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HR NEWS
Despite Downsizing, Employment Levels Hold Steadyby Mike FrostDespite a spate of high-profile layoffs and a sagging economy, the nation's jobless rate remains at historically low levels. That means employers who have been grappling with a tight labor market for several years can expect little in the way of relief. According to a report issued by Challenger, Gray & Christmas, an international outplacement firm in Chicago, employers trimmed nearly 378,000 positions from their payrolls in the three months between December 2000 and March 2001. That compares with just fewer than 131,000 positions during the same period a year earlier. The list of companies announcing layoffs in February alone reads like a who's who of American industry, including Alltell, Circuit City, Converse, Corning, Dell Computers, Delphi Automotive Systems, Eastman Kodak, Federal-Mogul, Goodyear Tire and Rubber, IBM, MCI-WorldCom, Motorola, Nortel, Polaroid, Ryder Systems, 3Com, Toshiba and Verizon Communications. Earlier this year, DaimlerChrsyler announced it would eliminate 5,000 positions by the end of March, and a total of 26,000 jobs (or about 20 percent of the company's total domestic workforce) by 2004. Lucent Technologies announced plans to cut its workforce by 10,000. During February, reported Challenger Gray & Christmas, companies announced they would give pink slips to about 101,700 employees. That's down 28 percent from January, when 142,200 layoffs were announced. However, it is up significantly from this time last year; in February 2000, only 35,400 jobs were cut. Analysts point to a number of causes behind the layoffs: flat sales, rising energy costs, poorly performing stock portfolios, an increase in merger-and-acquisition activity and the collapse of highly speculative dot-com enterprises. "One of the things that is most surprising is how fast this came on," says John Miller, senior vice president of U.S. sales and marketing at Drake Beam Morin, an outplacement firm based in Boston. "In the past, such a shift would be more protracted."
Jobless rate holds steady However, analysts point out that overall the unemployment rate remains quite low, and few expect to see it rise dramatically, despite the reductions in force. "Even if the 'dot-bomb' fallout is pushing some pink slippers into the job market, employers are still in a war for talent," says Aaron Brown, a consultant with T. Williams Consulting, a human capital solutions firm based in Collegeville, Pa. Indeed, online job boards are reporting brisk business -- both in terms of candidates adding or revising their online resumes and employers placing job announcements. "For the first time, we went to over a half-million active jobs in one day," said Doug Hardy, vice president of content and editor in chief at Monster.com, based in Boston. "That's up significantly from December." The story is the same at rival CareerBuilder, where, director of communications Barry Lawrence says, orders for job listings at the Reston, Va.-based firm were up 50 percent in the last quarter. "Don't believe the hype that it's becoming easy pickings for employers to find quality candidates," said Lawrence. "The really smart companies are looking at the economic picture and realizing they need to continue hiring. They know they can't afford to be in the position of not having personnel in place when the economy recovers." Drake Beam Morin's Miller said other factors are helping to keep the unemployment rate down. Some of the larger layoffs, such as DaimlerChrysler's cutback, are projected to occur over a number of years and rely heavily on worker attrition. In addition, many downsized workers find themselves rehired by contracting firms providing services to their former employers. In addition, says Brown, a number of recently laid-off workers are choosing not to reenter the workforce -- at least, not right away. "Those refugees from the dot-com's and the brick-and-mortars are in no hurry to go back to work," said Brown. Attractive severance packages and stock payoffs allow them to be picky when it comes to choosing their next gig. What do they want in their next position? In addition to greater job security, Brown said, "They are holding out for better balance of work and life. People are placing the ultimate value in flexible work schedules." CareerBuilder's Lawrence agrees that workers' expectations are shifting. In CareerBuilder's Job Satisfaction Survey, released in March, prospective job-hunters ranked work/life balance as the third most important factor in choosing a job, only slightly behind salary and location, and ahead of benefits, relationship with their supervisors and career growth opportunities. "Stock options and short-term perks are out, salary and work/life balance are in," said Lawrence.
Demand Remains High Executives aren't the only workers that remain in short supply. Monster.com's Hardy said employers are still scrambling for computer programmers, engineers and database administrators, and Brown said there is a shortage of workers in the fields of health care, biopharmaceuticals and financial services. Still, the forecast for the employment environment is clouded by the teetering economy. In early March, Alan Greenspan, chairman of the Federal Reserve Board, told Congress the economic downturn "has yet to run its full course." While few believe the country slip into recession, expectations are rising that the tight economy and layoffs will continue. "From our catbird seat, where we see many companies' planning cycles, it wouldn't be surprising to see layoffs continue for another six or nine months," said Miller. Merger and acquisition activity will continue to drive layoffs. "M&A activity is up in almost every industry, including automobile, energy, utilities, health care and financial services." "This is going to be the year of the merger and acquisition," Brown said. "And, what typically follows is rightsizing."
Refining the 'science of recruiting'
"Anybody who got into the recruitment business in the past few years has some learning to do," Kitson said. "They must shift their emphasis from just sourcing -- all those things you do to recruit applicants and just get them in the door -- to screening and selection. "It's back to the science of recruiting," he said. And, Brown added, employers can expect applicants to be more cautious in selecting their next job. "Employees are scrutinizing the employer as much as we do them. We're seeing a more informed and intelligent jobseekers."
Charts:Number of workers affected by layoff announcements
Unemployment Rate
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MIKE FROST · GOLETA PUBLISHING 3004 Mt. Vernon Avenue Alexandria, Virginia, 22305 Phone: 703/346-3170 · Fax: 603/299-0351 E-mail: mfrost@goletapublishing.com AIM: mikesfrost · YIM: msfrost © 2003, Goleta Publishing, unless otherwise indicated. |