Monday, May 12, 2008
Our region does not have a lot of factory jobs. We don't make ketchup. We don't make toilet paper. We don't make steel. Our business, without sounding too pompous, is largely ideas and the execution of them, whether they are moved around town in legal briefs or a consultant's briefcase.
Many of us have advanced degrees. We are engineers, information technologists, biologists, chemists, lawyers (oodles of lawyers), analysts, congressional staffers, financial gurus, think tankers and occasionally journalists. How smart are we? We have three of the top 25 most-educated U.S. cities by number of advanced degrees per capita, according to Census Bureau data. Arlington is No. 1, Bethesda No. 8 and Alexandria No. 9.
Our workforce holds a central place in the knowledge economy, and it is facing some crucial questions in this turbulent economy.
Will it continue to grow? Or stagnate? Will companies shy away from new hires to save money and beef up the bottom line, or will they throw caution to the wind so they don't miss out on hiring the next Steve Jobs?
The conundrum is complicated even further by our low unemployment rate -- about 3.3 percent as of March, below the national average. That means that even if a government contractor like SAIC, with more than 1,000 job openings in the D.C. area, continues hiring, it will likely have to compete with other firms, creating pressure to push up wages at the very time the region finds itself in a downturn. Unique circumstances, to be sure.
So who is doing what in this economy? Like all things in business, it depends on whom you ask. For instance, the folks over at Marriott International, facing a slowdown in business travel, said they expected to hire fewer managers. But they haven't changed their overall hiring plans for front-line hotel workers, even if they do have contingency plans. Booz Allen Hamilton, a frequent consultant to the ever-growing government, is proceeding full-steam ahead because its business is growing. But so is Capital One, which may be surprising given the troubles in the credit market.
One way of looking at an economic slowdown is that it can give risk-tolerant companies a chance to snap up talented people who might be turned away by other firms, or to pick off employees of competitors who are upset that their companies are playing it safe and stagnating rather than continuing to expand through the rough times.
Trudging ahead is a sort of pet tactic of the aforementioned Jobs, and he spoke on the matter recently in a Fortune magazine interview that caught the eye of Matt Schuyler, the chief human resources officer of Capital One. In the interview, Jobs was asked how he managed Apple through economic downturns. In his answer, Jobs began by referencing the last economic slide.
"What I told our company was that we were just going to invest our way through the downturn, that we weren't going to lay off people, that we'd taken a tremendous amount of effort to get them into Apple in the first place -- the last thing we were going to do is lay them off," he said. "And we were going to keep funding. In fact we were going to up our R&D budget so that we would be ahead of our competitors when the downturn was over. And that's exactly what we did. And it worked. And that's exactly what we'll do this time."
That is essentially what Schuyler said is happening at Capital One. He said the message to potential hires was: "Join us for the post-storm inflection point that's allowed us to attract talent that we may not have had a chance to attract before."
He added: "This is an opportunity to get talent, to get skills that we've needed for some time but haven't had a chance to get. We want to ramp up in skill sets that will allow us to weather the storm and then grow in the future."
Maybe that coveted banker was happy with her job in New York. But maybe now that her company is retracting, she's no longer happy. Or maybe there's someone in a compliance position who figures that now might be the time to jump ship to a financial services company trying to broaden its reach in consumer banking -- a company like Capital One.
Hiring new employees also tells current employees that it's okay to sit tight and ride out the storm at their desks. "If they see some senior hires at this time, they are going to be inclined to think that you are betting on the future," Schuyler said. Without new hires, the employees "are likely to believe that something is wrong," he added.
At the Corporate Executive Board, which advises some of the world's biggest corporations on a range of issues, including hiring, the message to clients during these times has been: Hire strategically.
Nick Connolly, who heads the firm's Corporate Leadership Council, said: "We find that with regard to talent, the smartest organizations use these tumultuous economic environments to strategically invest in capabilities that they will need moving forward."
He continued: "A common theme in the face of panic is: Who is buying when everyone else is selling?"
Marriott is buying, somewhat. In a written statement, David Rodriguez, executive vice president of human resources, said the company was still recruiting at colleges and job fairs "because we have a long-term philosophy to 'smooth out the peaks and the valleys' between economic highs and lows. In other words, we try not to overreact to any short-term trend."