Is news of economic gloom exaggerated?
News can be overwhelming, especially when 24 hour news is always on, cycling around and around. The same can be said for reporting of economic data, particularly when there seems to be a heavy emphasis on the downside.
When trying to interpret economic data that has a bearing on the recruitment industry, it is not unusual for recruiters to see contradictions between macroeconomic data and what they might experience for themselves on a daily basis at work.
How do recruiters square the differences that might exist between the headline news and what they see on a daily basis in their work?
Mixed signals and conflicting indicators
We all like to have some idea about the prospects for the future. While it’s not quite a crystal ball, headline economic news helps us to anticipate the larger forces that are shaping the recruitment market.
Very few of us properly understand macroeconomics, so we rely on analysis by experts. Unfortunately, to achieve cut-through and sell, the press tends to exaggerate and overblow. Often the full truth is obscured by our perceptions that are shaped by the ‘spin’ that is used to frame the analysis.
For example, empirical research data in the UK suggests the job market is contracting a little as The Guardian article ‘UK jobs market cools again as wage growth slows’ suggested less than two weeks after the Labour government swept to power. Although it tells a slightly different story, this press release supporting the KPMG and REC UK Report on Jobs survey suggests the same general direction of travel.
Contrast this with anecdotal evidence that we’re hearing from ETZ’s recruiter community. This suggests there is a rise in permanent hiring and a falloff in demand for temporary staffing, something that signals movement in the opposite direction, and an all more positive angle that suggests employers are rebuilding headcount numbers.
Should recruiters pay any attention at all to the big macroeconomic stuff, or take it with a pinch of salt? Or simply ignore it and just play the field in front of them?
Why analysis and experience often don’t match up
It is common to find that macroeconomic data and personal or anecdotal experiences do not match up. The job market is a complex and dynamic operating environment and the disconnect between data-based fact and personal experience can often be puzzling.
In a nutshell, while large-scale economic indicators provide a broad overview, they may not always reflect the nuances of individual situations. Here are a few reasons for this discrepancy:
- Not in real-time – Many economic indicators, such as GDP or unemployment rates, are lagging indicators – they reflect past economic activity. For example, we might get Q1 data and analysis well into Q2. This creates a mismatch between current trends and personal experience.
- Regional variation – Economic conditions may vary significantly across regions within a country. Macroeconomic data may not accurately represent the specific circumstances in a particular area. Assimilated data averages out regional differences, sometimes skewing analysis.
- Individual differences – Personal experiences can be influenced by factors such as industry, job role, and individual circumstances. What one recruiter experiences may not be representative of the broader economy, or indeed typical of other recruiters.
Making sense when analysis and experience do not match up
In order to make sense of what is really happening it is important for recruiters to strike a balance between macroeconomic trends and real-time market observations.
Relying solely on personal experience and discarding external market indicators would lead to a situation of being blinkered. Depending entirely on external market analysis and ignoring first-hand observations would also restrict the perspective.
Essentially, large-scale data provides a general sense of the economic climate while anecdotal evidence from recruiters offers valuable insights into specific industry trends and hiring demand. If it was a battlefield (and sometimes it may seem that way!) then it’s a commander’s high-level overview tempered by the input from troops on the ground.
Here’s an approach that might help recruiters make better sense of conflicting job market analysis and personal experience and arrive at informed decisions to navigate the complexities of the job market:
- Monitor both – Stay on top of broader economic indicators and industry-specific trends while paying close attention to developments in your specific marketplace and target industries.
- Engage with clients and candidates – Maintain open communication with clients to understand their hiring needs and with candidates to gauge job market activity. Every conversation is an opportunity to gather intelligence.
- Be agile – In a dynamic environment where change can be sudden and impacts significant, be prepared to adjust your strategies and tactics based on changing market conditions.
- Always trust your instincts – While data can be helpful, sometimes intuition and experience can provide valuable insights. The longer you have had to observe the ebb and flow of economic cycles the more you should be able to trust your instinctive reactions.
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