When the economy, in its natural cycle, begins to move from up to down, we begin to hear the “R” word repeatedly.  “The economy shows signs of recession” or “The economy seems to be moving toward a recession” or “The economy is almost in a recession.” 

I’m reminded of the old saw about telling someone, “Don’t think about an elephant,” and then watching him struggle not to do that very thing!  Simply saying “elephant” seems to force us to picture an elephant in our minds.  The difference is that talking all around the word, recession, seems all the more worrisome:  “Don’t worry about a recession” has exactly the opposite effect.  People begin worrying about a recession.

When the economy trends downward and fewer orders are coming in, companies get worried as well.  As a result, they begin to look for ways to cut costs, and one way to do that is to lay people off.

When the number of people being laid off increases, it means that more people are looking for jobs.  If you are hiring, it may mean that you have more people answering your ads.  More applicants sending in resumes and coming in for interviews means you have more options when it comes to filling a position, and more options are good.

Having more applicants apply when you post an open position is, however, a double-edged sword.  On the plus side, more applicants should increase the odds that you will find a well-qualified candidate.  The downside is that you will need to be more vigilant about screening applicants carefully.  Why?  Because of the Sinking Ship Phenomenon.

The Sinking Ship Phenomenon

When a ship at sea encounters a bad storm and begins to take on water, the order goes out to lighten the load so that the ship may more easily weather the storm and avoid being sunk by it.  A ship at sea will lighten its load by throwing overboard heavy things that could drag it down.  Not all heavy things, however, are equal.  Some, such as the engines, as heavy as they are, are essential to the ship’s survival.  It is the non-essentials (that is, items that are not needed to steer and navigate the ship) that are thrown overboard.

So, too, when companies encounter the bad storm of poor economic times.  One of the ways companies lighten their load is to lay people off.  Not all of a company’s employees are equally important to its survival.  The people in key positions are usually safe, as are those whose contribution is vital to the company.  Others may be seen as less essential and may be let go in order to lighten the company’s financial load and ensure its survival.  Employees whose contributions are marginal, or who are not strong contributors, are among those most likely to be let go.  Therefore, the people who flood onto the job market in troubled financial times may not all be the brightest and the best, at least in the judgment of the company that lets them go.

Three Steps To Better Hires In Wobbly Financial Times

For people who are buying a used car, the Latin term “caveat emptor” (“let the buyer beware”) warns them to not always believe the salesman who swears the three-year-old Mustang they are considering buying was previously owned by a little old lady who only drove it to church on Sundays.  And for those who are involved in evaluating and hiring people, we can modify the phrase to something like “caveat hirer.”  Extra care needs to be exercised when hiring when there is a glut of people available.  Here are three tips to help you separate the wheat from the chaff:

1.  Leave no stone unturned in your efforts to get to know your applicants.  Now is not the time to cut corners by skipping over any of the steps in your selection procedure.  The cost of hiring a supervisor or manager who doesn’t work out is conservatively estimated as equal to his or her annual salary.

2.  In the interview, focus on specifics.  Don’t be taken in by general statements like, “Enhanced sales three years in a row” on a resume.  Get the facts:  exactly how much did the person enhance sales?  Get numbers, dollar figures, sales percentages, etc.  Dig to find out precisely what the person did to bring in those sales.

3.  For your highly qualified candidates, obtain a one-day work sample.  This is what one of my clients calls, “A day in the life of one of our managers.”  Have the applicant shadow a manager in your company for a day as if he or she were actually doing the job, and then get feedback from the manager that he or she shadowed.

The Bottom Line

Economic downturns bring both problems and opportunities.  One of the opportunities, if you are hiring, is that you will likely have more applicants for your open positions.  Because there may be more people on the job market in the months ahead, now is the time to review your selection process and practices to be sure that you are vigilantly following best practices in getting to know an applicant’s strengths and weaknesses before you make the hiring decision.