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HR Hit Hard
HR professionals -- especially those in recruiting and training functions -- have lost their jobs during the recession. While the economy -- and hiring -- may be picking up, it is still a buyer's market. Companies looking to hire are taking their time and looking for exact matches.
Even as HR professionals have been delivering news of layoffs at their organizations, they, too, have been hit hard by the recession. "A lot of jobs were lost in HR and even the budgets for areas like employee relations and training and development -- all of those have been slashed in this recession in many cases," says John Challenger, CEO of Challenger Gray and Christmas, an outplacement firm based in Chicago. "It's hit HR very hard and it just seems like there are -- more than I have ever seen -- a large number of really good HR professionals out looking and having a hard time; people who would ordinarily not have a hard time are still out there looking." And some of them are exuding a "sense of desperation," says Greg Hessel, senior client partner for the HR Center of Expertise at executive recruiter Korn/Ferry in Dallas. Because of that desperation -- because they've been out of work too long or their severance is running out --some HR executives are becoming much more willing to open up their search parameters, Hessel says. They now, for example, will consider positions throughout the nation instead of in a specific region, will look at different industries than originally sought and may think about taking "a significant step backward" in their HR role, he says. That last possibility -- taking a step back -- is one that Hessel tries to talk them out of. "I tell them they need to stay competitive," he says, noting that taking a lower role "is something you can't recover from." There are few metrics available that detail the number of HR jobs lost in 2009, although experts say the bulk of the reductions affected generalists as well as those in recruiting and training departments. Also affected were those professionals who focus on organizational design and organizational effectiveness. One metric that was available: The median staff size of learning and development workers fell from 7.0 per 1,000 learners in 2008 to 6.2 in 2009, according to a just-published Bersin & Associates study, The Corporate Learning Factbook 2010: Benchmarks, Trends and Analysis of the U.S. Training Market. The study also found that L&D spending fell by 11 percent in 2009 -- for a total drop of 22 percent over the past two years. Other metrics are available from PricewaterhouseCoopers Saratoga's 2009/2010 U.S. Human Capital Effectiveness Report, although the report focuses on 2008. Last year's data is still being compiled, says Jon Burton, a manager based in the firm's San Jose, Calif., office. If last year's cutbacks mirrored those in 2008, hardest hit were HR professionals in recruiting and staffing, and workforce mobility functions -- functions that include relocation, expat and employee-transfer administration, among others. The PwC Saratoga report noted the per-employee investment in those functions decreased by 32 percent and 44 percent, respectively. The cost per employee to operate the recruiting function went from $239 in 2007 to $162 in 2008, while workforce mobility operational costs dropped from $25 to $14 per employee. Costs to operate the compensation and HR talent management functions remained fairly steady, according to the report. The HR talent management function reflects the "strategic parts of HR," says Burton. In addition, the survey found that the average HR employee supported 95 employees in 2008, compared to 85 employees in 2007. HR labor costs per employee declined 16 percent, from $1,098 in 2007 to $920 in 2008. At the same time, per-employee costs for HR consultants and contractors increased by 17 percent in 2008, to $124. Hessel says HR has not been "slashed any more or any less than any other functional area. I think the function continues to be viewed very well [by corporate leaders]. ... These organizations have had to shed talent as they have shed revenue." Jason Hanold, managing director in the Chicago office of Russell Reynolds Associates, notes that HR is a "bellwether of the economy," and says HR cuts were most severe in sectors that were hurt the worst by the recession: financial services, consumer/retail, luxury goods, industrial, and leisure and hospitality. Other executive recruiters added to that list: professional services and "pockets" of the pharmaceutical sector, but, as is true with many corporations, the layoffs took place even as companies ramped up hiring in other areas. In some cases, Hanold says, the staff and leaders of recruiting and talent departments were "decimated," while companies pursued searches for leaders in compensation and total rewards. As the economy continued its downturn, Hanold says, organizations went from making easy layoff decisions to more thoughtful cuts -- trying to hold on to future leaders and those who can help turn the company around when the economy rebounded -- to making deep, painful decisions about which employees to let go. And because some industries were hit harder than others, "there are some people who are unemployed today that are much more talented than some people who are employed," he says. Margaret-Ann Cole, senior consultant in the New York office of Towers Watson, says many companies also responded to the downturn by restructuring the HR function -- looking at the situation as an opportunity to streamline and be more cost-effective as well as efficient in delivering services. "I would say we have seen a big increase in companies asking us to help them do that now," she says. "There is a lot of activity around that." With so many talented HR professionals out of work, experts say the stigma that organizations had attached in the past to a job candidate's unemployed status has decreased. Fran Luisi, principal of Charleston Partners, a Rumson, N.J.-based retained search firm that specializes in HR, says a stigma now only applies to candidates who have a "spotty history." A candidate who has a "wonderful history for 20 years" wouldn't be damaged by being unemployed due to the recession, he says. On the bright side, the economy -- and HR hiring -- could be starting to pick up. "I think the most intelligent and most savvy of companies are really investing in talent at this point, so you are seeing recruiting continue to be pretty active in a number of different sectors and people really investing, not only in the acquisition, but in the development of people," Luisi says. "In many respects, you are seeing organizations go into the marketplace because they know there is some softness with a number of different companies and different industries," Luisi says, noting that HR can cross industries "pretty readily." In some cases, Cole says, that cross-industry experience is a selling point, such as when an organization, say a pharmaceutical company, seeks an HR leader with a consumer-products background in order to pursue different strategic initiatives. But with so many HR professionals available, most companies understand they are in a buyer's market. "Organizations are selective right now, making sure [no] stone is unturned," Luisi says, noting the process is taking a little longer and searches are more thorough than in the past. Hessel has seen that as well, saying that companies "are willing to be more patient and are looking for an exact match to the role." Mark Anderson, president and chief economist of ExecuNet, a Norwalk, Conn.-based executive networking organizations, says the economy as a whole will probably rebound in a "slow and steady" way instead of a fast-paced ramp-up. "This isn't a V-shaped recovery," he says. Anderson says many organizations will probably first respond to their growth strategies and a better overall economy by looking to third-party recruiters and HR consultants until they see the need to move to hiring full-time employees. Eileen Finn, whose New York-based executive search firm specializes in HR leaders, agrees, noting she added on a whole new business based on the need for interim HR executives. "I think many of the HR people I know that are in transition are finding consulting assignments," she says. The situation should only get better, experts say. It is the rare employer these days, Cole says, that doesn't understand the value of HR, especially as studies have shown that engagement levels are decreasing among both high performers and the rest of the workforce. "I think there is a recognition that HR is playing a critical role because so many things are affecting the employees, they really need HR more than ever," she says. Challenger agrees: "I think more and more companies are realizing that managing their people in a service economy is crucial and to shortchange HR, especially in a time when it's hard to hold onto your culture and to your employee brand, they can ill afford to cut too deeply or not to build that back up." January 25, 2010 Copyright 2010© LRP Publications |
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