The Blogs of Dave Murphy: A Candidate-Driven Job Market
The U.S. unemployment rate across all industries dropped to 3.8% in May, and it was the 92nd straight month where more jobs were added to the workforce than lost. There are now more job openings than unemployed workers and the U.S. economy is experiencing the second longest run of GDP expansion in history, with positive growth every quarter since the end of the Great Recession in 2009. As a result we have been experiencing what recruiters refer to as a “candidate-driven job market,” where the demand for talented, ambitious employees with unique skills far outpaces the supply of those workers.
Some of the growth can be explained by economic difficulties in other industrialized regions around the world, as well as by sound economic policies implemented since the recession. A significant cause of the imbalance in the job market, however, is the changing demographic patterns in the U.S. workforce. The retirement of baby-boomers has led to a management void and there aren’t enough bodies to replace them, particularly in certain knowledge-intensive industries like Pharmaceuticals, Biotechnology, and Med Tech. The net result is that, although we can expect a temporary rebalancing in the labor market in the next recession, talent shortages will be a significant issue in the U.S. economy for many years to come and we need to prepare accordingly.
What does this mean for employees and job candidates?
Good news, generally speaking. Candidates who are open to making a job change now routinely have multiple opportunities in front of them and often more than one job offer to consider. Wages are increasing and candidates have more leverage in salary discussion, particularly if they anticipate that their current employer is likely to extend a counter-offer when they resign (that is a topic for a different Blog). We’re seeing more willingness by employers to allow for remote work arrangements or telecommuting because employees don’t feel much pressure to relocate for job opportunities. Employees with hard-to-find skill sets know they are well positioned to ride out the next recession, even if there is a year or so of widespread downsizings.
What does this mean for employers and hiring managers?
It requires a change in both hiring and management orientation for those organizations that want to succeed in the War for Talent. For a company or division who long-term survival depends on the presence of knowledge-based workers it is absolutely critical that they are trained in how to attract and retain the best people. Many organizations will have difficulty changing their culture and orientation to adapt to this new reality, particularly large, multinationals that have a tradition of “screening applicants” and choosing new employees as if they are shirts on a rack in a department store. The shirt doesn’t say “no, I’m not going,” but the A Player at the direct competitor does, and he or she needs to be sold on the idea of quitting their job and taking another one. It’s not very difficult: if as an employer you have a good story to tell then tell it, particularly if it includes opportunity for career development and advancement. Be fast and responsive to candidates in the interview process and show interest in them personally. Those simple, common-sense steps will help progressive employers win the War for Talent.
In our candidate-driven job market employees are now basing their decisions about where to go to work – and where to remain – on things other than compensation and benefits. They want competent, trustworthy management with limited re-organizations, a collaborative atmosphere, and a runway for advancement of some sort, among other things. Salaries, bonuses and stock offerings have all bounced back nicely since 2009, but other cultural changes have been slower to develop, or to re-emerge. An example of this is how companies are handling the issue of relocation for new employees. Before the recession, which was caused in large part by the mortgage crisis, employers were quick to provide full financial assistance in moving new employees, including paying real estate transaction fees. Now even the large global organizations are rarely doing that for middle-management workers, and instead are offering small sign-on bonuses to cover the cost of moving household items and a few months of temporary housing. So that’s an example of an opportunity for an employer to differentiate themselves in the talent war, by offering more generous relocation packages.
There are many changes an organization can consider as it repositions itself to become an employer of choice. Some are large, expensive endeavors, but most are small actions that demonstrate a “high touch” orientation and a feeling that the company really cares about their people. The first step, of course, is to make the decision that you want to be an employer of choice. As a recruiting professional I have a unique opportunity to see the various tools and techniques used by many different organizations, and some are more effective than others. Please let me know if you would like to discuss them.
The Blogs of Dave Murphy: New Salary Disclosure Rules – Don’t Ask, Don’t Tell?
In January 2018 California will join the growing list of states and municipalities in the U.S. that have rules in place preventing employers from asking job candidates about their compensation history (other such jurisdictions currently include Massachusetts, Delaware, Oregon, Philadelphia, New York City and state). Each law provides their own unique directions along with exceptions and “safe harbor” provisions, but the rationale for enacting them is to prevent the exploitation of historically underpaid employees, and in particular to close the “gender gap” in compensation differences between men and women (some of the laws specifically address the gender gap in their preambles). The spirit of the law is to provide equal pay for equal work, so these are positive steps toward ensuring that all employees regardless of gender, race, ethnicity or any other demographic trait are treated fairly and are not exploited.
In addition to demographic traits another segment of the work force that has been subject to potential wage exploitation consists of unemployed or transitioning workers. The thinking is that some employers will take advantage of a candidate who has no current income and offer them a wage that is at the lowest end of the designated pay scale for the job. This is exacerbated by the often-false perception that unemployed candidates are not as productive and high-performing as those who are currently working and not actively seeking a new job. Of course this is patently unfair when employees are caught in a large reduction-in-force or layoff and have no control over their employment status, particularly in the age of skyrocketing mergers and acquisitions.
So these new laws are good for us, right? Most reasonable people would agree with the rationale behind them and envision that they will become the law of the land in the U.S. in the near future. There is a danger, however, for many job-seeking candidates to assume that non-disclosure of compensation history will work to their benefit. One must remember that they are in a competition with other job-seekers for an opening and that the employer might very well select someone else for the position, and that the price tag for the employee is a relatively small part of the overall selection criteria. While there are exceptions, for the majority of candidates it will be advantageous to proactively disclose salary history information at some point in the selection process rather than keeping that information hidden.
From the employer’s perspective they are trying to find the best employee possible for their opening and pay them fairly, so that the new team member will be happy and productive in the job, and stay with the organization long-term. The job market is subject to the same supply and demand forces of other markets; if an employee is unhappy for whatever reason in their current job they can make a job change (just talk to your friendly Executive Recruiter about that . . .) One way to correct an exploitive wage situation is to find an employer who will pay fairly for top talent, and good employers know that. But what is considered “fair” compensation? For the employee it means being paid consistently with what that industry generally pays for that function. The employer follows that same direction too, but also must maintain their own “internal equity” at their organization – making sure that they don’t pay a new person more than an existing employee who has similar qualifications and experience. So there is pressure on the employer to ensure that they are offering a candidate an appropriate wage that is a win-win for both sides.
How does the employer find that appropriate offer?
In addition to monitoring industry wage trends and maintaining internal equity, the hiring manager must make an offer to the candidate that is financially incenting for personal reasons as well. Some candidates are highly motivated by money, others not as much, but all want to believe they are being treated fairly. In the new era of “don’t ask, don’t tell,” candidates will now be asked about their salary expectations at some point in the selection process, possibly more than once. As a candidate you now have an important decision to make. If you share a number that is beyond what the employer believes is reasonable for them to pay you are likely to screen yourself out of the selection process (remember, they have other candidates to consider). And if you share a number that is below what they believe is reasonable then you are leaving money on the table. That’s why I always recommend that a candidate reply to the question about salary expectations by explaining that they are seeking a compensation level that is fair and reasonable based on their qualifications. Now, if an employer already has information about the candidate’s compensation history they typically have an idea of what they would like to offer, and that reply nearly always deflects the difficult question about money that inevitably comes up in the interview process.
In the new era however, the employer (most often an HR manager) will either attempt to “pre-close” a candidate during the money conversation or be faced with a protracted negotiating process after they make an offer, which is something they don’t want. Depending on how gracefully the candidate communicates in that “negotiation” he or she may or may not get the job. I’ve seen many cases where a job offer is rescinded by an employer because of frustration with the candidate’s communication style at the point of offer. The vast majority of employers want to extend an original offer that is the “best they can do,” or very close to it. A candidate may be able to go the well one time to enhance it, but generally not more than once. The rejection of counteroffers will doom the process, and it can all be avoided with better communication earlier in the process about what is incentivizing to the candidate.
So, in responding to that question about salary expectations I will continue to recommend that most candidates disclose some of their compensation history and also provide some direction about what they are seeking for that particular position. For candidate’s who believe they have been exploited in the past for whatever reason they can explain their situation. This will give the employer the opportunity to offer something that is incentivizing and is a win-win for both sides, and avoid the potential for the candidate to create ill will or burn up political capital before they even start working at the company.
As a recruiter and broker of these deals I have observed that the more transparency and candor both sides exhibit in the process the higher the likelihood of a new hire, and of having someone remain with the company long-term. I view the new trend of non-discloser as a potential threat to the process. On the other hand, it’s likely going to be a boon for the recruiter-broker who will be called upon more than ever to optimize communication and facilitate the process.
As always, I welcome your comments or questions. Happy New Year!
The Blogs of Dave Murphy: Giving Thanks in the Job Market
On Thanksgiving I took some time to ponder those things for which I’m thankful and it got me thinking about comments I’ve been hearing from hiring managers as they try to find people to fill openings on their team. For many employers it’s becoming less about finding specific technical skills or accomplishments in a resume and more about finding people with integrity, character and – most of all – humility. The matrixed based management structure prevalent in most organizations today requires that employees collaborate closely with their team members, and that they take time to thank and praise colleagues when appropriate as well as acknowledge their own faults and mistakes. The ability to be genuinely humble in this type of environment is a trait that is becoming harder to find.
As a candidate in a job interview it can be very tricky to express humility while also proving that you’re good at your job. An interview is a time to proactively communicate your attributes and positive qualities, which can be perceived as “bragging.” Hiring managers want to know that, although an individual has been working as part of a team, he or she can demonstrate individual contributions that have made a difference in the team achieving its goals. So candidates have to provide that evidence, but in a way that makes it clear that they value their colleagues and don’t take all of the credit for a team’s success. Team leaders don’t want to hire “Lone Wolves”, no matter how talented they may appear. Hiring managers want people who are genuinely thankful for the opportunity to be a part of a high-performing group of professionals. So as a candidate it’s important to balance “bragging” statements with humility and acknowledgement of other’s contributions.
A frequently asked question of candidates in the interview process is about perceived weaknesses or “areas for development.” Most interviewers will point out that we all have them, and will sometimes frame the question by asking what a candidate’s supervisor would say about their areas for improvement. This is another measurement of one’s humility and it is important to be truthful and genuine in your response. Hiring managers are generally not impressed when they hear something like, “sometimes I work too hard and have to take a break to achieve work-life balance.” That may be true but it’s a very predictable response and doesn’t get to the issue of whether or not you’re able to be self-critical and willing to acknowledge your faults. One candidate told me that his boss pointed out that he had a tendency to talk too much in meetings, so he deliberately set out to spend more time in active listening in order to help make the team more effective, at the expense of his own self-promotion.
Sometimes I’m asked if the trend toward individual attainment and away from humility and thanksgiving in the workplace is a by-product of our mas-and-social-media fueled culture. I think that’s true to some extent but it doesn’t automatically mean that younger Millennials are necessarily going to be less humble than Baby Boomers. I think that everyone, regardless of age and experience, must recognize the forces at work here and take steps to self-regulate themselves, whether working on cross-functional teams or answering interview questions.
Hiring managers are seeking that magic balance of skill and will. When they talk about a candidate’s lack of “personal chemistry” or “cultural fit,” they are most often referring to their perception of the candidate’s will: not just the willingness to work hard, but also the willingness to be humble and grateful for the opportunity to be part of a team. It is an increasingly important trait in the workforce and one we should all work on improving. As always I welcome your questions and comments.
The Blogs of Dave Murphy: Preparing for the Next Recession
I admit it – I’m a Prepper. Not the kind with machine guns and years of freeze-dried food stored in the basement; I’m generally more concerned with preparing for financial downturns because they are rather predictable and to be expected. According the National Bureau of Economic Research it’s been 7 years and 5 months since the end of the Great Recession in the United States (the generally accepted definition of a recession is two consecutive quarters of negative GDP growth). That particularly cruel recession lasted 18 months, from December 2007 – June 2009. In the United States there have been 11 cycles of recession / recovery since 1945 and the average length of those recessionary periods has been 11.1 months.
The NEBR defines “recovery periods” as the time from the trough of the last downturn to the peak before the next downturn. Of the 11 cycles in the US since 1945 the average expansion time has been 58.4 months. We are now in month 89 of the current expansion. That history, along with the uncertainty of a very new political reality in Washington, means that we’re due for a downturn in the next few years. And then things will bounce back and we’ll continue the cycle. So it makes sense to pro-actively manage your career to account for these cyclical events, right?
I’ve been doing some research online and in my own database on the job market during the Great Recession of 2008 – 2009, and to a lesser extent the recession of 2001-2002. We all know that employment trends lag GDP growth, and because of the depth of the last recession the unemployment rate in the US remained unusually high far longer than June 2009: unemployment peaked at 10% in October of 2009, after GDP had begun growing again, and it remained above 7% until November of 2013. We can’t accurately predict the timing of the next recession or the persistency of unemployment following it, but we can safely say that job creation is limited for a far longer period than the actual recession itself. I’ve seen talented executives search for mid-level and senior-level positions for years and only recently been able to find opportunities that make sense for them.
So what career management decisions can we consider to plan for this eventuality? A wise person once said that the best time to fix your leaky roof is when the sun is shining. Thinking back over the stories of how some people successfully navigated the last recession / recovery cycle I found some trends. For the most part these are Marketing and Business Development professionals in the medical technology and biopharmaceutical industry, and they were able to maintain a fairly steady income throughout the cycle. Back in the day conventional wisdom held that if you were able to secure a job at a large, global company in the Fortune 50 you could expect to ride out a recession without getting laid off. But I have friends at places like Merck, Medtronic and Becton Dickinson who were victims of reductions-in-force. So the conventional strategy of seeking security in numbers is now risky, and most would agree that we need better ideas to proactively manage our careers through tough times.
I’ve identified four techniques that may make sense to consider:
Seek privately-held organizations
The privately-held organizations I work with tell me that they are better positioned to make investments and limit short-term cost containment measures that their publicly traded counterparts. Without quarterly pressure from stockholders to post positive financial results management can remain focused on making decisions in the best long-term interests of the organization. There is a 50 year old privately held medical device company that I help to hire marketing personnel, and they have had no force reduction or layoffs over the past eight years. In contrast, their three publicly traded direct competitors – large, global corporations with huge market caps – have each had multiple rounds of layoffs during that time span. Although sometimes viewed as being risk averse and lacking in innovation, these long-standing privately held companies, whether family owned or otherwise, often provide safe harbors during economic downturns.
Develop a sub-specialty
I’ve noticed that over the past eight years the marketing professionals I know who have been able to thrive have developed specialized skills that are differentiating and hard to find. Examples include digital and online marketing capabilities, health economics and payer-focused programming, and in-licensing skills that help an organization grow with less capital and labor investment. There are many examples and they all follow relatively new trends that require special skills not developed by the masses – and they frequently relate to cost containment. These are advanced capabilities that make an employee different and valuable to an organization, as opposed to a more generalized skill set focused on strategic planning, for example. It’s also generally true that a marketing job which is farther downstream and closer to the customer is less likely to be impacted or eliminated in a workforce reduction than a role that is upstream and internally focused.
Work with first-in-class technology
My analysis showed that a disproportionate number of workforce reductions in last eight years were at organizations that manufacture relatively mature technology in markets that are becoming commoditized. Examples include pacemakers, small molecule drugs used in the primary care setting, and ELISA kits in the clinical diagnostics segment. At one time variations of these products were highly innovative and on the cutting edge of the life sciences, but no longer. When cost pressures impact payers and large buying groups they often look for deep discounts from suppliers of these undifferentiated products, and that leads to job instability for the suppliers (unless you’re in market access or reimbursement – see last section). While it’s true that first-in-class technology is often born in risky start-ups, those career opportunities are often less risky in an economic downturn than large, old-school organizations (provided they have adequate financing, of course).
Build an external professional network
Some of the most talented marketing execs I know were laid-off in the Great Recession – many of them more than once. Yet a significant number of them have been able to build highly successful consulting careers based on the relationships they fostered while toiling away for their employers. They kept in touch with former managers and peers, and even networked with agency personnel and vendors from management consultancies and the investment community. They’ve been willing to build 1099 contract-based consulting careers with multiple clients, and in many situations have found their next full-time permanent position after first completing a successful contract assignment for the would-be employer. In a recession employers often prefer to “try before they buy” a permanent FTE, and they first look to their personal networks to identify a contractor to fill a short-term need. Linked-In has been incredibly valuable in this regard, but there is no substitute for old fashioned one-on-one emailing and phone calls.
These are four career management techniques that have been used successfully in recessionary periods, and there are many others. One need not wait for an economic downturn to take these steps, however. Give the length of our current economic expansion it may be wise to take pro-active measures such as these to fend off career misfortune. As always, I welcome your comments and questions at firstname.lastname@example.org