Good help in bad times
When the economy nose-dives, smart companies
mine for top-shelf employees. The practice is known as countercyclical hiring.
By Rick Waters '95
study predicted that the Sept. 11 terrorist attacks will reverberate through
the U.S. economy for years, wiping out more than 1.6 million jobs in 2002
hit cities with exposure to the tourism and airline sectors hardest, but
they will also spread across a wide range of industries, from entertainment
to financial services, according to the Milken Institute, a Santa Monica,
Calif.-based economic think-tank.
While a definitive
toll can't be calculated, evidence of job losses are evident in the news.
Ford Motor Co. made headlines this winter when it announced plans to cut
35,000 jobs nationwide. Enron slashed 4,000 before its infamous collapse.
news is not all bad for job seekers, said Bob Greer, TCU associate professor
of management and lead author of a study on countercyclical hiring. The
best companies are always in the hiring mode, he said, sometimes not in
spite of a bad economy but because of it.
it contrarian hiring. Normally, in strong economic times, firms compete
with themselves in the labor market. But just as some investors buy stocks
when they are beaten down by a bear market, some employers go after key
managers and professionals when a recession puts thousands of workers
on the street.
is an opportunity to get bargains," Greer said. "It's a risky strategy,
but it is equally risky to assume the talent will be there when there's
risk is that employers will increase their costs when business is contracting.
Neither Wall Street nor a board of directors may approve higher spending
when everyone else is getting smaller.
risk is a public relations backlash. Many of the companies in Greer's
study were cutting jobs because of a recession while simultaneously upgrading
their key talent in other areas. The approach makes greater business sense
if a company has the resources, but it can also alienate workers.
100 companies responded to Greer's study, which involved analyzing employment
and stock market data and a subjective survey of human resource managers.
None agreed to be identified to the media or consulting firms.
do it, but they don't like to talk about it," said Greer, whose study
was published in the Journal of Business Research and has been
featured on CNBC's "Squawk Box" and in at least a half-dozen
newspapers. "It's most appropriate for companies that do a good job
of planning for the future."
concludes that companies that practiced limited countercyclical hiring
realized a significant increase in profits within two years. They also
had a stronger pool of minority applicants, helping them achieve diversity
not claim cause and effect. Those companies also tended to have other
forward-thinking practices, such as investing heavily in training and
management development and pursuing affirmative action, which contributed
to the results.
is best done on a small scale and is particularly effective in luring
workers in specialized or technical fields, such as engineering and research
and development. But in general, contrarian hiring is not an easy sell.
Human resource managers may agree it is a good strategy but not one embraced
by their bosses.
companies may have an advantage. They can take a longer-term approach
on hiring, just as they might with buying an office building.
scenario is to run a booming business during a downturn. Then a company
has the resources and opportunity to add top hires. Example: Lockheed
Martin, which won the joint strike fighter contract last fall. Engineers
are drawn to the project regardless of the economy because it represents
the next generation in fighter technology, and Lockheed won't have to
worry about losing top talent to dot-com upstarts.
without degrees in rocket science, returning to college is a viable alternative,
but they should remember that talent is always in demand, in good times
and in bad.