The Hemline Index(and what it says about the economy)

When Fall Fashion Week rolled out in New York in February, many designers were reversing course on their hem lengths—and not always in the same direction. While there were not many mini-skirts, there also were fewer of the full-length gowns than were seen last season. Some designers—most notably Alexander Wang—chose to go with several seemingly low hemlines, but then introduced soaring slits and gaps causing them to almost defy hemline definition.
The hemline index as calculated by Business Inside—yes it is a real index—rose to 44.38 from 35.04 last season. In a time when economic indicators are as plentiful as they are mixed, it may be one of the most apt indicators of the time. Lore says when the economy is good, hemlines rise and when soured, the hemlines fall. While hemlines seem to be going in many directions at once this season, the average is rising—much like the U.S. economy.
While the economy gains speed, workforce managers are feeling the pinch of a tightening talent market. A recent Corporate Executive Board study showed the average number of applications received per position fell to 118 from 187 one year earlier. Of those applications, respondents to the study said just one-third met the basic requirements for the position they were applying for.
Late last year, a survey of C-Level executives around the world by Lloyd’s of London ranked talent and skills shortages as the second-largest risk to their business. In 2009, talent worries were ranked as just the 22nd largest concern.
“The scales of the labor market have clearly shifted over the last six-to-twelve months, and now we are seeing that accelerating in the professional ranks,” says Rob Romaine, president of MRINetwork. “Top talent is no longer looking at a stable job and saying, ‘I’m happy to at least have that.’ Rather, they are opening up when recruiters call and are starting to explore what will really make them happy—financially or otherwise.”
Since early in 2010, the number of people who voluntarily left a position each month has been steadily rising to nearly 2 million, up more than 30 percent from its lows. “Having employees more interested in pursuing new opportunities is a double-edged sword for organizations,” says Romaine. “It’s going to be hard not to lose some top performers, as they will likely have the most opportunities presented to them. But while the field of top performers who are actively applying for positions is still very low, the numbers who are open to recruiting calls now is above average.”
During the years of tough economic times, the fear of the unknown was enough to keep many top performers in place. Although recent positive employment and economic news has not removed the possibility of another slowdown, it has given the workforce enough confidence to accept the risk associated with changing jobs.
“The economy will continue to be in a fragile place for much of the near future, with profit margins closely guarded and customers highly cost-conscious. Losing key staff or having continuity-of-services issues in this stage of a recovery will be damaging,” notes Romaine. “On the other hand, the worst possible outcome of bringing in top talent right now is that they will take pressure off existing staff, decrease turnover, and put a company in a powerful position to capture market share.”

MANAGEMENT RECRUITERS OF Vancouver, LLC

December 2010 Volume IV Issue 12

UNITED STATES

Top Candidates Are Moving, but Employers Fear They Won’t Find Them

Increasingly, hiring managers are finding themselves in a strange quandary, feeling like the drowning man dying of thirst. Headlines every day are shouting of high unemployment, long lines at work centers, and avalanches of resumes after every job posting. Yet, finding top candidates remains as hard as ever.

In a recent survey conducted by several MRINetwork offices, three out of four respondents said they were still having a hard time finding the right candidates. One hiring manager said, “We have too many positions open and not enough support to fill all of them in a timely manner.”

Another manager, looking further in the future noted, “Lots of retirements are coming up, and not a lot of people are ready. When the economy recovers, many employees will retire, but there’s a small pool of leadership talent available – we have a dilemma coming up.”

Despite the efforts to fill vacancies, managers note that they are looking beyond just filling empty seats. Less than five percent of respondents said they are only focusing their hiring on replacement candidates.

“This is a time in the economic cycle when employers are able to really pick up the type of impact players who will drive their organization,” says Jack Downing, managing partner of WorldBridge Partners - Chicago, an MRINetwork affiliate. “Companies are taking this opportunity to top grade their talent, and just generally increase the capabilities in their companies even if positions aren’t open.”

The portability of candidates, though, is a double-edged sword and managers are frightfully aware of it. Before the recession, it is estimated that 30 percent of top talent were looking for new opportunities, today as much as 70 percent are.

“It is difficult for us to achieve the goals we have set for our company without talented people in place,” said one manager.

According to the Labor Department, the quit rate, the ratio of people who voluntarily leave their job in any given month compared to the total U.S. workforce, has been steadily increasing since bottoming out late last year. As it grows, it indicates both the willingness and ability of employees to change jobs.

One method respondents cited to save their best employees, strange as it may sound, is to hire someone else. Even with raises, bonuses, and promotions, overloaded employees become frustrated, eroding the corporate culture and leading to inevitable departures. Bringing in new talent early to ease that burden can raise morale and help retain the top talent that already exists.

As one respondent put it, “Without the right people in place, we spend a lot of time training, teaching, coaching, disciplining, hiring, and terminating. The right people make most of that go away, as well as increasing employee engagement and improving culture because the people fit well together.”

“It’s no real surprise that 99 percent of companies list talent acquisition as one of their top five priorities,” notes Downing. “What is surprising is how many holes employers see in their hiring processes, yet leave them unfilled.”

Only 10 percent of respondents believed they have outstanding talent acquisition processes in place. “We should have a more dedicated effort toward recruitment and keep on track,” says one manager. “We lose people in the process.”

Notable International Events

• Ireland became the second EU member country to receive a bailout during the recession, accepting €85 billion. While the country agreed to steep austerity measures, Ireland was able to keep its competitive 12.5 percent corporate tax rate, which has been credited for much of the country’s success in attracting new businesses.

• A month after the Reserve Bank of Australia began raising interest rates, the country seems to have slipped into negative GDP growth with sharp decreases seen in profits for construction and financial services-based companies, according to data from the Australian Bureau of Statistics.

©2010 Management Recruiters International, Inc. An Equal Opportunity Employer. Each office is independently owned and operated.