The latest jobs report carries important implications for the recruiting industry.
By Michael Beygelman
The apparently weakening economy sounded another alarm last month. The job market disappointed people’s expectations in May by gaining only 54,000 jobs in the month, which is a significant slowdown from the 232,000 jobs that the economy added in April, as reported by the Bureau of Labor Statistics (BLS).
The media had much to criticize after the release of the May BLS numbers, which disappointed economists who were expecting a gain of 170,000 jobs, according to various surveys. Most economists believe that the economy needs to add about 150,000 jobs per month just to keep pace with population growth—new employable people entering the job market.
Overall, the United States unemployment rate worsened to 9.1 percent from 9.0 percent. This was problematic considering economists had predicted that the unemployment rate could improve to as much as 8.9 percent. Overall, the number of unemployed rose by 167,000 to 13.9 million, the highest level so far this year.
In April, retailers had one of their best hiring months in years but not so in May, cutting nearly 9,000 jobs. Overall, nearly half of the industries that make up the Labor Department statistics cut jobs during May, the steepest month of job losses in the past eight months.
So what does the changing jobs picture suggest? For one, it could signal a slowdown in the U.S. recruitment industry. Some evidence indicates the capital markets have already taken this into account. The table above (courtesy of Yahoo! Finance) shows recent stock price performance of some of the leading recruitment firms. Despite some peaks, the stock prices for the sample firms are mostly down—some by 5 percent, others by 15 percent or more.
Having traveled more than 40,000 miles around the world in the last eight weeks, I believe that large multinational companies are already shifting their work and the underlying recruitment focus abroad. This could also signal a much-anticipated explosion of global RPO opportunities.
Appetite for RPO services in the Asia-Pacific region (APAC) and EMEA (Europe, Middle East, Africa) clearly seems to be growing, but the interest these regions are experiencing is different from that in the U.S. and the United Kingdom. A number of large multinationals have only anemic HR support in APAC to begin with, and these organizations are being asked to implement new technologies that they don’t understand and recruit candidates who might be in scarce supply in their region. The head office elsewhere tells them that they must roll out a new applicant tracking system (ATS) in their region, and problems spike quickly.
Emerging markets understand recruitment technologies like an ATS and outsourcing concepts like RPO, but often only superficially. The unpopular truth is that the U.S. and the U.K. have done a brilliant job exporting the idea of recruitment technology and RPO to EMEA and APAC—thousands of PowerPoint presentations are available for download—but we’ve failed to export the intellectual capital required to make these things work. As one of my esteemed colleagues said, “We need less Power and more Point.”
Given the statistics on adoption of mobile technologies, and the absolute need for skilled workers in emerging markets, recruitment technologies and RPO should explode in APAC and EMEA over the coming years. But this will absolutely not work if solutions sold in the U.S. and the U.K. are forced into APAC and EMEA without proper transfer of intellectual capital.
Recent BLS data suggests that the U.S. job market is nowhere near a recovery pace—that it is not even keeping pace with new job market entrants—while growth in places like Germany, India, and China is very real. Multinational organizations that embrace this recruitment shift early in the cycle, and decide to partner with providers that are committed to transfer the necessary intellectual capital to high growth areas, will ultimately develop a formidable competitive advantage in finding, attracting, and retaining top talent.
Michael Beygelman is president, RPO Solutions at Adecco Group North America, the world’s largest workforce solutions provider. He can be reached at email@example.com