IN THIS ECONOMY, DOES REALITY REALLY BITE?

Here are important steps we can take
to protect ourselves in case it does

By Rich Ream
RMC Associates
Appeared in Information Today

Like Rip Van Winkle fitfully awakening from a very deep sleep, we are just now beginning to return to an economy in which stocks can no longer fly up into the air with no visible means of support and in which very low unemployment is no longer a given. And remember, way back then when the economy got out of hand there was a guy named Alan who seemed to be able to stabilize things with a well-placed pinprick. Inflation was nonexistent and every company raced to find some reason to add a dot-com to its business. Turned out the dot-com wasn't a tireless worker or the solution for every business that struggled to simply achieve a favorable price/earnings ratio. Gravity really did have some pull. 

In my October 2001 column 
( http://www.infotoday.com/it/oct01/ream.htm) 
I noted that we had just barely escaped the classic definition of a recession and provided some grim employment statistics from the Chicago-based outplacement firm Challenger, Gray & Christmas. This data was current through the second quarter of last year and after that, predictably, things didn't improve. Companies believed that the new economy didn't have the constraints of the old economy and hired accordingly. The following are a few of the resulting lowlights from data current as of mid-December 2001: 

• More jobs cuts were announced in the weeks after September 11-624,411-than in any full year between 1993 and 1997. 
•  Through the end of November companies had announced close to 1.8 million job cuts in 2001, nearly three times more than those in 2000. 
•  John Challenger of Challenger, Gray & Christmas notes that in addition to a struggling economy and the September 11 attacks, two other trends have had a significant impact. First, there has been a significant increase in mergers over the last few years. This, coupled with a frenzy of hiring that occurred as the economy soared in the mid-'90s, has created a bloated labor pool that cannot be sustained in a recessionary economy. Now, even industry leaders are cutting to the marrow. Motorola, the second-largest maker of mobile phones, led all U.S. companies in job cuts by laying off nearly 43,000 people. 
• Different market segments suffered disproportionately, with telecom, computers, and electronics leading the most severely hit sectors. No wonder unemployment in technology-laden Santa Clara County, California (read Silicon Valley), jumped from 1.3 percent in December 2000 to 6.6 percent in December 2001. Talk about a sea change! 

Perception vs. Reality 

Now shake yourself, rub your eyes, and step into Dr. Who's famous time-travel machine to gain a bit of insight. Using the "wayback lever" we see that while consumer confidence is way down this year and unlikely to rebound quickly, at last measure it was just under 100. Now if you consider that 100 was established as a baseline in 1985 during the boom years of Reaganomics, it doesn't seem quite as dire. 

Fine, you say, but what about the wreck that was once the stock market? Well, my friends, I can tell you that I'm not exactly thrilled to find the market at just about where it was 3 years ago-which is where it was before we started our economic dream. No one anticipated a 30-percent-plus drop across the Dow and a much more severe one in the high tech and telecom sectors. If you pull on the wayback lever a bit more to look at the last 20 years, you'll find that we've managed a quite respectable 11.7-percent return. So Rip, if you slept through it, you probably think you didn't miss much. 

However, it really is a different world out there and we can't afford to be wide asleep again. Remember, it's always darkest just before dawn and indeed daybreak appears within sight. The following are some cracks in the gloom: 

• Most consumer surveys show growing expectations of more jobs and rising income 6 months from now. 
• Regarding the stock market, the consensus seems to be that the sky has not fallen but rather that valuations have fallen from sky-high. 
•  There's pent-up demand in the tech sector, where systems and hardware replacement has been delayed. Radford Associates reports that in 2000, 62 percent of technology companies cut workers. Only 19 percent anticipate layoffs in 2002. 
•  Bioscience will be a $15 billion industry in 2002-a 50-percent growth over last year. 

 And what about the dot-coms? While 516 companies expired in 2001, the prognosis is improving per the following: 

Number of Dot-Com Job Cuts by Month 
(U.S. Bureau of Labor Statistics) 

The bottom line is that good content and e-commerce companies will survive while bad ideas will get stuffed like the sock puppet. Individuals and employers can each take steps during this transition time to maximize their opportunities, for themselves and for their companies. 

For Worker Bees or Wannabes 

In today's unpredictable economy, no one's job is secure. In fact, 86 percent of the people who are in career transition with outplacement firm Drake Beam Morin have lost their jobs through no fault of their own, but rather through restructuring, mergers, acquisitions, or plant closures. So like the Boy Scout motto "Be Prepared," this means you should always have a current resume, and a fresh and trusted reference base that includes bosses, peers, and clients. 

Remember that some wiggle room may exist on severance. Setting severance levels is an entirely discretionary decision and should be designed to carry you through the time it will take to find a new job. In today's environment that may be optimistic, but knowing the market and industry trends can provide you with the facts you need to negotiate during a very emotional time. This should also be a time to open your thinking up to career options such as self-employment or contracting, semi-retirement, or less than full-time work, etc. 

Stay positive. According to the U.S. Bureau of Labor Statistics, those with library science degrees are now being courted for jobs as diverse as information network administrators and Webmasters. There's more awareness now of the value of folks like you who not only know how and where to find the right data, but also know how to get the right content to the right people. The trend of early retirement in library science should also open up opportunity. James Matarazzo, dean of Simmons College's Graduate School of Library & Information Science, notes that retirements in the field have doubled to about 10,000 annually in recent years compared to the early 1990s. 

Make sure you inventory the really important stuff: 

• Core expertise-Aptitudes, logic, emotional stability, technical skills, organizational abilities, etc. 
• Personal desires-The time, enjoyment, and flexibility of our work (the quality of our personal lives and how this job may change or impact it) 
• Financial needs-For now and the future (education for our children, retirement considerations, health issues, and where and how we live and work) 

For Employers 

Fight hard for your key employees. Because things can change quickly, you need to have a sense of a bell curve at all times for the people who report to you if you're suddenly asked to contribute to the cause of downsizing. 

Keep in mind that the stress of head count and budget cuts puts a tremendous strain on those left to man the pumps and organize lifeboats. Even in a down market two in five employers say they recently lost top performers to other opportunities. According to Brad Federman of HR consulting company BT Novations, there's a big misconception that because of all the layoffs, retention no longer has to be a top management priority. 

Highly skilled workers are at a premium as business challenges become more complex. If you lose one, be prepared to act quickly to find the right fit. Of course, I have a bias for working with a professional firm that can cut through the millions of resumes out there to present proven candidates who can make an immediate impact. The real key is to move through the hiring process with focus, speed, and good communication among all parties. I've seen more qualified candidates lost to the competition due to poor communication and the stretching out of the hiring process than for any other reason. This is a particular danger today as some managers assume that they can simply take their time and pick from the very best since so many people are available. 

For Everyone 

We have more options than ever about how we can move ahead and make more informed choices. Often there's little warning of shift-and shift seems to happen more frequently in these amazing times we live in. Embrace the challenge and be both prepared and creative in looking at potential solutions and alternatives.

This article has been reprinted in its entirety from the February 2002 issue of Information Today with the permission of Information Today, Inc., 143 Old Marlton Pike, Medford, NJ 08055. 609/654-6266, http://www.infotoday.com.

Reader feedback is always appreciated as are suggestions for topics you'd like to see explored in future columns. Remember the old Yiddish proverb, "If fortune calls, offer him a seat."