The New Economics of Work
I have been off the topic of layoffs and recruiting for a few editions, but I'm back at it today because of one thing I heard directly from a recruiter and another that I read in the WSJ. Either one could either be the most ridiculous thing I have ever heard or just the "new normal" of the economics of work.
The conversation with the recruiter was completely illogical, so I'll start with that one. I was approached for the second time about a potential role with an established company opportunity. The first time was right after I was jettisoned from my previous employment like a crash test dummy flying through a windshield, so I was a little disoriented by the whole thing. I did two rounds of interviews, apparently didn't mumble or repeat myself enough for anyone to think I was demented, and I moved on to the "compensation requirements" round. When we got to the point of discussing salary and the number that was quoted was fair and was - as usual - presented as part of a "total comp potential" that was much higher. My bullshit meter went off at the same decibel level as a 747 taking off because I had heard this line many, many times in the past. In the end, there was an org change, a hiring freeze, Russia attacked Ukraine, they found life on Mars, yada, yada, whatever. No offer was ever made.
When I was recently contacted about the opportunity for the second time the conversation was as equally cordial as the first, and we again got to a conversation about salary. This time the number was $20k lower than the first time and the incentive comp opportunity was both less attractive and harder to achieve. Of course, I mentioned this to the recruiter who said - apparently straight-faced - that "the economy has changed so we can't pay the same salaries now."
Let's unpack this a bit. First, unless I misunderstood something, this is the same job I interviewed for six months ago. Second, my credentials have not changed. (I would actually argue that they have been greatly enhanced by authoring this newsletter). Finally, they called me, I didn't call them! How in god's name would they think they had leverage to offer a lesser salary? That is the most ridiculous thing I have heard since...How does it go?..."Artificial sweeteners were safe, WMDs were in Iraq, and Anna Nicole married for love."
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The second harbinger of the "new economics" was the WSJ article that flat out reported that companies hire more people than they need in good times because the cost of recruiting and hiring is so high. Wait, what? It costs less to hire people when times are good than when times are bad, is that right? Or is it that the cost of laying people off is cheaper than hiring, so better safe than sorry on staffing levels? Last time I drew my little supply and demand curves in grad school costs went down when supply went up, not the other way around.
I'm sure you're wondering what all this means and so am I. I think it means that traditional supply and demand analysis doesn't work anymore when it comes to compensation. It also means that some of us are apparently destined for a "Benjamin Button" salary scale: the longer we live the lower the salary will get until we end up at in a reflective jacket parking cars at the high school football game for minimum wage. That's not so bad, at least I'll get to watch the game...
I believe what the recruiter showed you was a series of red flags...with this last one culminating in a "save yourself" in flashing neon lights. The economics of labor have not changed - but attitudes toward it have and employers are struggling to figure out how to approach it. I know the WSJ you reference and I believe that on a macro level the concepts the article referenced are widely true. Mainly for the supply/demand curve you state - they are trying to reduce risk of having to continually hire as wages inflate, as they try to get ahead of their backlog and experience lost revenue due to production limitations, or they get in the backlog and suddenly the cost of hiring is compounded by rushed decisionmaking. It then makes the limited cost of layoffs look reasonable. In short, employers are treating labor as they have always treated labor - as an expendable resource. Unfortunately, tying into the first point - those same resources are now fighting against being treated as expendable and employers are not catching up yet.
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1 年Wow!
So, for what it's worth, here are my thoughts: That's one of the dumbest things I've ever heard a recruiter say. Even if it was true and the hiring managers were so narrow minded that they thought they could get away with this, a good recruiter would have counseled them as to why this was a bad idea, particularly with a candidate they already saw and apparently really liked. The fact that the recruiter actually repeated it tells me the recruiter is an order taker and the company is not a place you want to go. (I bet you they are someone's best places to work list!!) Second, I don't know where the WSJ gets its information (Rupert Murdoch? Fox News?), but that's not why companies hire more people than they need during good times. It's almost always because a company can't accurately project what their needs will be in the future OR they are trying to keep talent from their competitors OR both. I've never worked in an organization were the discussion was, "Let's hire more now because the cost of recruiting and hiring is so high when times are bad." How does that make sense? Sounds made up to me. #thatisall