How will recruitment be affected by the credit crunch?

I was chatting to a friend of mine the other day and he said to me: "You should be worried: recruitment's going to stop dead during the recession so no-one is going to need your software..."

Clearly, my chum is wrong with this rather sweeping statement because even during a recession companies need to hire people. Yes, there are a number of large companies going to the wall, Yes, there are high profile retailers either feeling pain, or going bust – and Yes, even banks are having major dramas. However, none of this stops the need to recruit new people.

Think for a moment about a 25,000 employee company, they hit the headlines by saying they are making 10% of their workforce redundant – that's 2,500 people - a lot of people. Firstly, only in rare cases are these mass redundancies undertaken immediately, they are normally carried out over two or three years – in fact I would say that a fair number of these statements exist only to keep analysts happy. Secondly, every company still has its level of natural wastage or job turnover – these people will need to be replaced.

Another element to all of this is that just because your company is not recruiting, or is recruiting less, that doesn't mean to say that people aren't applying for jobs at your company. In fact it would be fair to say that because there are less jobs around, the number of applicants for each job will be much higher. Either way, you are going to need a recruitment system.

Clearly, the recruitment industry will be hit, this is inevitable. The kind of recruitment services that are more likely to be cut back are:

• Offline advertising – maybe clients will use one less job advert or maybe make the ad smaller
• Online advertising – simply post on three job boards, not four.
• Agency rates – get them down from 20% to 17.5%. (or 30% to 25%!!)
• I've heard that some companies are even closing down their graduate schemes (short sighted in my opinion)

Finally, we are entering a phase of having a candidate-rich market. This is a great opportunity for companies to make their direct recruitment channels easier for candidates to find and use. I'm still staggered by companies who simply don't even list their own jobs on their own website.

- Mike

Comments

[Kelly Yehling]

I agree. Great article, Mike. Now is the time for recruitment agencies (and all businesses) to evaluate their processes and technology and figure out how to use their resources more efficiently.

[Recruitment Software]

You've put some very good arguments regarding the effects of economic slowdown on recruitment, but I'm sure there are people who will disagree with some points.

[recruitment software]

You should tell your friend “Are you out of your mind?” I totally agree with you in saying that companies still need to hire people even during this dreadful economic situation we are in. I honestly think that the recession is the best way for companies to invest on recruitment software because it will save them time and money spent on the staffing process. What’s more, they will only need a couple of people to handle the system and that will prove to be cost effective, right? Not only is recruitment software cost effective, but it will also open the doors of opportunity of finding the best talents that can be an asset for the company.

[Bullhorn Recruitment Software]

With the recession, more students were staying in school to receive higher degrees when they couldn't find immediate placement after uni. For that reason, it'd have been foolish to cut down on graduate schemes - companies can bring more experience in to their program this way, recruiting after post-grad