Hiring in a Recession

September 15, 2009

You’d think that in a recession companies would have an easier time hiring. They should be flooded by resumes because of the high unemployment rate. But I think that recruiting actually gets harder, for two reasons.

The first is that many lay-offs are actually firings. Companies don’t dare fire too many people when times are good because the public may perceive the company as having problems. But in a recession the company can get rid of its 10% lowest-performing employees and blame it on the economy. Some companies do get rid of entire projects, where both good and poor employees are lost, but hiring is so difficult that a company will typically try to keep the best employees before flushing the rest.

The second reason is that good employees, those not getting laid off, hold on more tightly to their jobs. An employee might normally be thinking, “This job isn’t so great, I bet I could do better.” In a recession, though, he’ll be thankful just to be employed. His current situation is likely to seem more stable and safe than a position in another company.

During a recession, then, companies with good hiring standards must find it harder to hire, because although they are flooded with resumes, those resumes are of lower average quality.