Recruiting outlook: creative HR for 2003; despite a puzzling economic forecast, HR professionals are addressing recruitment and staffing in innovative ways. The task increasingly requires flexibility and skill

Workforce, Dec, 2002 by Eric Krell

Like most of his colleagues, Russell "Rusty" Rueff isn't in a furious hiring mode--far from it. But while other HR professionals lapse into employment pessimism, he happily pursues talent, not in the usual places, but in the privacy of living rooms and bedrooms.

Rueff is senior vice president of HR at Electronic Arts, the world's largest publisher of video games. "Our best candidates hang out online and read gaming magazines," he says. "I think about our next generation of employees when they're 16 years old. I can get to them because our games are in their living rooms and their bedrooms. All I need is their e-mail address." Those addresses flow into an applicant-tracking system from Hire.com, a cornerstone of Electronic Arts' talent-management strategy.

The 3,500-employee company, located in Redwood City, California, will continue to integrate recruiting efforts into the organization's marketing efforts in 2003. Referring to potential hires, Rueff says, "I never want them to be more than 10 pages or 10 clicks away from getting a great impression of Electronic Arts." In keeping with this commitment, the company now includes more information about its EA Academy internship program, including a URL to its Web site, on the back of video game manuals.

The economic forecast remains puzzling, but, like Rueff, many HR professionals address recruitment and staffing issues aggressively and creatively They take calculated action. They continue to recruit during a hiring freeze. They fulfill highly specific recruiting needs during soft labor markets and times of corporate cost reduction. They also take advantage of hiring lulls by re-evaluating strategy and tactics. Even if the economy drifts downward and corporations remain in a belt-tightening mode, savvy HR managers enable their companies to quickly add quality staff as soon as the workforce growth light turns green. In 2003, that means defining exactly what "talent management" means to the organization and where it fits into overall corporate strategy Is it more than a fancy term for recruiting?

On the staffing side, HR professionals expect to more closely manage their organizations' collective psyche and find new ways to motivate and develop employees, who, with the exception of the highly talented, are less likely to jump ship than they were 12 to 18 months ago.

"From a recruiting and staffing standpoint, I would be concerned about whether the economy is going to make a strong comeback or not," says Chris Michalak, a principal at consulting firm Towers Perrin in Chicago. "Given the general preponderance of potential candidates, many companies can be more selective in their recruiting. But that does not hold true for all positions or all industries. Depending on the direction the economy takes in the next 12 months, recruiting pipelines could become much less robust very quickly."

The candidate pools for nurses, pharmacists, and many types of engineers continue to shrink, even as unemployment in the United States approaches a seven-year high. In the professional services industry, top firms like Accenture laid off thousands of highly paid consultants in 2001 as large client companies scaled back their enterprise-software investments. Yet those same consulting firms are scrambling to hire consultants who can help deliver hefty government contracts tied to homeland-security initiatives. "Many companies will continue to hire and fire," says Jane Paradiso, recruiting solutions practice leader at consulting firm Watson Wyatt in Washington, D.C.

A Towers Perrin study of 22 companies, selected for their strong financial performance, high employee-retention rates, and appearance on publicly recognized best practice lists, echoes Paradiso's point. The survey found that 73 percent of firms that cut staff in the previous six months continued to hire talented employees while downsizing.

Deciphering recruiting and staffing trends is complicated by an uncertain economic recovery, which could further restrict recruiting budgets. On the other hand, any signs of a sustained revival likely would tighten the soft labor market. Unemployment is rising, but remains within a moderate range (5.7 percent) from a historical perspective. Mass layoffs, which the U.S. Department of Labor defines as instances of 50 or more initial unemployment claims being filed against one company in a five-week period, appear to be on the decline (1,060 in September) after peaking in January at 2,146. The practice of hiring while firing bolsters cost-reduction efforts and allows companies to continue pursuing highly talented employees, who remain as difficult to find, hire, and hold on to as they were in the dot-com glory days.

As firms discover that they can attract new hires for less than they paid a year or two ago, pay levels for similar positions within the same company may grow more inequitable. Those gaps can further demoralize workers already jaded by a spate of accounting chicanery, workforce reductions, directives to shoulder more health-care costs, revelations about luxurious executive-compensation packages, and the pummeling of 401(k) plans and company stock holdings.