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Wed, Feb 25, 2009 15:17 EST

Sign of Economic Recovery: Businesses That Are Restless to Hire

Topic: Enterprise Management

Blog: Career Connection

Current Rating: 5 Comment: 1

Business demand for new talent will rebound before consumer and business demand for goods and services, says executive recruiter Chuck Pappalardo. He expects companies to get restless for new talent (and new business) by the end of the year. 

Everyone wants the recession to be over, but we all know our economic troubles aren't going to pass anytime soon. Federal Reserve Chairman Ben Bernanke, addressing the Senate banking committee yesterday, projected that a full economic recovery wouldn't take place for at least another 12 months. And President Obama again made the case for his $1.5 trillion economic recovery plan in his speech to Congress last night.

Despite the President's and Bernanke's warnings that an economic recovery from a crisis so deep will take time, I can't help but hope it will begin sooner than a year from now.

Last Friday, I had a conversation with Chuck Pappalardo, managing director of Trilogy Search Non+Profit, that made me a little more optimistic about an economic rebound. Pappalardo gave me something to look forward to—an early indication of recovery.

Pappalardo has experienced several economic boom-and-bust cycles during his 25 year career in the search business. As such, he gets wind of indicators that signal immanent economic recovery before the rest of us.

Pappalardo thinks we could start seeing signs of an economic recovery by the end of 2009. The indication will be companies that are once again ready to fill strategic positions. Demand for people will bounce back before consumer and business demand for goods and services, he says.

"Businesses really can't go long periods of time without new people," says Pappalardo. "A year is really stretching it. Businesses get old and stale if there aren't people turning, if there aren't new ideas."

In other words, businesses are going to get cabin fever from having hunkered down so long. They're going to get restless to start making money again. Pappalardo says these companies will realize that they need to hire people—particularly in sales, marketing and possibly also R&D—to move forward and win new customers. (The new hires in IT won't happen until the new people in sales, marketing and R&D starting making demands for technology, he says, and supply chain is likely to be the first area in IT that gets a boost.)

I'm aware that Pappalardo's theory on economic recovery sounds like a pitch for executive search services, but his ideas about hiring as a leading economic indicator are based on businesses' behavior during previous downturns:

"2003 was a very difficult year in executive search," says Pappalardo. "At the end of the first quarter and beginning of the second quarter in 2004, we saw a significant amount of search activity—a lot in sales. Businesses began to feel in 2004 like there might be some progression if they could hire, so they did, and we took on a bunch of [search] projects around sales and marketing. Then it seemed like nothing else [went on] for the rest of the year. Companies were forming a [hiring] base to move forward… 2005 was a much better year."
 
So when companies begin making and implementing hiring plans, it demonstrates their confidence that things are getting better and their desire to make money. And by making money, businesses help improve the economy. (See: In spite of my largely pro-labor, anti-corporate stances on many issues, I am a capitalist at heart.) Hence the reason Pappalardo's


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Thu, Feb 26, 2009 17:00 EST
Posted by: MEK
Rating:

Meridith,

Pro-labor? You? I'm shocked. ;)

Actually I think that Mr. Pappalardo is correct in the trending, but the pessimist in me thinks that the time-frame is still off. Given all the indicators out there I believe that 2010 is when we will begin seeing key hires begin to pick up again, followed by a more general increase in employee ranks afterwards.

I agree with the last comments you have made in that this is not going to be a typical downturn. Not only is contraction already spanning a longer period of time than anything we have seen since the period of 1980-1982, the possibility that it may surpass that is already looking very possible.

In addition, on a Global Scale, there is a much larger ripple-effect than we have generally seen in the past, and in many ways there is no such thing as a "local" economy anymore (The EU did not even exist in 1980, nor did NAFTA and a whole host of Global Economic Structures that will play into the downturn and bounce-back).

I'm really hoping I'm wrong but I think we are looking at at least another 12 months of this (5.1+ Million U.S. Jobless Claims as of Today) before we begin to see a "restart".

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