HR recruitment: steady as she goes

by 30 Sep 2008

Despite a general economic slowdown, the HR recruitment has remained relatively buoyant compared with other sectors. Craig Donaldson reports

HR is often one of the first and hardest hit departments in economic downturns. One of the big differences with the current softening of the market is that companies are still struggling with attraction and retention of talent. The need to constrain costs in a tough market is important, however, many companies have come to appreciate the value that HR can add in shoring up its talent stocks.

There has been a noticeable reduction in recruitment volumes overall, but this reduction is not quite as pronounced in HR when compared with other sectors, according to David Owens, managing director for HR Partners.

“On a positive note, we have seen very little by way of retrenchment/redundancy in HR recently, despite the immense turbulence being suffered overseas. HR departments appear to have plenty to do and appear to be pursuing ‘HR business as usual’ right now,” he said.

“Indeed, we anticipate this to remain constant for the rest of the year. HR is rarely over-resourced, and with most HR teams being tasked with important agendas, any economic decline may take some time to filter through to the workload of a fully engaged HR team.”

Leoni Barnett, a senior consultant with The Next Step, said that it is important to remember that the current economic climate has not impacted on all organisations or industries. “From a recruitment perspective these organisations are continuing to experience a talent-short market and are forging ahead with their HR strategies to ensure they attract and retain employees.”

Peter Gleeson, executive general manager of Ottimo, Chandler Macleod, said that with a tightening of the market many HR people are looking for increased job security rather than creating another area of uncertainty through changing jobs. “Ironically, employers have become more conservative, particularly with variable costs (contracting or temporary hires), and are expecting more of the existing employees,” he said.

Specific HR roles

Despite the economic decline, the recruitment market is moderately busy overall, according to Owens. “Melbourne is quite busy, Brisbane is steady and it is perhaps only Sydney which has suffered a noticeable drop in activity,” he said.

HR generalists in the sub-$140,000 category, learning and development roles as well as HR contractors appear to be most in demand, with in-house recruiters experiencing mixed demand. Owens also said the very senior market appears to have slowed the most.

Barnett said internal recruitment and learning and development functions are under scrutiny in some companies, whereas in other companies these functions are being assured that they are not only safe but are considered the key differentiator between themselves and competitors. “Overall, companies appear to be looking at their internal resources functions and acting in a conservative manner rather than running the emotions of the economic market,” she said.

Advice for HR

As a result of the downturn, the power in the decision-making process will not revert back to the employer as it has in the past, according to Gleeson. “We still have a candidate shortage and companies must ensure they respect that the candidates need compelling reasons to change their employment, rather than quantitative,” he said.

“It is also critical that you do not take for granted existing employees, as retention of key staff is critical in such conditions. The cost to the business of losing a key employee is estimated at three times the annual salary of that role.”

As no-one can really predict what the long-term effects of the current economy will be, Barnett said it is vital that HR remains focused on the business and motivating employees in delivering to its customers.

“Revenue will be a key driver in maximising cash flow and profit so as to ensure longevity,” she said. “Don’t get focused on budget tightening –especially on succession/retention plans. In this environment tightening is generally not a reflection of commitment to people practices; it is usually about ensuring the long-term future of the business. The important piece will be where the ‘tightening’ occurs. Negotiation, influencing and business acumen will be vital.”

Advice for the business

While the market is unpredictable and costs will need to be closely managed, people are crucial to the performance of all businesses, so it is important to keep morale and engagement high, Owens said.

“If the business has to make cuts, consider them carefully and try not to cut into the organisational muscle.”

“Many HR professionals have spent a long time recruiting, developing and engaging expensively gathered talent for their businesses. The most important thing to consider now is the protection of organisational capability, so that the business is capable of performing at its optimum when the economy emerges from these leaner times,” he said.

Barnett recommended staying focused on the customer and the cost-effective activities that are required to keep them buying. Any decisions regarding people should be made with this context in mind, she said.

“Be aware that your competitors are ever vigilant in looking for talent,” she added.


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