Prepare to Hire

Things seem to be looking up (at least the economists seem to believe so) and it appears that consumer confidence is gaining steam. May’s consumer confidence index was as its highest level since September 2008. With that in mind, I wanted to spend a moment discussing the pent up demand in the labor market – people out there who have been looking to make a change, are unhappy with their current position, but have not been willing to take any risks amidst the recession. As we turn the financial corner in our economy, companies who have personnel needs and have put them off due to hiring freezes will need to become prepared so they can take advantage of the top players who will suddenly be willing to make a change and leap at the right opportunity.

I found the attached article very interesting and hope that you do as well.

David Lammert

Sign of Economic Recovery: Businesses That Are Restless to Hire
Abridged CIO, By: Meridith Levinson

Business demand for new talent will rebound before consumer and business demand for goods and services, says executive recruiter Chuck Pappalardo. He expects companies to get restless for new talent (and new business) by the end of the year.

Everyone wants the recession to be over, but we all know our economic troubles aren’t going to pass anytime soon. Pappalardo has experienced several economic boom-and-bust cycles during his 25 year career in the search business. As such, he gets wind of indicators that signal immanent economic recovery before the rest of us.

Pappalardo thinks we could start seeing signs of an economic recovery by the end of 2009. The indication will be companies that are once again ready to fill strategic positions. Demand for people will bounce back before consumer and business demand for goods and services, he says.

“Businesses really can’t go long periods of time without new people,” says Pappalardo. “A year is really stretching it. Businesses get old and stale if there aren’t people turning, if there aren’t new ideas.”

In other words, businesses are going to get cabin fever from having hunkered down so long. They’re going to get restless to start making money again. Pappalardo says these companies will realize that they need to hire people—particularly in sales, marketing and possibly also R&D—to move forward and win new customers. (The new hires in IT won’t happen until the new people in sales, marketing and R&D starting making demands for technology, he says, and supply chain is likely to be the first area in IT that gets a boost.)

I’m aware that Pappalardo’s theory on economic recovery sounds like a pitch for executive search services, but his ideas about hiring as a leading economic indicator are based on businesses’ behavior during previous downturns:

“2003 was a very difficult year in executive search,” says Pappalardo. “At the end of the first quarter and beginning of the second quarter in 2004, we saw a significant amount of search activity—a lot in sales. Businesses began to feel in 2004 like there might be some progression if they could hire, so they did, and we took on a bunch of [search] projects around sales and marketing. Then it seemed like nothing else [went on] for the rest of the year. Companies were forming a [hiring] base to move forward… 2005 was a much better year.” When companies begin making and implementing hiring plans, it demonstrates their confidence that things are getting better and their desire to make money. And by making money, businesses help improve the economy.

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