Guest comment: To hire or not to hire - that is the question for 2008!
Recruitment decisions aren't quite so straightforward in the wake of the credit crisis, says Andrew Pullman.
I am sure that when depositors were queuing up outside Northern Rock recently they didn't worry too much about financial services recruitment in the New Year.
However, many thousands are now facing the prospect of a rocky period ahead if they are looking for a new job in the City in 2008. How are banks and financial institutions making recruitment decisions in the face of so much uncertainty?
The first major question is whether firms can actually afford to hire anyone. Given recent losses, the emphasis is on cost cutting - and that means people, who account for between 60% and 70% of the cost base. Hiring may be limited to people with a proven track record and specialism in a particular field. Often at year-end people are let go in order to free up space for hiring - fire 20 and hire back 10 better ones! However, many firms are now being forced to cut their overall headcount.
The second major issue is those redundancies themselves. When a company has cut staff, employment legislation dictates that if a role is truly redundant it cannot hire someone back into that role. This can limit the number of new roles available.
On top of this, the hiring process is liable to become more convoluted. Each organization is different - parent firms in Europe or the US often demand that most hiring approvals have to go back to head office at times like this. This will cause delay.
In times of uncertainty individuals will be looking for employment guarantees, particularly about bonuses ... conversely, employers will want to limit their guaranteed liabilities; this friction adds to a further reduction of opportunities.
Overall, most firms will be wary of rushing into recruitment at the moment. Many are still not sure how exposed their business is to the changing market dynamics; there is uncertainty about recession in the UK, and the US. Costs for each person hired are high when you take into account salary, national insurance, desk space, computers, life insurance, pension etc.
My advice is, like the Northern Rock customer, get out your folded chair with thermos of coffee and wait until opening time at the recruitment office. It will happen, just don't count upon it happening too soon.
Andrew Pullman is managing director of City HR consultancy People Risk Solutions, and a former head of capital markets human resources at a European investment bank.
