Greg Garrison is the president of vrecruting – Recruiting solutions from vcfo. He has over 15 years experience in the recruiting and staffing industry, and is regularly quoted nationally as a thought-leader in employment trends. He can be reached at ggarrison (at) vcfo or 512-450-6569.
Is your startup company hiring or firing? Chances are you’re doing a little of both. Neither is easy and both events impact you, the individual, your team, your company and even your customers and stakeholders.
Layoffs
We are all trying to navigate through these difficult times. Chances are you’re contemplating cutting employees, rather than hiring new ones. During economic downturns there is a great propensity to let people go in an effort to contain costs — the greater the economic downturn impacts your company, the greater the tendency to cut workers.
According to a recent national study by the Institute for Corporate Productivity:
- 58% of the companies polled have had a reduction in force within the last year
- 39% foresee one coming within the next six months
- Of those companies that reported a reduction in the last year, half (48%) expect another cut in the next six months
Layoffs may be prudent and necessary for your company to survive and continue to stay afloat. Cutting headcount will certainly reduce your company’s expenditures, but it may also have severe consequences to the overall business, capabilities and goals.
In the last recession, during and after the dot com bust, we saw many Austin startup companies cut workers hastily. They then found it quite challenging, expensive and times consuming to reconstruct their workforces to position the company to best compete again once the market started to recover and had settled.
Before making headcount decisions it’s a good rule of thumb to “measure twice and cut once.” Carefully consider the following:
- Who will pick up the work load of the employees being let go?
- How might the void impact your company?
- How much have you invested in these employees?
- How much will you spend in severance?
- How difficult will it be to find their skills again?
- When might they be needed once again?
- What would the recruiting costs be?
- What would the training costs be?
Hiring
Even as companies go through a reduction in force, it’s common for them to continue to recruit and hire. Key skills are always needed – even in economic downturns. In October there were 3.3 million job openings nationwide and during the month 4.3 million people were hired.
In the coming months economic conditions may continue to deteriorate and unemployment rates will most likely increase. It’s important to understand that the unemployment rate itself is not necessarily an adequate barometer for Austin’s own talent pool. Competition for top talent here in Austin won’t let up much simply because the unemployment rate is high. Top engineering, sales/marketing and accounting/finance talent will continue to be in demand and somewhat scarce in Austin.
During these current economic times it’s important to leave your recruiting engine running. There are two challenges you’ll face when trying to recruit during a downturn.
- Candidates with coveted skills hunker down and remain hidden and scarce. It takes a greater recruiting effort to find candidates who are gainfully employed and get them to consider and accept your positions.
- Sifting through “noise” – The amount of unqualified candidates and displaced workers who apply to your open positions spikes exponentially. I posted a Software Engineer job recently and we received over 200 resumes. Only 8 of the respondents had degrees and most were from unrelated industries. It takes a significant amount of time and energy to appropriately sort through and respond to applicants.
Whether your company is hiring, firing or both, it’s important to remember your startup’s capabilities, sustainability and livelihood are all directly tied to your ability to recruit, develop, deploy and motivate top workers. People are you startup’s most coveted asset! Hiring and/or firing takes careful consideration.
