Discussing talent and the economy with Dr. Rosensweig
Recently, The Seamless Workforce had a chance to speak with Dr. Jeff Rosensweig, the keynote speaker at the CareerBuilder Executive Summit for Staffing and Recruiting in July. At that event, Dr. Rosensweig presented great analysis of our current economic situation — where we’re headed and where we could be headed — and the impact that either scenario could have on the workforce.
Through his work at the Goizueta School of Business at Emory University, Dr. Rosensweig has observed that the job market in the U.S. is better than it was a year or two ago, particularly for highly educated employees. He attributes this, in part, to the strength of our service-oriented economy. The United States exports twice as many services as any other nation. We’re out-competing the world in the part of our economy that employs the vast majority of our people.
If you missed the interview, check out the transcript below to see what Dr. Rosensweig had to say about contingency planning and workforce management in this uncertain environment, as well as some of the incredible advantages the United States still has today.
Talent management techniques for today’s economy: A podcast with Dr. Jeffrey Rosensweig
Joel: Thanks for joining us again. I’m very honored today to have Dr. Jeff Rosensweig, the associate professor of international business and finance at the Goizueta School of Business at Emory. He was the keynote speaker this morning at the CareerBuilder Executive Summit for Staffing and Recruiting. So Dr., first of all, thank you very much for taking time out today.
Rosensweig: It’s my pleasure. I think a lot of you. We’ve had a chance to spend some time together at these executive summits.
Joel: I appreciate that. You presented a pretty good analysis of some of the factors that are happening in our economy today—where we’re headed, where we could be headed. One of the things that we write a lot about, and it’s not our original thought—you might know Dr. Peter Cappelli at Wharton. He does a lot of work on scenario planning.
Given the fact that there’s a best case and average assumption of where we might be headed in the next say 12 to 24 months—how should that impact our business at the micro level when we’re planning out the workforce itself? I’m wondering if you can take that macroeconomic analysis to how we might behave on the day-to-day.
Rosensweig: I think right now, we probably face greater uncertainty than we have at almost any time. What’s going to happen in Europe? What’s going to happen with debt limits? What’s going to happen with what we get job market stimulus?
Now, given that, this is a time of year when a lot of companies are starting to do their budgeting and their forecasting. They’re coming into their budgeting cycles, and most of the ones do their plans. It’s like, “We think the economy’s going to grow 2.5 percent,”—which is the average estimate by the way. “Our company can grow this much, and so here’s our plan. We’d better hire this amount of people, do this much CAPEX.”
I think that’s wrong in this uncertain environment. I think you have to make a plan for the most likely estimate, which is 2.5 percent economic growth. With what you’ve seen in the past, how will that affect the growth of your firm, and do you need to hire some people?
But before you think of hiring only permanent people, you have to realize that this is a time when there is a risk of a double dip recession for instance. I don’t think it’s going to happen, but there could be as much as a 25 percent chance that we get a negative scenario, a pessimistic scenario. For instance, if Europe really does fall apart, that would hurt our exports to Europe and that would hurt us.
So what is your contingency plan? Instead of hiring so many workers full time, do you hire some contingent workers? Do you not spend as much on CAPEX as you would if you knew the economy was going to grow?
But on the other hand, there is an optimistic scenario. What we used to call the V about a year ago, before we started getting worried again, which is the economy came down very fast and bottomed out—could it start to go up very fast? More than 2.5 percent, 3.5 percent, 4.5 percent? Like we saw both in the ‘80s and the ‘90s when we came out of recessions. You don’t want to full staff up on permanent workers because there might only be about a 10 percent chance of the V, but you do want to have a scenario, an optimistic scenario. And then, what is your contingency under that scenario?
I suggest those three scenarios: your baseline, your basic forecast, and 2.5 percent GDP growth. But you may not want to fully staff up with permanent workers for that, because it’s not symmetric. There’s a much greater chance of the downside.
Joel: Now this might be putting you on the spot a little bit, so I apologize if it does. But I am interested to know, being a professor of one of the top business schools in the States, you see quite a number of business leaders come through from diverse backgrounds. I know a lot of international students are attending Emory. So what I’m curious about is if there’s any anecdotal information that you’ve gathered from your students that has given you additional perspective on some of these factors?
Rosensweig: One thing is that the job market is better than it was a year or two ago. At Yoh, you often work in higher level industries, industries of more educated people. I may be getting a little bit also of a stratified view, but I think it may fit the Yoh client perspective. I educate MBAs at a good business school, but even for them, the job market was terrible two years ago. Large groups of students reached graduation without a job offer. That wasn’t true this year. They had job offers by graduation. Quite a number had multiple job offers. So anecdotally, things have really picked up for people that are well-educated. That’s the number one thing I noticed.
The other thing I noticed is that I know a lot of CEOs, not just coming through Emory, because we’re fortunate we’re in Atlanta. We have so many Fortune 500 companies, so I know a lot of CEOs through that, but also in my keynote speaking around the country. And although they’re guardedly optimistic, there are a number of things that worry them, particularly if we’ll have more government regulation.
Also, depending on what industry they’re in, they’re still worried if credit is available. For instance, will credit be available for small business? Small businesses often are the job creators. It seems like credit came back to maybe some big businesses after the credit crunch and the Great Recession of two or three years ago, but it’s still not flowing to small businesses.
Joel: That reminds me. One of the things you spoke about this morning was the incredible advantage that the United States has today as far as exporting services. You even used an education at Emory as indicative of exporting the service of education. I found it a positive outlook. Is there anything you would suggest to those that might need a little bit of encouragement? We do have something that would accelerate exports and it could be services. It might be a little obscure, kind of conceptual, but I found it encouraging and want to share it with our readers.
Rosensweig: First, we export half a trillion dollars worth of services a year. Tourism; like you said, what I do, education; financial services; staffing services; legal services; consulting services. Our big consulting firms are all over the world. So not only do we export twice as many services, or earn twice as much of service exports as any other nation—we dominate—but our service exports are growing well. Every month they’re hitting an all-time high, and we have a surplus.
People that look at the glass as half-empty, they always talk about our trade deficit. Well, that’s manufactured goods, or oil. In the part of the economy that employs the vast majority of our people—over 80 percent of our people service industries—we’re out-competing the world. And it’s growing.
Joel: I think that’s a good note to end. I want to thank you again for your time and for the insight.
Rosensweig: Well you’re here in the major leagues, so I’d like to see you keep learning and keep part this.
Joel: Great, thanks very much.