In recession, employers look for high-fliers, not ‘office plankton’

Demand remains high for some categories of employees, but competition is high for most vacancies.

A decade of strong economic growth gave way to a booming employment market in Ukraine, during which salaries skyrocketed and employers doled out unprecedented benefits to grab top talent.

But the boom abruptly ended with this year’s deep economic recession, hitting both employees and human resource agencies hard.

Official government figures show that unemployment doubled to some 1 million early this year, only to drop inexplicably to 570,000 by Sept. 1 out of a workforce of 20.9 million, according to the State Statistics Committee. Real figures are much higher, however, and the prospects of the middle-class workers searching for jobs continue to be grim.

This year the job market became so weak that 30-50 percent of recruiting firms operating in Ukraine before the crisis got wiped out. Meanwhile, the workload for those that are still surviving has fallen sharply, by more than 60-80 percent, according to various estimates.

Overall, Ukraine’s economy is starting to show some signs of recovery, after a dismal first half that saw gross domestic product dive by 18 percent. But the rebound is expected to be slow. It could take several years for the human resource and employment markets to bounce back to pre-crisis levels.

And that means the near term will remain testy for both job seekers and human resource agencies.

“Businesses are starting to see some light at the end of the tunnel, but my prediction is that the employment market will not reach its pre-crisis highs for another five years,” said Stanyslav Vilyukha, managing partner of Exon Recruiters.

“There are practically no startups. Many investors are holding on to their money until after the January 2010 presidential elections. Companies are showing very little growth,” Vilyukha added.

Also desperate for work in these tough times, recruitment agencies often find themselves in a role very different from the recent economic boom years. Instead of searching for, and hiring talent, they are often helping companies cut costs – advising on ways to shed unnecessary or ineffective workers, and replacing them with better, sometimes less expensive, employees.

What was an employee’s market in the recent years has reversed completely into an employer-driven one.

“Before the crisis, salaries in banking sector, for example, were catastrophically inflated, by 30 to even 200 percent,” said Alex Yurchenko, regional manager in Ukraine for the Hudson recruitment agency. “It all happened because the high-fliers were scarce and companies were enticing the talent.”

Competition among those who have managed to keep their jobs can be fierce. This often means cuts in salaries, but also in fees charged by client-hungry human research agencies.

“Competition between companies operating on the human resource market increased sharply. Remuneration fell by around 10 per cent, and almost no client is prepaying,” said Vitaliy Mykhailov, general manager at World Staff in charge of the Ukrainian and Russian markets.

According to Hudson’s market research, more than 80 percent of companies operating in Ukraine were hit hard by the crisis. Every forth business has significantly reduced staff to cut costs. Businesses are getting rid of the employees they can survive without, the so-called dead weight. Those that are most productive and central the business’s future, the high-fliers, are kept on board. But even some of those have had to accept salary cuts.

“Businesses start cost cutting by laying off the so-called ‘office plankton,’ people that do some work, but show very little result,” said Andriy Krivokorytov, general manager of Brain Source International managing company.

“In previous years, a candidate was successful if he or she met 90 percent of the requirements. But now, he or she is obliged to satisfy the whole list of demands,” said Olena Trach, senior consultant for Exon recruiters.

Compared with pre-crisis times, demand for employees in the hardest-hit industries – such as real estate and banking – fell by more than 80 percent, according to market research data from Ancor recruitment agency. But qualified top managers still enjoy strong demand. Companies are unable to function without managers. To make it out of the crisis, they need the best.

Even if a company tries to cut costs to a bone minimum, they still need top executives to keep finances under tight control, said Krivokorytov from Brain Source International. Sales personnel are also needed to keep money flowing in, and public relations managers that can stay close to clients are seen as vital to bring them back on board after the crisis, he added.

And so, “The demand for top notch professionals remains high,” said Vilyukha of Exon Recruiters. “If we are dealing, for example, with a marketing department in a company, marketing director would probably stay put while a brand manager is more likely to lose his or her job.”

How else can you hold on to your job until better times?

Human resource experts said one way is to work harder. Try to do the job of 2 or 3 people. But unless you are really valuable, don’t expect a raise or reward for this added work until after the crisis.

“Before October 2008, a typical commercial director, for example, was receiving $3,000 per month. Now, this salary is down to $2,000 per month,” said Mykhailov from World Staff.

Cutting employees completely loose is often a bad idea for a company’s reputation. So to keep hold of their reputation as responsible employers, many multinationals are hiring human resource companies to help employees that were let go find new jobs.

And so, outplacement services have started to pick up during the crisis.

The cost of such services varies, ranging from 50-100 percent of the monthly salary of the employee.

“Outplacement not only helps to ‘save the face,’ but also helps employers avoid litigation costs” that could arise if employees challenge a decision to fire them, said Evgeniy Delov, country director at Ancor.

Adopting outplacement as a strategy could also preserve relationships with employees that the company may want to return after the crisis passes, Delov added.

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