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Are Recruiting Layoffs a Sign of an Economic Downturn?

Oct 26

Have you been watching the recruiting news lately?

My good friend Stacy Zapar (who runs The Talent Agency focused on recruiting recruiters!) and I send notes back and forth on stuff we hear in the industry. She’s in California, I’m in Michigan, we swap all the rumors and verified stuff we are hearing to get a better understanding of what’s going on. In the past few weeks – it’s been a bloodbath on the corporate recruiting front!

Snap, Blue Apron, CareerBuilder, Facebook, etc. and those are just the ones that have gone public!

So, the big question is “Are layoffs of recruiters a ‘canary in the coal mine’ indicator of an economic downturn?”

My first reaction is “Oh, hell yes!” Recruiter layoffs happen when you know you won’t be hiring! So, it has to be some kind of indicator about your business. The broader question would be are those layoffs an indicator of overall economic health across the board? I’m not quite as sure of.

There are a number of factors at play here:

  1. Too many organizations across too many geographic areas have announced recruiter layoffs for this too coincidental. So, something is happening. So…
  2. Could it be just another tech bubble bursting, or is it wider than that?
  3. Is this just a normal 4th quarter correction after TA Leaders see their budgets for next year?
  4. Has TA technology, A.I., and Intelligent Automation, finally started making some impact on how we staff our recruiting teams?
  5. Did TA Leaders over hire over the past few years because we came out of the great recession with almost no TA staff, went right-ditch-left-ditch in our correction, and now we are correcting back to the proper staffing levels are teams should be?

I think it’s all of these things.

I don’t see any economist calling for a major downturn. I do see economist calling for things to slow down, but all of that has been expected for a while. Since the Great Recession, almost ten years ago, we’ve been on a cycle of really good growth, almost historic in nature. What we know is that can’t continue. So, there is some slow down happening, and it will hit certain segments harder than others, like every downturn.

I do think TA Tech automation, A.I., etc. has to have an impact on TA Team size moving forward. As TA Leaders, much of the ROI built into your TA Tech purchase is headcount. It’s the only way it works out. Either you’ll lose some of your team, or you’ll be in a position not to add team members, that’s how ROI works!

So, what do you think Recruiters? Are you feeling anything? Hit me in the comments!

2 Comment to “Are Recruiting Layoffs a Sign of an Economic Downturn?”

  1. Feeling nothing here but I would speculate that #4 is the main reason for the spike. Automation can cause companies to let go of staff too soon and then have to hire again once things level off.

    Mike Townsend
    Oct 26, 2017
  2. I strongly believe that #4 is the biggest driver of the current situation. I have been in the industry for 10 years now and came in right before the big bust of 2008. I have seen lots of ups and downs since then. Nothing compares to the multitude of changes in technology over the past couple of years in TA and recruiting that are fundamentally changing the game.

    Joe Arnold
    Oct 26, 2017

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