The Unfolding Recession and Your Career-Inconvenient Truths

Some Straight Talk About The Unfolding Recession

We are beginning to see concrete data that point to the beginning of a recession that we at Right Recruiting predicted 6 months ago. This post is an updated article that we posted at that time explaining what a recession could mean to you, your career and your life. One of the advantages of getting older (well maybe the only advantage) is the ability to see today’s events and compare them to yesterday’s events. Those who remember the last bout of serious inflation in the 1970’s also remember how inflation was tamed. Interest rates rose (my first mortgage was at 13% and I was glad to have it) and the Fed realized that the only way to beat inflation was to create a recession.?Said more bluntly, the only way to beat inflation was to put people out of work. That was 1980-1982 and it worked but at great cost. About a month ago, the Chairman of the Fed admitted that his goal was to create a recession to "bring the labor market into line". We've also recently seen a series of major companies announce layoffs and hiring freezes - FedEx being the latest. Rightsizing is becoming a popular term again.

Those who entered the workforce over the last 12 years have no experience with a true recession. The COVID experience was an exception and was not a classical recession. There was so much government support put into the system that for many it was a long but uncomfortable holiday. The COVID experience will not be comparable to the upcoming recession. For some, what is coming will be devastating.

It is normal to be complacent about something you’ve never experienced but some warning may be helpful. The goal is not to scare but to help educate. So here goes.

Usually in a recession there are certain groups affected more than others. Companies are forced to take steps to survive and that always leads to specific existential decisions that affect employees. At some point there is often a C-level change in executive personnel from growth to cost cutting. Tip- if your new CEO or CFO has the nickname “Chainsaw” it does not bode well. New execs are hired specifically to cut costs. In good times employees are assets. In bad times they are costs. There are certain people and groups that are most vulnerable. Here is a list of some;

1)???Any Director reporting to a VP who is under 55 years of age. Two big salaries and one will be cut. If the VP is over 60, expect an early retirement option for the VP. If not, the Director goes. Very few VP’s lay themselves off.

2)???In any department with 5 people, at least one will be laid off. It won’t necessarily be the last hire, as is sometimes assumed. It’s usually the weakest or most disliked person. If it’s a 10 person department, at least 3 will be let go.

3)???Many of the fancy new functions that have been created over the recent boom years will become “unnecessary”. Talent Acquisition departments will be cut in half and many will be eliminated altogether. The parts of HR devoted to culture will be de-emphasized. Culture will unimportant when employees are thankful for a paycheck. HR will revert to its historical role - finding ways to quietly save money in areas like payroll, benefits, etc. Morale will be less important than now because quitting a paying job will be unthinkable for most people. HR staffs will shrink dramatically

4)???Job hoppers will be on the block. People who have had 4 jobs in 5 years won’t have the internal political capital to survive a series of layoffs. Plus, if each job change has increased your salary you will be overpaid. Laying you off may save two other people from layoffs.

5)???Anyone who took a counter-offer in the last two years will be cut. Your employer wanted to pay you X. You put them over a barrel to pay you X+1. You are another easy decision.

6)???Remote workers are the easiest to terminate. Your boss just has to click enter and access is gone. Remote people have no allies among those who are in the office. There will also be a sustained effort to get everyone back into the office anyway.

This may sound harsh but it is reality. Any business in an existential crisis is required to make uncomfortable decisions to survive. I’ve been in recruiting through the 1980-1982 recession, 1991-1992, 2001-2003, 2008-2010 and the pattern has always been the same.

I have one more piece of bad news and then some advice. The bad news is that if your company is laying off, so will most other companies. For those used to a world in which your next job appears magically in a day because of the tight market, that won’t happen this time. You will have to compete with others who are highly motivated and it’s not unusual to be out of work 3-6 months. ?Break out that interview suit and tie.

Now here is the advice:

1)???Be good at what you do. Companies don’t cut true talent, with some exceptions. Being great at a suddenly unimportant business function is not going to keep you in your job. For example, a company going through layoffs does not need a good talent acquisition person. Which leads us to the point 2.

2)???Do something important to your employer’s survival. Be good at sales. Be good at running a cost efficient production line or marketing campaign. Every company and industry has specific core functions. Make that your function.

3)???Have savings. That’s not a joke.

4)???Work for a well run company. Focus on company and not industry. If your current employer is not doing well now, get out ASAP. ?And when I say "doing well" I mean making a profit, not just growing sales. A recession won’t help a marginally profitable company. It will make them unprofitable. Of course there are cyclical industries but a well run company in a cyclical industry knows how to ride things out. A poorly run company, especially one run by people who have never experienced a downturn, will panic.

5)???Don’t get bitter. If the worst happens to you remember one thing, every recession ends. You will get back to work and your career will continue. I promise. As we end the recession in 6 months to a year I will post an article about the best way to get your career back on track. There are do's and don'ts to career catch-up.

If this is all depressing, I apologize. The intent is to give you a historical perspective to help you through potentially tough times. Better to be forewarned than surprised by the unknown.