Since July, 2000, the number of managers and professionals on the unemployment rolls has jumped by 189,000, or 24.7%, to 955,000, much greater than the 13.2% increase in the total number of unemployed Americans. Nevertheless, the jobless rate among managers and professionals is still less than half the rate among the general population: 2.2% vs. 4.5%.
Just when things look darkest, however, executive recruiters are starting to cheer up. They believe that the remainder of 2001 could turn out to be better than the prior part of the year, which was as lousy for headhunters as it was for job seekers. Indeed, business at most search firms has dropped 20% or more, and the two largest have reduced their staffs by at least 10%.
"THINK ABOUT NEXT YEAR." A couple of reasons account for the tempered optimism. As fall approaches, companies are planning their 2002 budgets. And with these come the need to hire employees for new initiatives companies want to pursue. "They are starting to think about next year," says Susan Bishop, president of Bishop Partners, an executive search firm that specializes in media, communications, and related technologies. "They will need new people to get them where they want to go."
What's more, companies that have postponed hiring in hopes of an economic rebound are now reckoning that with unemployment still at a rock-bottom 4.5%, they should start filling open managerial positions -- or trade in underperformers for top talent. Though there's no certainty about precisely when the U.S. economy will bounce back, "we're seeing that a lot of companies that had been holding off on key searches are realizing that now is as good a time as any to hire," says Scott Gordon, managing director of Spencer Stuart's Internet practice. "They can't postpone or procrastinate any longer" -- if they want to stay competitive and avoid the gold rush for talent that will attend the first signs of a strong recovery.
What's unclear is just how quickly demand for execs will bounce back. The Federal Reserve's panel of forecasters expects economic growth for 2001 in the 1.25% to 2% range, respectable but less than half the rate during the recent boom. And signs about the economy's direction are still conflicting. Employment is strong, "but if you watch the stock market, you are hopeful one day and devastated the next," says Fred Stang, president of Houston recruiting firm Ackerman Johnson Inc. He thinks that the coming increase in hiring will be steady rather than dramatic. "We see light at the end of the tunnel," Stang adds. "But we don't think it's a freight train."
REVERSAL OF FORTUNES. What's easier to determine than the overall trend is which jobs are in highest demand. With corporate purchasers particularly cautious about their spending, recruiters are on the hunt for stellar sales execs. "How can you let a sales position stay open and not generate any money because you don't want to spend the base salary that any good sales rep will pay for 10 times over?" Stang asks. "I think companies are beginning to see that."
Gordon adds that Spencer Stuart is now doing four sales v-p searches for every marketing v-p search, whereas 18 months ago, the mix was just the opposite. The switch reflects the focus on finding executives who can boost top-line growth -- and who will likely replace those who can't.
The bar is being raised as well. Corporate recruiters these days are more impressed by a background in selling for a Standard & Poor's 500 company than by a résumé stacked with dot-com sales experience. "You have to present your experience using traditional metrics like total sales, as opposed to market share, number of users, eyeballs aggregated, and so on."
LESS PATIENCE. Food service company SYSCO is one that's in the market for good sales professionals: It'll hire 500 to 1,000 of them by June 30 of next year, the majority of them managers, says Ken Carrig, senior vice-president and chief administrative officer at the Houston-based company. That's on top of the up to 90 new information technology and systems employees, more than half of them managers. "Fortunately for us, we're in a market that is continuing to grow," says Carrig.
The calls for CEOs will remain strong, too, as companies scout for people with a knack for leading in these trying times, recruiters say. In fact, executive recruiter Christian & Timbers reports that its CEO search business, which represents nearly a third of the firm's total business, is up 35% over last year. "Boards today are less patient with poor performance," says Michael Nieset, managing director of the firm's technology and board services practices in Cleveland. "They are more comfortable shooting their CEO and going to market for a new one. They realize that a CEO search can now be accomplished in three to four months, whereas before the dot-com crash, it would take 9 to 10 months."
Especially in demand, Nieset says, are CEOs with a track record of turning around struggling organizations. It's no surprise, then, that "turnaround CEO" is one of 11 positions that made Christian & Timbers' list of "Hottest Jobs in a Down Economy." The firm compiled the list during 2001's first quarter after surveying more than 100 senior managers at top employers and venture-backed companies.
"ABSOLUTELY CRITICAL." Other such jobs on the list include bankruptcy attorney, chief financial officer with global experience, chief revenue officer (a Net-era pseudonym for sales vice-president) and chief operating officer. The COO role, never considered among the most coveted in the corporate food chain, also has gained appeal lately as companies struggle to stay in Wall Street's good graces. "In an environment where top-line revenue is stable or declining in a good quarter, it's absolutely critical that you have someone who can manage the margin of profitability," Nieset says.
In a sign that things may get better -- if even just a bit -- later this year, the hiring freeze at consulting firms is starting to melt, recruiters say. The professional services industry was among those hardest whacked by the slowdown, as pricey consultants were one of the first expenses to be cut by cost-slashing clients. In fact, recruiting for management consultants plummeted 46% in this year's first quarter over the fourth quarter of 2000, according to the Association of Executive Search Consultants, a search industry association.
Now, says Jo Bennett, a recruiter who specializes in professional services, consulting firms are starting to call her again for candidates after being incommunicado for months. "They are doing some selective hiring," says Bennett, a partner at Battalia Winston in New York. "You're probably having more people leaving than going in. But there will always be a need for someone who is good at business development."
Indeed, some companies are using this revolving-door strategy -- shedding weaker performers while simultaneously welcoming promising new talent -- to upgrade the quality of their workforce, says Madelaine Pfau, managing partner of Heidrick & Struggles' professional services practice. "I think during the last bubble, people were hiring anything that could move," Pfau says. "I think the standards are higher for the people they are bringing in."
ASKING QUESTIONS. Industries where hiring was largely insulated from the economic pullback will continue to do well for the remainder of the year, Bennett says. Help wanted signs are still up at many health-care companies. And outfits that provide outsourcing services -- from customer service to accounting -- will keep adding to their payrolls as corporations look for ways to pare down internal operations. "You have to study what is going on in the economy and pay attention to what industries are doing well," Bennett says.
Even though fewer jobs are out there, candidates do seem to be paying closer attention to whom their new employer is going to be once they land those harder-to-come-by offers. Even though Pantellus, in The Woodlands, Tex., is hiring, the company, which runs a marketplace for equipment such as gas turbines and compressors used by the utility and energy services industries, still needs to sell prospective hires on career opportunities, says Vice-President of People & Culture Scott Burnett. "People are asking better questions about who they are going to work for, and they're more thorough in their due diligence," Burnett adds.
For their part, job seekers in this economy would do well to play up their experience as generalists, many recruiters say. Unless their unique skills are critical to the organization, professionals who are highly specialized can become a luxury in a downturn, says Smooch Reynolds, author of the upcoming book Be Hunted!: 12 Secrets to Getting on the Headhunter's Radar Screen (John Wiley & Sons, September, 2001) and president and chief executive of Repovich-Reynolds Group, an executive search firm in Pasadena, Calif.
"People who want to get jobs today need to be people who can learn to cut across a lot of functions," Reynolds adds. "I think people too often get swept up in 'I'm getting paid to do X.'" Becoming more flexible is wise advice indeed if you want to succeed in this economy. By Eric Wahlgren in New York