For many, their understanding of the recession is a deeply personal view of the effect it had on one company—the one where they work(ed).
To illustrate the point, one company I know laid off every non-essential employee in the U.S., combined and consolidated roles so that everyone left was doing two peoples’ jobs (to make up for the lack of personnel) and instituted an across-the-board 5% pay cut. The company survived the recession and is doing fine now. But it was touch and go for a while and affected everyone in the company, some more harshly than others.
Certainly we talked with our friends and relatives about their jobs and shared stories like this one.
And, of course, the media provided insight into what was happening in many companies. But often the reporting was slanted in a specific way. For instance, there was a lot of coverage about the automotive industry here in southeast Michigan. But was it correct to generalize what was happening in that industry—assuming it was the same everywhere else? And there was even more coverage about the companies that went out of business, the people who lost their livelihoods, and so on. In the final analysis, newspapers and their brethren exist to sell ads, and the most sensational stories were promoted to page 1.
So what really happened to everyone else? And what are the lasting impacts?
If you are a salesperson, you get to go into numerous offices and dish with numerous people. Same for a consultant—like me. And here’s what I observed.
Hiring was next to non-existent. The opposite was the rule of the day. Massive lay-offs. The target in any software or Web or embedded systems development group was the “non-essential” roles. So there was a blood-letting at the management echelons right down to the project manager. QA roles were eliminated. Technical writers were cut. Business Analysts were cut.
To compensate, all of these functions were piled on the remaining staff, that is, the software developers.
For most companies, new product development was scaled back or put on hold. Uncertainties in the marketplace made many companies nervous about spending money on new product development at all. I mean, seriously, if you made a new product, who would buy it? When sales plummeted, companies started hoarding their cash to ensure they could ride out the recession. Of course, when everyone is hoarding cash, the recession is prolonged because no one is buying. A bit of a chicken and egg situation.
Internal projects to automate and streamline business processes were likewise put on hold. No cash to fund them. Simple.
In cases where personnel were absolutely essential, temporary (contract) employment was the preferred mode. And that temporary employment was often price-constrained. The thinking was that with so many people looking for work that someone was bound to accept a low-dollar contract. Beats working at a cash register in a retail store for minimum wage, right?
I am sure that some economist can put his or her finger on the exact turning point when the recession ended. To me, it was so gradual that it was hard to find an exact moment when it got better.
At first, our clients started complaining about difficulties they were having finding qualified people. They brought us unusual—and often unrealistic—roles to fill (contract at first, and then direct-hire). Over time, the unrealistic expectations (like a tech lead who is also a project manager who is also a DBA for $80K) became more and more realistic—with wages moving upward, as well.
Then clients started to ramp up new product development.
And finally, clients have started to move on business process improvement projects.
We find ourselves in a highly competitive hiring and contracting market. This is made more complicated by the fact that numerous technical personnel moved out of Michigan to find employment during the darkest hours of the recession. Also, many people are hanging onto their current employment, on the bird in the hand worth two in the bush principle. Those who are willing to leave their current employment will do so only for direct-hire opportunities.
For technical personnel, there is one key take away: be as multi-faceted as possible. The person who can fill multiple roles is extremely valuable during a recession because he or she can do the work of several people. A project manager who is only a project manager is more likely to be affected by a lay-off than a project manager who can cover some other role. Along the same multi-faceted lines, the developer with strong customer-facing skills is more valuable than a head-down developer. Whether the developer works with external or internal customers, he or she can handle business analysis or customer support—once again reducing the likelihood of being laid off.
A second take away for technical personnel is this: do not let your technical skills stagnate. Some companies will keep a developer on staff to support legacy applications because no one else wants to do it. A tool like FoxPro, which has passed its end of life date, isn’t something people are clamoring to use. During normal, healthy times, a company will pay someone to maintain the legacy applications with no questions asked. But when layoffs are a necessity, that same developer is the first to be let go, the assumption being that some other developer will be able to spin up on the tool and make minor support type changes. We have observed this with a handful of candidates; their outdated skills make them very difficult to place. This can be mitigated by pursuing formal training or certification or diversifying with other non-technical skills.
For companies, there are several take aways that stand out. One is to invest in cross-training technical personnel so it is less painful to maintain a development activity during financial stress. It’s one thing to have fewer people. It’s quite another to have zero experience with a vital competency. Zero QA? Zero project management? Zero business analysis? Ouch.
Another take away is to take the initiative on training legacy developers in new technologies. The legacy developers have substantial domain knowledge, making them valuable members of the team. Rather than spelling their doom by keeping them sequestered in legacy coding, train them on new technologies or skills.
And as the hiring and contracting heats up in the waning days of a recession, understand how to attract good candidates. In some cases, it is as simple as offering the best compensation. This can often be as little as a few thousand dollars annually. In other cases, a more nuanced understanding is required. Identifying the key skills that are needed will open the door to many more candidates applying for roles. Out of those candidates, there will be at least one who is abundantly trainable in those areas that may be required but which are relatively easy to learn.