Home > Recruiting > Shrinkage. A Good Thing?

Shrinkage. A Good Thing?

Shrinkage, shrinkage, there is shrinkage everywhere.  I can’t help thinking of George Costanza whenever I hear the word shrinkage.  Here’s the link to the famous scene from Seinfeld.

http://www.youtube.com/watch?v=1cUNNKzj_Nc

Pool or no pool, we have a lot of shrinkage.  In nearly all industries you can look around and you have less competition due to companies going out of business or just unable to really compete.  If you look at your market, whatever you sell or whatever service you provide, you see a much smaller market.  Economy, housing prices, profits…..it goes on and on.  In recruiting, as usual, we see this to an even greater degree than most other industries.  Let’s look at the scorecard on this.  There are far fewer jobs in total than there used to be.  That goes in the negative column.  Of those jobs, the jobs that really warrant outside assistance in order to be filled is much smaller as well.  Another big negative.  Because of this we have seen less job flow even as we grow our client base.  The market is just smaller.  A big reason for this is that our clients’ markets are much smaller, so it all ripples through the business world.  Everything is eventually tied together, one industry affecting another and another etc…….

On the positive side, there is less competition.  Our industry has seen big time shrinkage.  We all know many who are no longer in the business.  That’s fewer firms competing for business in that smaller market.  In addition, our clients in other industries have less competition as well.  We see evidence of this every day.  Some companies struggling or going out of business while others are doing very well and solidifying their position in their industry.  In addition, the bench has shrunk, and this is a big deal.  Companies that are doing well are running very lean and they don’t have extra employees on the bench.  They also don’t have candidates sitting on the bench.  So when they have a need, they need action fast to fill that need.  This is a big positive for those of us in recruiting.  Inside recruiting has seen a lot of shrinkage as well.  It’s expensive, and inefficient in many cases, to pay an inside staff to recruit when you are running lean.  This is also a big positive for third party recruiters, who are the most efficient option for filling difficult positions in my book. 

So where does all of this leave us?  Industries are finding their appropriate levels and this is a painful and slow process.  However, they are getting there.  For our part, we see less job flow (more than ’08/’09 but less than in decent markets) but we see more interviews and fills with that job flow.  So the positive shrinkage of less competition and lean operations is balancing out with the smaller market.  In the various industries that we serve we see the same thing.  The stronger companies are doing fine while others are not and those industries are showing some balance.  There may be a lot more time to this process, but it is working.  Importantly, this environment makes an industry better.  As the strong survive in recruiting and in other industries, those industries perform better overall.  Is shrinkage good?  I don’t know if I can say that because it is painful, but it is effective.

Todd Kmiec

Todd Kmiec & Associates

todd@toddkmiec.com

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