Recruiting in a down-turn: A helpful guide

At the top of the market when there were more opportunities than good candidates, the recruitment process was quick and candidates had a strong negotiating position when it came to discussing salary levels or title. The last eighteen months have seen a definite shift in the balance of power between employer and potential employee. With a drop in the number of opportunities and an increase in the number and calibre of suitable candidates, employers can be forgiven for being more selective. This is especially true since employers have found it increasingly difficult to obtain sign off for increased headcount and have found themselves having to produce and justify a full business case for even the most junior roles, writes Ioulia Fenton.

The following few paragraphs are designed to provide a useful commentary on the current situation and the four main recurring themes of the issues faced by our clients. It should hopefully act as a useful guide to help you – the employer – get the most out of your recruitment process.

Difficulties increasing headcount

Although things are picking up in some sectors, it remains challenging to obtain headcount approval even for replacement roles, let alone trying to grow a team. This is especially true if there are redundancies being made elsewhere in the organisation. One of the ways employers are attempting to overcome this is to allow the rest of the team to "up-skill" by involving in activity above their grading.

Although this is generally good for their CVs, the additional responsibility does not tend to come with additional pay and usually means longer hours and more pressure on the team. This can have a negative effect on the office environment and general satisfaction of the employees. Given that we know most people value work-life-balance above all else, this can mean a real brain drain from your organisation once the market picks up as employees look to regain their previous satisfaction levels and can secure higher pay for their enhanced skills.

One way to get around both these problems is to entertain the idea of contract and temporary workers. The calibre of immediately available candidates who would consider temporary opportunities has increased over the last twelve months. This means you can secure talented individuals with relevant experience who can take pressure off the rest of the team. At the same time, temporary employees do not tend to add to the company headcount, so the sign off process should be easier. Finally, candidates are realistic that, on an interim basis, they need to be flexible around salary expectations so you are likely to be able to secure more experienced professionals at lower cost to the bottom line. It is worth noting here that this would not be advisable for permanent employees for the reasons outlined in the next section.

Salary expectations of candidates

There has been a marked increase in the number of candidates available for roles, many of whom are willing to take a significant reduction in salary in order to secure employment. Being able to secure talent at a significantly lower cost can be tempting for any employer and can be seen as getting value for money. This is indeed the case if you are looking for someone to carry out an interim project or cover for maternity, but when it comes to permanent hires it is important to remunerate at market rate. The reason is simply that you will risk losing that person as soon as another opportunity materialises which offers salary and responsibility levels more closely matched with the individual’s level of experience. An employee may feel the employer is taking advantage of them and this may affect motivation.

Recruiting individuals is an investment in time and money and replacing a hire which you lose only after a few months is a costly endeavour. It is therefore worth ensuring that your new employee is truly happy with the offer at hand and that remuneration is commensurate with the market (to request our latest Tax Salary Survey).

This is not to say that you should completely discount professionals who earn significantly more than the role you offer. This is most true when recruiting for senior level appointments in-house. There are many very experienced highly skilled Directors and Partners in the profession who are biding their time for a ‘Head of’ opportunity that will allow them to sink their teeth into a great role in-house for the rest of their career. They are often more willing to be flexible on salary as they are not driven by financial considerations but the type of the work they do. 

Candidates whose roles have been made redundant

When faced with individuals who have been affected by redundancy, it can be tempting to be negative and presume that they have been chosen for redundancy based on their performance. It is important to remember that, as it is regulated by law, it is generally true that it is not the individual being made redundant, but the role they have to perform in an organisation. However, if you still find it difficult to overcome that perception, it is worth taking stock of the whole situation.

Secondly, in the current down-turn most organisations have gone through at least two redundancy rounds, sometimes even more. This means that where as initial cuts may have been performance-related, latter redundancies may be entirely due to board level decisions to unilaterally cut costs, thus forcing them to make redundancies even among the strongest individuals.

It is usually worth undertaking some research and finding out the reputation of the team where the candidate you are considering has been made redundant from. Even the strongest teams in their field have been experiencing cut-backs and therefore have forced some of the best people out to the market.

In short, whether or not a person has been made redundant should not influence your decision on whether to call someone to interview as you risk missing out on great talent. In addition, they will be available to start immediately, thus taking the pressure off you and your team.

Recruiting for 2010

Increasingly, the message from our clients is that they are focussing on how to be positioned for an anticipated economic recovery in 2010. Having reduced headcount through redundancies, blanket restrictions on hiring or the implementation of flexible working conditions as a result of the recession, many businesses are tentatively formulating their strategies for a growth.

Identifying the appropriate hiring needs and getting the right individuals into these roles is incredibly important.  In the current climate, employment opportunities are fewer and the recruitment process becomes longer due to a combination of factors. Firstly, the uncertainty in the market hampers employers' decision making. Each role has a higher level of due diligence and sign off and candidates have to satisfy far more stringent assessment. In addition, there are far more candidates to consider which can lead to far higher numbers being interviewed.

Finally, you have to bear in mind that most candidates who are in employment at the moment will be on one to three months' notice (up to six months' in more senior positions). This means that, to recruit in early 2010, an offer made by a potential employer must be accepted by the latest in November or December this year.

We would advise that to secure talent for start dates in January to February 2010 you need to allow around three months for the recruitment process from start to finish. The process is likely to be as follows once a need for additional headcount has been identified (this can be a conservative estimate):

Week 2 – 4:                Approval process/ sign off on the role from the business

Week 4 – 6:                Advertising, search and CV submissions from your recruitment partner  

Week 7 – 8:                First round interviews

Week 8 – 9:                Second round interviews

Week 9 – 10:              Third round interviews

Week 10 – 12:            Offer/ counter-offer process and acceptance of role

For further information and impartial advice in the current economy and tax jobs, please contact Pure's Taxation team on 020 7429 4400.