Recession Hiring: Look Out for the Pitfalls

Whether the U.S. remains technically in recession or not, January’s 9% unemployment rate certainly indicates ongoing recession-like conditions for anyone seeking a job. Given that, and how the economy has struggled to add jobs since the onslaught of the financial crisis, you might assume that it is a buyer’s market for companies that are hiring now. But, according to Wharton management professor Peter Cappelli, the high jobless rate, combined with a large pool of job seekers, presents a potential pitfall for those in the hiring process.

On the one hand, there are many qualified applicants in the job market. On the other hand, says Cappelli, “because so many people need jobs and are desperate, they are much more likely to apply for positions for which they aren’t completely suited and also for ones for which they aren’t completely interested.”

Cappelli also warns that today’s pool of applicants might not include the best of the best. After all, in a recession, highly qualified employees who are not in danger of being laid off tend to stick with their employers so that they won’t be the “new guy” at a new job, and therefore subject to layoff if the economy sours even more.

“Employees are more likely to stick around because there is greater fear of the unknown [during] downturns,” says Cappelli, who is also the director of Wharton’s Center for Human Resources. “If I moved to another company, how do I know that it isn’t in some kind of trouble that could lead to a layoff there?  And people are much less likely to move to positions that take them out of their networks, such as a move to another location, for fear that if they lose a job they won’t be able to find a new one.”

Cappelli recommends three tactics to help avoid these potential pitfalls:

  • Develop comprehensive job descriptions:  According to Cappelli, “It helps to have clear job descriptions that will scare away candidates who don’t fit.” Now is a good time to perform a “jobs inventory.” Look at each job description and ask yourself if it’s relevant. Some jobs change over time, some change after mergers and acquisitions. And some were created especially for an incumbent who has long since departed. Make each job description as accurate as possible. That way, people who are unqualified won’t even want to apply.
  • Beware of overqualified candidates: Of course it’s always smart to review a candidate’s qualifications relative to the job for which they are applying, but in grave economic times it’s especially important to keep in mind that there is always a risk to hiring overqualified candidates who have more skills or experience than the current job requires.  “It’s very attractive to think about hiring them,” says Cappelli, “and possibly underpaying for what they are truly worth. But it’s also likely that they will leave when the market picks up.” But he adds that it may make sense to hire such candidates, “if it is possible over time to redesign their job so that the requirements and the contributions can be expanded.”
  • Establish clear criteria for all jobs: And stick to it when matching candidates to criteria. How much previous experience is required? How much training? What types of certification?

Most important, don’t rush to hire a candidate who is desperate to take any job. Make sure there’s a fit. According to Cynthia Hedricks, Ph.D., chief analytics officer at SkillSurvey, Inc., a pioneer in web-based reference assessment headquartered in Wayne, Pa., a key component for employers hiring within any economy is honesty.

“You have to tell them what the job entails,” says Hedricks. “If they have to roll up their sleeves, you need to tell them that. If you feel that someone’s previous job had more prestige, paid more or was more engaging than the one for which they are now being considered, you need to be honest.  If there is no room for career advancement, “ Hedricks says, “be up front about those expectations.” Otherwise, you’ll risk losing the employee the moment a better opportunity arises for them.

This article was created under sponsorship from American Express

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