• LOGIN
• |
• REGISTER
• |
• 

Hiring in a downturn can be advantageous, but experts say top talent still deserves good salaries.

Many companies were forced to downsize at the onset of the global financial crisis, however recent economic optimism has some employers looking at growing their staff.

And there can be advantages to hiring in a downturn. But several experts warn: Don’t be fooled by ‘cheap labour’.

Leading recruiters have urged employers not to take advantage of the flood of candidates in the market by offering sub-standard remuneration and benefits. The employer/employee power balance, for so many years in the favour of employees, is yet to balance out in employers’ favour.

Peter Gleeson, EGM Executive & Professional Recruitment at Chandler Macleod Group, said that good people will always be able to command good salaries, and most employers are willing to pay them. However, he added that some employees may compromise their own ambitions in the short term and take roles which they might not normally consider. Nevertheless, he believes the medium term upswing will see many of these employees leave those roles for opportunities more aligned to their experience and skills. Some may also consider taking contract roles whereas in the past this would not have been a consideration.

“The bottom of the downturn has already passed. While we’re not seeing the candidate shortage we had been experiencing a year or so ago, good candidates are still in short supply and can command a premium. Adverts run by companies are pulling greater numbers of candidates, but not necessarily better ones. In fact, a lot more company time is being spent having to review many more unsuitable resumes. So I don’t see companies feeling they are controlling things to a large extent. However, candidates feel there is far more competition for roles than there was, so I’m sure they’re feeling less confident when it comes to applying for a job,” he said.

Jane Adams, group director of specialist recruitment and HR services company, Randstad, added that in some cases the industry sector dictated where the power balance between employer and employee sits. Skills shortages persist in many markets including specialists in the areas of IT, engineering and finance - hence many candidates are still in a position to negotiate strongly for top dollar rather than just feeling lucky to have a job offer.

“Certainly it’s true of some industries that pay rates have reduced and if the economists are correct in their belief that we will recover very slowly from this downturn then employers can take advantage of the reduced salary costs in their business for the foreseeable future.
 
“In light of the economic environment we’re in, you would expect that candidates to have lower wage expectations. Yet many people don't seem to think the downturn has had a significant impact on business. It's about managing their expectations. Offering incentives, financial and otherwise, could help entice quality candidates to take on the role if a higher salary is not an option,” she said.

The other issue raised by engaging employees on lower salaries is retention. Employers will need to be open and willing to negotiate pay rates once business conditions improve. “Employers need to think long-term when hiring people in the current environment, as securing people on lower pay rates will not encourage retention. It might be a good tactic to get people in the door for the short term, however, pay rates will have to be reviewed very carefully. Once the economy picks up, job and career opportunities will begin to present themselves, it is highly likely that they will walk out the door,” said Adams.

Gleeson added that in tough times, some companies may let retention take a back seat as they feel that their employees are less likely to depart due to uncertain markets, but they should do this at their peril. “Good employees will always expect to be rewarded appropriately for their endeavours. While salary freezes may still be in place in many companies, this will change in the next few months,” he said.