The Financial Job Market
The impact of the credit crisis and other factors
Executive Recruiter Rich Bond says, "Don't panic. The market is better than you think. But the jobs are in different places than they have been!"
In recent months, many people in finance and treasury seem to have a heightened degree of concern about possible cutbacks resulting from the credit crunch, the real estate "bust" and the apparent economic recession the country is in or may be entering.
The impact of the credit crunch and the real estate "bust" will be relatively specific. The major banks and investment banks will have to lay off thousands of people to help offset the billions of dollars of assets they have written off. The real estate and construction companies will have to lay off the majority of their staffs in order to survive.
Thousands of people have been laid off by mortgage brokerage and origination companies. Unfortunately, most of these individuals have experience that has limited “transferability,” and they face difficult job searches with limited prospects.
Other than the industries or businesses most directly impacted, the job market will be softer than it has been, but it will not shrink dramatically. The "Wall Street boom" that occurred over the last five years had little positive impact on most companies. Similarly, the dislocation of the financial markets will have limited impact on the downside as well.
Secondly, there will be limited job cutbacks. Most companies are thinly staffed and have limited "fat" that can be cut.
The increased cost of oil may worsen the impact of these other conditions as companies may have difficulty passing on the increased cost of oil or other commodities. There are industries that are being hit extremely hard—the airline industry comes directly to mind, but the overall impact should be limited.
The most visible impacts of the economic dislocation will be hiring freezes, smaller raises, almost no new positions and limited promotions.
The jobs that are the safest are with companies that have organic (internally generated) growth. The expansion of a company through increased sales almost guarantees employment for almost everyone as well as creating opportunities for those who can document that they are contributing to the growth of the organization.
Job security and opportunity are more directly proportionate to growth than they are to size. A smaller growing company is often hiring, while a larger company with little or no growth is laying people off.
There are companies that have been experiencing continuing declines, like pharmaceuticals, where large drugs have lost patent protection, and industries like tobacco that have been declining for a while. The domestic automobile industry has been in decline for a long time as well. The recession and other bad economic news will only make a bad situation worse.
The economy has been growing for a prolonged period of time with the strongest growth in services, health care, export based companies, and generally small to middle-sized companies. These industries should continue to grow, albeit possibly at a slightly slower rate during a recession.
If you want to judge the security of your job, take the CAGR (Compound Annual Growth Rate) of the basic product or service your company sells over the last five years, factoring out acquisitions. If the CAGR is a negative number, you should be in an active job search. If it is around zero, you should be looking on a selective basis. If the rate exceeds 5%, and you haven’t been promoted, you should be doing some soul searching about whether your company values you as an employee or not.
From a rational economic point of view, the value of an employee is what that employee contributes compared to what it costs to employ that individual. Individuals need to start to think about their value in terms of what they contribute as measured by quantifiable accomplishments and not by function responsibilities.
A typical manager of cash management might describe his or her job as managing banking relations with 10 major institutions with an annual budget of $2 million. An atypical person would say that he or she saved $200,000 in bank fees while improving services levels.
A typical accounting manager could say that he or she is responsible for the internal and external financial reporting. An atypical person would say that he (or she) reduced the reporting cycle from 15 days to eight days.
Contrary to popular belief, it pays to be different. Employers recognize contributions with raises and promotions. They feel that people who take risks are part of the “process improvement” that almost every company is striving for.
Today's job market is frustrating and unnerving. There are huge displacements taking place in a number of important sectors in the job market, including automobiles and many other manufacturing businesses. There are, however, great opportunities in many non-traditional sectors that are growing and need more and better employees.
The best career advice to employees is to look to leave companies or industries that are not growing.
Smart companies base a good deal of their own candidate assessment on how well that individual can quantify what he or she has done to make the company for which he or she is working a better place.
Accomplishments are significantly more transferable than experience. It is a difficult and time-consuming process to quantify one's accomplishments as well as to identify the companies and industries that are growing.
The difficulty is worth the effort. The orientation toward accomplishments not only increases the candidate's marketability, it also can create opportunities to grow within a candidate's own organization.
Do some soul searching, but don’t panic. There are great opportunities in the rapidly changing job market. Richard Bond, president of Bond & Company Executive Recruiting and Search, is a graduate of Lehigh University and has an MBA in finance from the Wharton School. He worked for American Can and the Seagram Company LTD before setting up his own recruiting firm in 1986, specializing in middle-level finance and treasury positions.