chuck retires and we realize the next day that Chuck was the one who knew where the coffee filters were kept, or had the code to turn the lights on after-hours or knew how to reboot that troublesome testing computer.  Now imagine the disruption when 70 million boomers retire, except instead of unique expertise in coffee filter location, they have unique and irreplaceable knowledge in running the city’s electrical grid, or nuclear power plant management, or the logistics of running an aging legacy data center.

 According to the most recent American Staffing Association survey, one in five staffing professionals said the labor shortage is the most pressing issue facing the recruitment industry and fully half said it’s one of the top five issues.

 Well, I’ve got some good news and some bad news.  The bad news is that the stock market is in the tank and portfolios are down from 30-50%.  Of course there are exceptions – some individuals had limited exposure to the stock market and are doing ok, and others had all their money with Bernie Madoff and as soon as they come out of their daze from realizing they’ve lost everything, they’ll have to come up with “Plan B” for their retirement.

The GOOD news, at least as far as the staffing industry is concerned, is that the virtual overnight contraction in retirement portfolios may convince a number of baby-boomers to put off retirement for a few years and may cause some recent retirees to rejoin the labor force.  I have personal experience with some retired boomers who recently went back to work to earn enough money to maintain their lifestyle, now that their portfolio is struggling, and they are bringing valuable skills and experience back into the job market. 

So the smart thinkers at staffing companies and RPO firms right now should be polishing their sourcing plans and candidate marketing campaigns to target these reluctantly returning recent retirees.  Think about how to tweak your candidate marketing to appeal to that individual who is worried about their retirement funds, and just starting to think about coming back to work.  Those who successfully make this pitch should have access to an entire pool of candidates which was unavailable even six months ago, creating a competitive advantage in both client acquisition, and client service.

I’ll list some specific ideas for how to approach this market in my next post.

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