Better Hiring Today

Here in Chicago, where unemployment in June topped 11%, the market for full-time professional positions is very, very tight. Large employers here are very hesitant to increase permanent headcount, but are finding that their lean workforces aren’t keeping up with demand.

The solution? Hiring contractors.

Last week, I met with a large consumer products company to discuss their workforce plan for the next 12 months. In that meeting, their stated workforce strategy was to keep full-time hiring on hold, and to pursue hiring contractors for all roles, with the aim to convert them to full time employees within the next 6 months. That’s a significant change from their previous strategy, and, since most other large firms with whom I speak seem to be following a similar path, the implications for the workforce are several.

First, contract-based work “moves faster.” Instead of having to wait for cumbersome internal HR processes to produce a hireable employee, contract firms blitz the company with people who can literally begin work tomorrow. When the demand shift to contract-based workers, hiring cycles accelerate, which bodes well for reducing unemployment rolls.

Second, most contract assignments carry with them zero benefits like health insurance, vacation time, or a 401(k) plan. While getting back to work is good, the shift to a contract-based workforce doesn’t much help our national problems of too-little retirement savings and high levels of uninsured workers.

Finally, any increase in demand for contractors will drive employment in the recruitment industry. Contractors aren’t hired by HR representatives, they’re hired by professional recruiters who work for staffing companies. Along with this recently observed uptick in contractor demand, I’m also seeing requests for full-time recruiters climbing steadily at the large staffing shops.

Staffing industry pros know that an increase in demand for contractors means that full-time employment will pick up in the next 4-6 months. When that happens, we’ll see the unemployment numbers (a lagging indicator) begin to decline by mid-2010.

Is your company hiring contractors in lieu of full time employees? Sound off in the comments section.

This recession is longer, deeper, and more painful than many business managers were prepared to handle. When things turn around – and they will – the expectations for the relationship between employer and employee will be dramatically different. A few key statistics highlight the coming shifts in the US workforce.

Here’s what you need to know:

Fact: 40% if the US workforce will be made up of independent contractors or contract-based labor by 2019, up from 26% today. (source: EPIC-MRA; Kelly Services)

Why: Older workers have seen their retirement accounts decimated by losses in the equities markets over the past 24 months, and they’ll need to work more years to make that magic nest egg number. Corporations haven’t done a very good job with succession planning, and they’ve been running so lean these past 2 years that middle management bench strength is nowhere near adequate. Additionally, many companies are shifting to a “get the labor that we need, when we need it” mentality, which is another way to say, “we’ll hire contractors on a per-project basis.”

What it Means: Ten years ago, it was unheard of to seriously look at a resume of a potential hire that had more than 3 positions in a five year period. Ten years from now, you’ll be seeing more and more candidates who have experience across multiple companies while working as a contractor. You won’t be able to dismiss candidates out of hand just because they appear to have short job stints. In the future, compressed job stints will be almost half of our nation’s employment.

Fact: In 2010, 28% of the US workforce will telecommute either part time or full time, up from 12% just ten years ago. (source: Gartner Dataquest)

Why: Companies are getting wise to the fact that telecommuting saves a ton of money…as much as 30% less per employee once you factor in savings with office rent, technology infrastructure, and other administrative overhead. And as corporate globalization continues to trend higher, project teams will become accustomed to having multiple disparate members located not just in multiple locations, but in multiple time zones.

What it Means: The notion of waking up in the morning and spending two hours driving to and from a desk – when you could do the same job, more productively, from a desk in your home – is going to make less and less sense to knowledge working in the economy of tomorrow. And it should make less and less sense to employers, as well, when they realize that employees typically replace those 2 hours of commuting time with 1.5 hours of productive work time, without working less hours overall.

Fact: 80% of employees want flexibility in their work arrangement provided it doesn’t harm their careers. (source: Georgetown University Law Center)

Why: As Gen X (those born 1965 – 1978) takes the management reigns from the Boomer generation, they bring with them a less structured view of the workplace. As managers, they’re less concerned with having people show up to a central work location every day. As employees, they’re accustomed to more flexibility in their employment arrangements. Attitudes about what constitutes “an office job” are radically different from the previous generation. Factor in Gen Y (born 1979-2000) and their propensity for “me first” work-life balance, and you’ve got some real change on your hands.

What it Means: Managers and companies will be required to rethink their view of employment, with the biggest change being the belief that people are after the top dollar possible. To the contrary, the research has shown that Gen X and Gen Y workers place a higher value on work flexibility than they do on salary or bonus. So, before you run off and throw money at that next crop of top-performing college seniors, consider that sabbaticals, time off for charitable pursuits, and generous flex time policies are all more effective – and cheaper – when the goal is attracting and retaining talent.

Few would argue that the US will emerge from this economic downturn without permanent changes to the way corporations plan for and manage employees. Make sure you’re on the front end of these huge changes in the way we work. You’ll be ahead of the game.

Leading online job board Careerbuilder.com mailed out their Q2 Employment Outlook this week, and although it’s about a month late (it’s mid-May, after all) there are some good nuggests of data that I’d like to share with you.
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