Recruiting Recruiters as a Leading Economic Indicator

The following commentary posted on systematicHR.com this morning.  Also take a look at the comment rebuttal by Andrew from Resourcing Strategies.

There was some serious conversation at the Talent UnConference (TalUnCon) hosted by Electronic Arts on January 25.  Specifically, the Talent Planning sessions focused on understanding economic indicators as it applied to workforce planning.  However, a very interesting though came up when we turned the conversation around and discussed recruiting as an economic indicator instead.  This is an almost obvious indicator to both future workforce needs and the normal business cycle. ¹

After a serious decline in 2000 and 2001, beginning in 2002 there was a marked increase in the recruiting of recruiters.  Clearly, when the recruiting of recruiters increases, there is an expectation that organizations are starting to build their pipelines.  Even when other economic indicators might be saying that the economy is still stagnating or is in negative growth (recession), the odd are that projected increases in staffing by organizations are a positive indicator.  Since Dave Lefkow (of the Electronic Recruiting Exchange) was there, it was fairly easy to see the ties in increases in job ads on ERE’s recruiter job boards and the positive trending of the business cycle at that time.

Additionally, the types of recruiters being recruited also gives us some insight into the trends appearing in the industry.  Learning what requisitions are out there (for recruiters) tells you what industries, regions, and businesses are prepping for expansion well before that expansion happens.  For example, if the mortgage industry starts hiring lots of recruiters again in 2008, you can bet that they are projecting favorable housing rates and markets 6 months down the line.  If technical recruiters are all sitting around with nothing to do, perhaps the tech sector is due for a rough patch.

Later in the event, David Manaster was kind enough to share some statistics from ERE’s job board volumes.  While the numbers were stripped out, there seemed to be a significant decrease in the volume of recruiters being recruited in the last quarter of 2006.  I didn’t mention this during the session while David had the graph up on the screen, but I’m not about to call a downward trend in the economy just because posting for recruiters on ERE were down last quarter.  It appeared to me that there was a quarterly cycle – possibly where postings were generated early in a quarter for the entire quarter.  In other words, there were 4 spikes per year.  The graph also showed that the last trough of each year was the most substantial.  This is mysterious to me since you would think that recruiters are most desired for the January hiring rush, but perhaps recruiters need more time to ramp up, and thus recruiters are needed in Q3 and not Q4.  At any rate, serious trough or not, I didn’t see a downward trend from the quick glance.

Lastly, talking about recruiting recruiters, sorry about the redundant redundancy in this post.

Comments

[Gerry Crispin]

With respect to 2006 Q1-4 numbers of job postings, it is traditionally same month comparisons year over year that have a correlation with the economy and not month to month or quarter to quarter. 50 years of tracking Conference board employment indicators (until the mid-90's) based on jobs "posted" to newspapers supported this notion.

[Colin Kingsbury]

Whether the ERE numbers are a leading indicator or not, there will eventually be a downturn and therein lies a discussion that will need to happen. My sense is that the "war for talent" idea was just starting to sink in back in 2000, especially in IT, but got essentially put off again until 2006 (some could say 2008) by the 2001-3 recession, which happened to be a mild one. I'm optimistic but not yet entirely convinced that the baseline has shifted far enough so that a similar disruption would not make us all sound like stock analysts in 1999.