Business Week logo

February 9, 2004


Hiring Outlook 2004, Part 1

Says one of the experts on our panel: “In this market, leadership strength is always a pivotal factor in the decision to hire someone”

By Eric Wahlgren in New York

January’s disappointing figures on job growth in the U.S. pretty much tell the story. This year is shaping up to be more promising than 2003 for execs looking for work. But it’s not going to be a hiring cakewalk by any stretch. Last month, companies created some 112,000 jobs — the strongest month for job creation in more than four years. But the feat looks less impressive when you consider that economists had been hoping for at least 150,000 new jobs, which is the minimum monthly rate needed to absorb all the people who actually want to work.

The bottom line is, competition for these scarcer-than-expected openings will remain fierce, and as a result, the job hunt will continue to be a long and miserable odyssey of four to six months on average, according to DBM, a large outplacement company. “There’s a ton more scrutiny of candidates because businesses want the perfect employee who will have an immediate return on investment on salary,” says Penny McBain, a managing consultant for DBM in Falls Church, Va. “I’ve had one candidate who’s had 11 interviews at the same company, and still no offer.”

If that’s not enough to worry about, job seekers will also have to contend with a growing trend of companies shipping jobs overseas to places like India and the Philippines, where highly educated professionals are willing to work for a fraction of what their U.S. counterparts make. Although the “offshoring” threat to jobs, especially for U.S. professionals with specialized skills, may be overblown, many experts say the phenomenon is a factor in keeping any U.S. jobs expansion in check.

LESS PAIN FOR MANAGERS. Overall, however, the word from the top is more encouraging than last year. Some 25% of the executives on The Business Roundtable, an association of top CEOs who lead a combined workforce of more than 10 million, say they expect to bring people on in the first six months of 2004. (Another 25% said they still expect more bloodletting, while the remaining half said they expect no change in staffing levels.) Compare that with the beginning of last year, when a terrifying 60% of corporate big-wigs warned they would eliminate jobs in 2003 — and then followed through on their predictions.

In 2004, managers and professionals may not have it as rough as the rest of the population. By January, the unemployment rate for managers and professionals stood at just 3%, vs. 3.2% a year ago. In contrast, the general populace faces a 5.6% jobless rate. Still MBAs and managers will have better luck finding work in certain industries than in others.

As has been the case in the past few years, health care and biotechnology will continue to employ a growing number of execs (see BW Online, 2/04/04, “Tech Hiring: No Longer an Oxymoron”). Americans aren’t getting any younger — and they don’t seem to be getting much healthier either. But this year, consulting is making a comeback as businesses call in hired guns to help them wring more out of still-tame revenues. In the legal field, lawyers with a background in securities and white-collar crime are in demand as lawsuits against corporations and mutual-fund firms pile up, to tick off just a few of the occupations where candidates are likely to get job offers.

To get a sense of this year’s employment outlook, BusinessWeek Online’s Eric Wahlgren asked a number of career experts, including headhunters, B-school officials, and corporate recruiters, to make educated guesses about the 2004 job scene. Their edited comments follow in Part One of BusinessWeek Online’s fourth annual utterly unscientific career-outlook survey of employment experts. Part Two will be published on Feb. 10.


Mark Jaffe headshot photo

 “It’s inevitable that jobs will continue to move to low-cost, high-efficiency locales”

Mark Jaffe, president of executive-search firm Wyatt & Jaffe in Minneapolis:

I’m optimistic about the hiring outlook in technology, probably with a greater emphasis on hardware than on software and services. In telecommunications, there should be hiring activity in wireless and voice over Internet protocol (VoIP). In health care, there’s a good outlook, particularly for biomedical products and pharmaceuticals. Certain sectors of the financial-services industry should see hiring, although the JP Morgan merger deal with Bank One may signal some bloodletting in the short term.

As far as jobs, sales executives will be in the greatest demand along with financial leaders who have the knowledge, confidence, and expertise to safeguard stockholders’ interests. And there’s no question that effective recruitment of board directors who are willing to roll up their sleeves and maintain vigilant oversight will continue and even increase during the coming year. It has also been speculated that marketing executives — usually the first to go in any corporate downsizing — will be the first to be rehired as conditions improve.

In this market, leadership strength is always a pivotal factor in the decision to hire someone. Whether it’s labeled “Level 5” (Jim Collins) or the “Four E’s” (Jack Welch) or something else, we all know that a strong leader is critical to the success of a company. Whether you’re managing a department, in charge of a division or running a $10 billion corporation, you’d better have that magic ingredient.

It’s inevitable that jobs will continue to move to low-cost, high-efficiency locales. Just as when manufacturing first migrated to the Pacific Rim and elsewhere, the challenge domestically will be to grow the next wave of U.S. jobs. It will happen again.

David Parker headshot photo

“The key to getting hired remains experience and results”

David Parker, founder of executive-search firm D.P. Parker & Associates in Wellesley, Mass.

We expect life sciences to continue to be strong. The financing climate for biotech and biopharmaceutical ventures is improving. Medical device companies are rebounding. Nanotechnology [the design of devices that are extremely small] has a lot of buzz and is generating significant investment. Enterprise software is showing renewed vigor. Information-technology spending is estimated to show significant growth in 2004 and the demand for better, more feature-rich products will drive hiring.

As far as jobs are concerned, revenue-generating functions are always in demand. Sales and business-development positions have been active and will be more active this year. In pharmaceuticals, the improved regulatory environment is bringing more products to market, increasing demand for business development and sales and marketing functions. Improved revenue and investment activity is creating more capital for research and development initiatives and will drive job growth in those areas.

The key to getting hired remains experience and results. Having specific, relevant experience and demonstrated success is crucial. There’s very little creativity in the hiring community today. It’s a difficult market for those that want or need to make a true career change.

A number of surveys have indicated that we’re at the front end of an attrition bubble. The number of people — at all levels in organizations — that would like to make a change is extremely high. As hiring picks up, we will see a domino effect with every hire creating a new opening at another company. This will not be a jobless recovery.

Many jobs in customer service, manufacturing, software development have gone or are going overseas. The trend will likely continue as the economics are sound.

Jo Bennett headshot photo

“The truth is, jobs are shifting from the developed to the underdeveloped world”

Jo Bennett, a partner at executive search firm Battalia Winston International in New York:

Hiring is occurring now, although it’s “replacement” rather than “expansion” hiring. Companies are being opportunistic and are trying to replace employees with better talent from the outside. In general, companies are maintaining 2003 staffing levels or adding conservatively. The industries that are seeing a pickup: health care, investment banking, business services, and industrial and defense-related areas. Among the job areas most in demand: finance, sales, and general management.

Demand is weak for chief information officers (CIO) and technology jobs in general. The CIO position has been downgraded, eliminated, or put under the finance function in a number of companies. If the CIO isn’t sitting at the table at budget time, you can guarantee that investment spending on technology will be reduced.

The bottom line is that productivity has been increasing without new hires. And there is a total focus on costs. And hiring is expensive. These days, getting hired usually involves prior work experience with a well-regarded company, a positive attitude, flexibility, a focus on deliverables, and, perhaps most important, a large number of business acquaintances.

The truth is, jobs are shifting from the developed to the underdeveloped world. Offshoring is shaping up to be a major factor that negatively impacts low- and mid-level job creation in the U.S. but positively impacts costs.

Tom Johnston headshot photo

“We will never see anyone outsource sales and marketing jobs”

Tom Johnston, founding partner of executive search firm Management Recruiters International-WorldBridge Partners in Cleveland:

Most areas are going to be hiring, with heightened activity in professional services, health care, and financial services. Hiring is happening now. It’s just not going to have a real impact on the lower-level manufacturing sectors that were lost in the downturn. Jobs will be available in sales, particularly in sales for both strategic and national accounts, and in the clinical areas for health care.

Most important today — although it has always been important — is the ability to have an immediate impact on revenues.

Outsourcing is an issue in holding back job growth, but the main functions that are being outsourced are simple tasks, where there’s no real need to be face-to-face. We will never see anyone outsource sales and marketing jobs.

Ted Martin headshot photo

“2004 will see a sharp spike in hiring in the second half of the year”

Ted Martin, CEO of Martin Partners, an executive-search firm in Chicago:

Health care continues to be a growth area. Selective areas of biotech, medical devices, pharmaceuticals, diagnostics, and managed care continue to grow. The financial-services industry is coming back with a good deal flow in front of the investment bankers. Nanotechnology is finally taking off, and after a couple years of promise, it’s finally enjoying significant venture-capital investing.

Finally, engineering services will continue to evolve as will the software industry. The security industry, including both software and hardware security, also continues to be hot.

The biggest demand will be for CEOs, CFOs, and CIOs. The biggest change for 2004 is that CEOs no longer enjoy much of a timeframe to prove themselves. There used to be a rule of thumb that CEOs had at least three years…. In the first year, they would create their plan. In the second year, they would implement it. And in the third year, they would execute and measure the results of the plan. This timeframe no longer holds any validity.

The CIO’s role is to tie systems across all areas of the company, and there’s no excuse for failing to deliver timely and accurate reporting through the systems side. And that holds true for the CFO, who must deliver timely and accurate reporting, with a big emphasis on the fact that he or she cannot be wrong.

2004 will see a sharp spike in hiring in the second half of the year, barring an unforeseen global-instability issue. As long as the global instability continues, the markets remain skittish and the prominent corporations retain a conservative attitude towards growth.

As far as offshoring goes, the bottom line is, when a consulting firm can replace a $48,000 hire with an $8,000 hire in India, it’s going to be very difficult for this trend to reverse itself. Not only are you saving $40,000 on an annual basis per person for a programmer, let’s say, but you often are getting a more qualified and experienced individual than you could in the States.

The question is, if our college graduates cannot get hired at the entry level due to offshore hiring, how can they expect to move up to the management level?

Norris Palmanteer headshot photo

“Offshoring or outsourcing hasn’t really had an impact on our hiring plans”

Norris Palmanteer, manager of staffing, strategies and research, at Intel in Santa Clara, Calif.:

Hiring in the U.S. for 2004 will remain similar to 2003. There will be more planned “college” hiring with a focus on advanced degrees in engineering and computer science. Hiring for MBAs will continue at the same rate as the past couple of years, with an emphasis on finance and marketing.

Consistent with past years, we continue to need software and hardware engineering talent to support our product-development groups. We expect to see some increase in the demand for engineering talent in the wireless and communication fields.

In addition, there’s demand for manufacturing-engineering expertise to assist with the delivery of our products. We look for talented people who are comfortable taking risks, are results-oriented, and disciplined.

Our hiring plans for the entire year are pretty consistent from quarter to quarter. However, there will be a seasonal increase in the second quarter, which ties into the bulk of the college hires completing school and starting work.

Offshoring or outsourcing hasn’t really had an impact on our hiring plans. What has had an impact is our desire to make use of the best talent wherever it makes sense. Some of the fastest growing markets around the world are in places like India, China, and Russia. When you combine their strong educational foundation with the fact that all three have entered the world’s open economy, you get a dramatic increase in the available technical talent.

Will we continue to grow outside the U.S.? Yes, but that’s no different than what we’ve done for the past 30 years. Our focus for job creation in the growing markets continues to be the availability of technical talent and the proximity to our customers.

Randy Neal headshot photo

“We still see a strong bias for been-there, done-that experience in candidates”

Randy Neal, chief executive at Randall James Monroe, an executive search firm in Dallas:

We’re seeing a broad recovery, with most industries seeing improvement in 2004. We even expect to see some hiring in telecom, which has been dead the last two years. Demand is on the rise in areas most strategic to a business — sales and operations. Companies want to add to or upgrade their sales team. In addition, they also want to improve the efficiency of their operations and continue to cut costs.

As far as landing the job, we still see a strong bias for been-there, done-that experience in candidates. Clients want people with a demonstrable track record of producing results. They’re not very interested in on-the-job training.

More important, it’s the intangibles that have come to the forefront in getting hired at more senior levels. Some of these include, but are not limited to, innovative thinking. Companies want the benefits of change without the discomfort of the change process. Innovative leaders always find a way to move the organization forward and deliver results.

Clearly, the trend continues to be around the use of “offshoring” resources to help reduce costs in U.S.-based companies. In terms of holding companies back from hiring, all options remain open at present. But given the fact that some jobs can be performed more cheaply by outsourcing, we view this trend as one that will continue into the foreseeable future.