There’s an evolution to an employee’s mindset when the economy goes into a state of sudden and massive job loss.
First off, when there’s massive job loss, there are two major groups of employees: Those who have lost their job through no fault of their own and those who are still employed.
This is now 5-8% of the market. Keep in mind that this number is not the unemployment rate. It’s on top of a 3.5% unemployment rate that we never get under.
People who have had their position eliminated will be looking to get back to work as soon as possible. They will be evaluating each opportunity in terms of whether it’s a good job move — not necessarily worrying if it’s a great career move. What’s a “good job move”? Let’s just say that the bar has lowered slightly from where it was just a few months ago, when the person was employed.
Whenever a candidate accepts a position, they evaluate two things: 1) “Did this position turn out to be what I thought it would be, or is it even better?” 2) Is this position better than my current situation?” Remember, they’re unemployed, so their potential employer doesn’t have to be concerned with #2.
Many of these candidates will find other companies to hire them for roles similar to the one they just left. Other candidates will use their current skills to transition to similar positions or another industry altogether.
As the economy continues to move downward, more companies downsize and fewer hire. In this scenario, you have a very high available-candidate-to-jobs ratio.
The second group, consisting of people who have not lost their jobs, is composed of three different types.
Type 1: This person was happy with their position prior to mass layoffs and is even more grateful to have a job today. They typically remain in a job until they become dissatisfied, and not being laid off during these times gives them a greater sense of loyalty. They were not looking prior and they certainly will not be looking as unemployment rises. This group composes 15-20% of the market.
Type 2: This person wasn’t necessarily looking for a new job prior to the mass layoffs. Generally, they will look when they become dissatisfied or a better opportunity presents itself. But due to the uncertainty in the market, they will put any plans of a career change on hold until they feel that the market has stabilized. Their fear is that if they leave and things continue to go bad, they may be let go by their new employer and find themselves unemployed in a bad job market. This group composes 40-50% of the market.
Type 3: This person wasn’t dissatisfied with their job and wasn’t looking. But when they do decide to look for something new, they don’t necessarily evaluate the overall employment market. Instead, they evaluate based on the opportunity to attain their career goals, taking a critical look at a specific organization and opportunity.
Also, some of those in Type 3 view an economic downturn as an occasion of tremendous opportunity. They know that the general population will hunker down during these times and, therefore, there may be less competition for new opportunities. Have you ever seen someone in a position and wondered how that person got to that role? Many times, it's a Type 3 person who was willing to take advantage of a timely opportunity when everyone else only saw risk. Or maybe they were willing to take risks that others weren’t or couldn’t. This group composes 20-30% of the market.
So, looking back at the three groups, only Type 2 is really affected by the market downturn.
But it’s with Type 2 that the market really starts to change and we see mass movement. It isn’t that when this group is ready to look that they create supply; it’s that when they start leaving their current employers, they create demand.
Now, here’s the problem for employers.
When companies downsize and fewer of them are hiring, there’s a large candidate-to-job-opening ratio. Companies that have openings tend to change their hiring process, and not necessarily for the better. They will add additional job requirements, not to mention more interviews to their hiring process, which extends its completion time. These adjustments actually make their process less competitive in normal conditions. But since there are more people looking for jobs than there are jobs available, they can get away with it.
Once an offer is made, candidates will consider two final questions before accepting:
- Did this position turn out to be what I thought it would be, or even better?
- Will I be better off if I leave my company to take this position, or am I better off staying put?
With unemployed candidates, as long as the job you offer is comparable to their last job, they will most likely accept the position. Since they’re unemployed, there’s no current position against which to evaluate.
When an organization interviews unemployed candidates and Type 3 candidates, the hiring process that’s been modified to be overly selective will not be attractive to the latter group. The longer process will come across as disorganized and won’t be strong enough to attract this level of candidate.
Also, as the market starts to improve and the Type 2s get back in again, the same overly selective process will lose many of them as well.
In an environment where there is a high volume of unemployed candidates, a very selective process may not always be a bad thing. That determination can be made by assessing if the company is hiring the people they want.
The point is this: If an organization’s process has been adjusted for the high volume of candidates who are not as critical in evaluating opportunities as they are in a more normal market, they will have to make sure that they adjust their hiring process so that it produces results in a more stable market as well.