Is This The Best Time To Hire a Top Executive?
In this soft, recessionary economy, there is an increase in availability of superior executives. However, most CEO's and other senior level hiring executives tend to look at the softening economy and dipping stock prices and mandate hiring freezes across the board in their companies. Some senior executives are reacting to this economy by instituting company wide layoffs. Is this a good strategy?
This is the very best time to selectively hire top talent.
In fact, you could be missing the chance of a lifetime
by retrenching and belt-tightening.
This writer believes that this is the very best time to selectively hire top talent. In fact, you could be missing the chance of a lifetime by retrenching and belt-tightening. Of course, it is prudent to take sensible measures that will reduce unnecessary costs due to inefficiencies. Taking advantage of process improvement strategies including innovative uses of information technology can help reduce overhead. CEO's might think they are saving money by not hiring, but in fact, this is penny-wise and pound-foolish behavior. No one can really predict how long the economy will stay soft. There are predictions that indicate it could be as long as another year before we see a true recovery. Now is the time to re-think corporate strategy, restructure the business and figure out if you need a few new leaders to move your business forward By not taking advantage of hiring now, those companies that have had lay-offs are finding low morale amongst those who are left behind, picking up the slack. Managers are working harder and longer and are not seeing any significant reward at the end of the tunnel.
It has become very demotivating and stressful for employees to see some of their colleagues and friends laid off. Some companies have had several rounds of layoffs, which make employees anxious and are looking to their managers for insight and honesty about the company’s future and their job security. During this recession, CEO's and other company leaders will need to spend more time than they would normally allocate, protecting their key employees. This means reaching out to their reports and staff in many special ways, reducing anxiety through open communication. Additional recognition programs may be needed to acknowledge their hard work and loyalty and to ease the loss of wild financial expectations of the past few years. Some companies are making use of on-site industrial psychologists to offer counseling and stress reduction for employees. Since keeping up morale is so important for a company’s recovery and productivity, the best companies are using a wide variety of management tools to keep employees motivated and to be sure they offer good and solid outplacement services for those who are let go. Planning now for the future is key. It is highly likely that companies will want to re-hire some of their downsized employees once the recession has passed. How you treat those you let go will no doubt have a direct bearing on your ability to re-attract them. Also, your company’s entire reputation is at stake and what you do will be watched closely by employees, community leaders and Wall Street analysts, etc.
Now is the time to re-examine the leadership in your company and, if you are short on talent from within, then it is time to do an external search. Today, there are a good number of top executives who are suddenly on the market and available. This is a seller’s market and a great time to attract talent and pay more reasonable compensation than a year ago. Search firms have been inundated with resumes over the last several months. On-line employment sites have reported record entries of new executives currently available. Placing an ad in The Wall Street Journal will get an enormous response these days.
Due to numerous dotcom failures and the large amount of merger and acquisition activity over the last 12 months, executives have been let go. Almost every field has been affected. There are COO's, CFO's, CMO's and CTO's who have been cut. Some of these executives are the cream and are anxious to get back into the game. They realize it's a sellers market and they are becoming more realistic about their approach to a new job. Some are willing to relocate, travel of the crop more on the job and negotiate more "reasonable" compensation packages that do not leave the employer feeling violated at the end of the deal. We have already seen a softening of compensation packages in the last three to six months. Gone are the huge sign-on bonuses that were commonly used to lure an executive away from a current employer. In addition, the amounts of stock options that have been required in the past to attract someone have been reduced in offer packages.
It takes courage and vision to step up to the plate and tell Board members you plan to do some hiring during this down time. It can appear counter-intuitive. However, to not do this is to potentially put you and your company at risk when things turn around. When they turn, they may turn quickly and you could find yourself in a reactionary mode when you try and hire. Recruiting an executive can take from 3 to 6 months when times are good. And, as always, there will continue to be an imbalance in the supply and demand for certain professionals such as top information technology and software executives.
It is time to be proactive and exert positive thinking toward the future. CEO’s should seize the moment and not “take council of their fears” but do the right thing. Bringing in a select number of proven, talented executives will lift the spirit of the employees and demonstrate that you are in the game for the long-haul. You will also be fore in the driver’s eat to push ahead when business recovers and you will have that competitive edge that you so want!