It may come as a surprise, to many recruiters, where we came from. Our industry was “born” as a result of war; where companies struggled in the wake of adversity to find the best talent. The void was created by workers joining the armed forces. The industry grew even more post 1945 as the agencies worked with returning soldiers. It was in this era that resumes were used more in job applications. Those who know me know that from school, university until today I have always been a student of the economy - in particular political, social and economic changes in Europe and the USA in the early 20th Century.
If History teaches us anything it’s that it has an uncanny habit of repeating itself. Now, bar events in 1939 in Europe and 1941 in the USA, there were several steps that governments made in the mid 30s to increase employment, with a focus world-wide on infrastructure and defence, that saw a rebuilding of economies following the Great Depression highlighted by the Wall Street Crash. The “Roaring 20s” was a time where people were reaping the rewards from an Industrial Revolution and Global Capitalism - not too dissimilar to our Information Revolution of the 20th Century and current Digital Revolution. This came in the years post the Great War and at a time when populations (and workforce) had been depleted by Spanish Influenza. I read an article the other day with notes from Dr Andrew Grant, senior lecturer at the University of Sydney Business School on potential “spillover effects” if our economy were to dip. From an employment perspective it suggested slower wage growth but more importantly signs that hinted job security would be important to people.
The article also mentions Deloitte Access Economics partner Chris Richardson who said a "recession was now the most likely outcome, and that it would resemble the GFC in terms of an increase in the unemployment rate and 180,000 job losses in six months’ time.
But he said it wouldn't resemble the recessions of the 1980s and 1990s which saw the unemployment rate – which is currently 5.3 per cent – rise into double digits".
So rather than the Recession we studied in the 1990s (which some of us can remember) this is more to be a less severe dip with regards to unemployment despite the mass media concern.
It got me thinking:
If the effects to the economy are short lived, then there is a huge opportunity for organisations to take the lead in securing talent and gaining a competitive advantage.
Post 1945 there were a list of successful companies that were founded: • Minute Maid (1945) • Sony (1946) • H&M (1947) • Manpower - one of the world biggest blue collar high street staffing agencies (1948) There were multiple factors attributing to their success:
• An opportunity or gap in the marketplace • Increasing customer loyalty • The ability to scale efficiently and quickly • Securing the best Talent in the market (and quickly) The economic downturn we are currently experiencing are a result of the actions taken to combat COVID-19 - by this I mean that we have chosen to create the harsh economic environment. I’ve been lucky enough to work with Professor Paul Stevens, a brilliant economist and Chatham House distinguished fellow who specialises in the Middle East. I remember him once sharing a quote that “An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today”. What we can guarantee is, that as Australia enters what is arguably an overdue downturn after the worlds longest boom of 30 years, organisations will have growth again. NAB’s chief economist, Alan Oster has predicted that the economy will contract next quarter by around 5%. He estimates gross domestic product would contract by 3% in 2020, but rebound to 3.5% the following year. So there’s an economist willing to hint not only how much, but also when! We have seen numerous companies in tourism and hospitality shed staff recently. The on flow has been seen in a few other industries too although this is likely knee-jerk reactions to a lack of confidence in the economy. Australia's Unemployment rate in 2020 started at around 5-6%. It is predicted this could near double from 8-12% as the fallout from our reactions to tackling COVID-19 have implications to businesses. Back to Employment History: The patterns we are seeing in unemployment are nothing new. In fact when I worked in recruitment in 2007 in the United Kingdom following a recession signified by a financial services collapse, including Lehman Bros., there was a huge spike in unemployment. This changed as the economy recovered but recruitment didn’t stop. Recruiters were incredibly busy at this time. There were many companies that experienced exceptional growth from 2008-2015. From top 100 FTSE companies to SMEs who grew significantly. These companies used a general downturn to improve their teams and secure the best talent to ride the oncoming wave. For a lot of organisations currently, the reality of this downturn and the fear of COVID-19 can be numbing. The way of life onward is unsure. What is sure is that there will be an opportunity for you in the very near future to acquire a high performing team...if you take it. The way we work and hire: The way we work and acquire talent has been changing rapidly well before 2020. We wrote about our 5 Predictions in the Future of work some 3 years ago. Three year ago we wrote: “Australia has one of the strongest economies in the world, with nearly 25 years of consecutive growth. However, it’s clear that there are challenges ahead with the make-up of the employment market changing rapidly. There is a trend for a loss of jobs in manufacturing, agriculture and heavy industry compensated by increases in the service sector. The mining sector, for example, now employs only 2% of the Australian population. (The Future of Work, EGM Partners, 2017) We reported that 92% of CEOs in a Deloitte survey said they're not confident they are organised correctly or have the leadership skills to deal with the digital economy we are having to operate in. The way we work has changed. Some companies have adapted really well to working from home. Others, we have seen, have struggled. In addition, a forecast of employment trends by the World Economic Forum identified flexible work, including virtual teams as “one of the biggest drivers of transformation” in the workplace. The way companies deliver on flexible working arrangements has already been a factor in their success and productivity in the aftermath of COVID-19. Moving forward must be the idea that, especially for SME businesses, the focus on outcomes outweighs the traditional way that a workforce delivers. In other words, it’s not just the amount of time that employees spend at work that counts, it’s the quality of the output that matters. For example, Unilever has created Agile working, which allows staff to work anywhere and anytime as long as they achieve their goals Transactional Recruitment Vs Trust and Relationships EGM undertook research in January 2017 with job seekers to understand their key motivating factors. An interesting observation was that almost 80% of respondents who classed themselves as ‘not actively looking’ felt that autonomy and flexibility would be more important than salary and other reasons in their decision to move companies. Respondents who identified as ‘actively looking’ cited salary and better team culture as their most important motivating factors. If the future workforce is focused on securing the best talent in the marketplace, that talent may not be what we labelled as ‘actively looking’ for their next role. This means that when securing talent, companies will need to attract employees by offering more autonomy and flexibility; and retain them by, among other things, keeping their promises. This data indicates that organisations can start to secure their ideal workforce if they offer more flexible working conditions. When confidence leaves a marketplace - or when unemployment figures rise - candidates are less likely to explore switching roles. The key to this is moving away from a transactional recruitment process: they won’t apply to an advert. They are far more likely to need to be encouraged to apply by someone they trust and have a relationship with.
There are key drivers which have influenced the way we work and the way we hire that will be key to an organisation's success in talent acquisition.
Checking in with EGM’s FOW predictions: Key drivers So, what’s driving the new world of work? What's the context? Here are the key developments that we see: Technology Workers are being bombarded by a huge amount of new technology; for example, voice, video, messaging, collaboration platforms and all forms of communication media. Whilst there’s not much evidence to suggest that these changes are driving up productivity, there is no doubt they are having a massive impact on the way we all work and behave. Data The amount of data that companies are collecting is huge and there are implications for functions such as HR. Indeed, estimates show that the data collected by organisations in last two-years is nine times greater than previously collected in all of humanity. Companies are using data in many areas; including to predict performance and potential, to identify staff non compliance and even to show how the pattern of work in one organisation compares to another. Data is even being collected by companies on their employee fitness and health using on-body devices such as Fitbits. Indeed this kind of data is key to COVID-19 tracking. Gig economy The Gig economy is expanding. Mckinsey estimate that 20% - 30% of workers in the US participate in the Gig economy. There is a slow and steady increase in the rise of the contingent worker and the impacts may not all be positive. For example, concerns have been expressed that these workers often receive poorer pay and benefits and the rise could drive income inequality. Artificial intelligence Artificial intelligence (AI) is becoming more important. There have been great leaps in the use of AI recently in medicine, agriculture and finance. For example, it’s now possible for an insurance claim to be fully processed end-to-end by computer. We should all take note as big companies are investing big money in this area. Amazon, for example, has 1000 employees working on the Amazon Echo - the voice assisted automated personal assistant - and many other Global companies such as Apple, Google, Facebook and IBM are investing in AI. Big companies making big bets. Diversity and generational differences Diversity and generational differences are becoming much more important issues in the workplace. On diversity, there has been a huge drop in birth rate in Australia – it’s now only marginally above its lowest level in 2001 (although we’ll see what isolation does to that - especially now there’s no sport on TV!). Put simply, economies that expand and grow will become reliant on labor from elsewhere. Millennials now make up 50% of the workplace. Many articles have been written on how they have different attitudes and outlooks to previous generations. Interestingly, Millennials don't see diversity as an issue. Summary Organisations are facing a change in the way they traditionally operate. They must adapt. The next few years will see certain industries and companies see exceptional growth. There are many factors that will contribute to this growth. One factor that you can be certain of is that they will invest in finding, attracting, retaining and developing the best talent for their high performing teams. There are opportunities as the dust settles (even right now) for both employers and employees. Staying relevant has never been more important.
Key Points
Unemployment may not rise as high as we have seen in previous recessions
The economic recovery may be significantly quicker than we have seen
The way that we have worked in the past has changed dramatically
Some organisations will quickly look to add talent to their workforce
Some of these organisations will be the ones we talk about in History that took their opportunity to grow
The are huge factors around your Employee Value Proposition for example that could help you secure your future workforce
Recruitment is moving away from the transactional - it's about trust and relationships
Whether you are an employer or employee; stay relevant.