What Has the Recession Done to Your Pipeline?

I have written before about data and the way HR should leverage it, but I am just a “low rent” data guy—Josh Letorneau handles the brilliant analysis around here. My data work is typically basic—I get with some smart partners and try to tell a story with data. Today’s post about figuring out capacity is no different—I make some assumptions and draw some hypotheticals to talk about how I think a lot of firms are going to be hurting when it comes to bench strength and taking advantage of an improving market.

If you think firms have been worried about pipeline growth the last 2 years? Forget about it. With headcount reductions and hiring freezes, leaders have just been trying to keep the doors open. If a company now needs to take on new work or expand as the market turns, Talent pros will need to rebuild capacity.

DJIA Average 2007-2010 Take a look at the graph of the Dow Jones from April 2007 until October 2010. I’ll make my first assumption and guess that a bunch of companies have revenue lines that look similar. Your shop might be doing better, but in general, folks are clawing their way back to 2007 levels. You can get with your finance partners for your history and projections and then run a quick graph.

Sample Graph I ran a hypothetical one based off the Dow—take a look at the left half (2007-2010). The top line is revenue, and the second line is overall headcount for a developmental role (think college graduate accountant, management trainee, programmer, nurse, etc). I think it’s a safe assumption that most headcount reductions mirrored revenue drops.

The third line, developmental hiring, is where the warning signs start – notice an even steeper decline in hiring feeder positions from 2007-2010. Again, it’s an assumption, but not a stretch, given that hiring has fallen faster than HR’s reputation at NPR. So, revenue dropped, overall headcount dropped, and then hiring of pipeline talent dropped or stopped completely. When the ecconomics demand it, you can do this for a while…a year or maybe even two, but to compete, you’ll soon have to race to add capacity.

So, carry the graphs out for the next three years with your firm’s financial projections. With the sample, I made it so 2013 revenue would be similar to 2007 revenue. The projections here assume developmental headcount should be the same in 2013 as it was in 2007, so simple math (projected headcount- current actual) and a factor for attrition will give you a rough idea of what you need to do to refill your base hiring group.

Depending on training cycle times, you can front load and get ahead of it or try to time the revenue uptick with some just-in-time hiring. Longer cycle time, earlier hiring. Either way works, as long as you can help position the company to take on new business or stretch to new product lines. This is when I get excited as a recruiting geek – HR talent strategy, planned and executed well, driving the business forward. If the worst is indeed behind us, then capacity planning is a key HR activity right now.

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RJ Morris
R. J. Morris is based in the STL as the Director of Talent Acquisition and Management for McCarthy Building Companies, a multi-billion dollar national firm. Like many others in the FOT clan, he’s a sports nut who can endlessly draw the parallels between athletes, sports and the talent management game. I know, I know, as if we needed more of that. He has 10 years of practitioner experience leading talent efforts in corporate HR and another 7 years in leadership roles on the agency side, so he gets both sides of the desk. Talk to R.J. via emailLinkedInTwitter...

One Comment

  1. Ann Sabp says:

    In most companies hiriing well before need is an unfulfilled dream. Most of the time we are asked to fill a position with ever diminishing time-frames. We use an assessment that rates and ranks job suitability (www.prevue.us) that is supplied to us under a faxed price site-licensing program. This allows us to review resume’s and immediately assess candidates with just a preliminary interview. We have a benchmark for each job and can generally get from receipt of resume to hiring in a day or two. Another advantage to this program is the custom on-boarding and training program it provides, it has really helped us reduce turnover.

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