Employees who resisted the urge to switch jobs frequently during recent labour shortages may now be reaping the rewards of greater job security. The number of short-tenured managers and executives falling victim to job cuts rose by 50 per cent in 2001, while those who have expressed loyalty to organizations are being retained.
Evidence that employers are targeting shorter-tenured managers and executives for job cuts comes from the latest Job Market Index by Challenger, Gray & Christmas, Inc., which shows that the average tenure among the discharged in 2001 plummeted to a record low of 4.8 years from 9.8 years in 1999, when the economy was still flying high.
In fact, until 2001, the average tenure of discharged managers and executives was 8.5 years. Even during the 1990-1991 recession, tenure remained at eight years, indicating that employers in 2001 initiated a major reversal from the long-standing practice of targeting higher paid, veteran employees in downsizing.
We may be witnessing a new type of recession — a “new economy” recession — in which productivity actually increases and competition for customers remains intense. As a result, companies that want to survive must retain their best employees, and that often means the most experienced.
This shift in corporate strategy is likely to disproportionately affect frequent job changers, who often have the shortest tenures.
Human resource executive Richard Mark, vice-president of human resources of Drexel Heritage Furnishings Inc. in North Carolina, agrees that companies today are depending more on experienced workers to guide them through this downturn.
When companies reduce their workforce, they are relying more and more on the old guard — those who have been around for a while and know what is going on, he maintains.
Two years ago, when labour shortages were in full swing, companies were more willing to retain recent hires for a longer period even if they turned out not to be the best fit for the position. Now, if new hires are even questionable after a few months, employers are letting them go while holding onto those with more experience, Mark said.
This might help explain the surge in the number of managers and executives being discharged before reaching their two-year anniversary.
On average in 2001, 26 per cent of those discharged were employed fewer than 24 months. That is significantly higher than any other year tracked by the Challenger firm since 1986. It is 50 per cent higher than the previous record of 17 per cent in 2000. In 1999, only 13 per cent of those discharged had fewer than two years with their former employer.
The shift toward retaining more experienced employees is likely to favour older workers — the huge population of baby boomers, in particular — who demonstrated more workplace loyalty during the late 1990s, when job switching was rampant.
In 1998, at the height of labour-shortage-induced job hopping, workers 35 to 54 years-old stayed with their employers an average of 6.6 years. Workers age 20 to 34, on the other hand, were with their companies for an average of just 1.9 years.
Further evidence of higher job switching among younger workers comes from a longitudinal survey by the U.S. Department of Labour, which tracked employment among a group of 10,000 young men and women from 1979 to 1998. The survey found that between ages 18 and 34, college graduates held an average of 11.7 jobs.
This frequent job switching may now be resulting in higher unemployment. The latest employment report from the U.S. Bureau of Labour Statistics shows that the unemployment rate among 20- to 34-year-olds in January was 7.9 per cent. Meanwhile, unemployment among baby boomers, age 35 to 55, was 4.8 per cent in January, nearly a full percentage point below the national average.
Employers will continue to favour experienced workers as they take a more cautious approach to hiring and expand their use of outsourcing to better adjust to fluctuations in demand.
It will be critical that the employees who remain with the company are those who have built and maintained lasting relationships with customers. Companies cannot afford to lose any customers due to inconsistent service with recovery on the horizon.
John Challenger is the CEO of Challenger, Gray & Christmas, Inc., an international outplacement firm. The Job Market Index is based on a quarterly survey of 3,000 managers and executives from a wide variety of U.S. industries. For more information call (312) 332-5790.
Evidence that employers are targeting shorter-tenured managers and executives for job cuts comes from the latest Job Market Index by Challenger, Gray & Christmas, Inc., which shows that the average tenure among the discharged in 2001 plummeted to a record low of 4.8 years from 9.8 years in 1999, when the economy was still flying high.
In fact, until 2001, the average tenure of discharged managers and executives was 8.5 years. Even during the 1990-1991 recession, tenure remained at eight years, indicating that employers in 2001 initiated a major reversal from the long-standing practice of targeting higher paid, veteran employees in downsizing.
We may be witnessing a new type of recession — a “new economy” recession — in which productivity actually increases and competition for customers remains intense. As a result, companies that want to survive must retain their best employees, and that often means the most experienced.
This shift in corporate strategy is likely to disproportionately affect frequent job changers, who often have the shortest tenures.
Human resource executive Richard Mark, vice-president of human resources of Drexel Heritage Furnishings Inc. in North Carolina, agrees that companies today are depending more on experienced workers to guide them through this downturn.
When companies reduce their workforce, they are relying more and more on the old guard — those who have been around for a while and know what is going on, he maintains.
Two years ago, when labour shortages were in full swing, companies were more willing to retain recent hires for a longer period even if they turned out not to be the best fit for the position. Now, if new hires are even questionable after a few months, employers are letting them go while holding onto those with more experience, Mark said.
This might help explain the surge in the number of managers and executives being discharged before reaching their two-year anniversary.
On average in 2001, 26 per cent of those discharged were employed fewer than 24 months. That is significantly higher than any other year tracked by the Challenger firm since 1986. It is 50 per cent higher than the previous record of 17 per cent in 2000. In 1999, only 13 per cent of those discharged had fewer than two years with their former employer.
The shift toward retaining more experienced employees is likely to favour older workers — the huge population of baby boomers, in particular — who demonstrated more workplace loyalty during the late 1990s, when job switching was rampant.
In 1998, at the height of labour-shortage-induced job hopping, workers 35 to 54 years-old stayed with their employers an average of 6.6 years. Workers age 20 to 34, on the other hand, were with their companies for an average of just 1.9 years.
Further evidence of higher job switching among younger workers comes from a longitudinal survey by the U.S. Department of Labour, which tracked employment among a group of 10,000 young men and women from 1979 to 1998. The survey found that between ages 18 and 34, college graduates held an average of 11.7 jobs.
This frequent job switching may now be resulting in higher unemployment. The latest employment report from the U.S. Bureau of Labour Statistics shows that the unemployment rate among 20- to 34-year-olds in January was 7.9 per cent. Meanwhile, unemployment among baby boomers, age 35 to 55, was 4.8 per cent in January, nearly a full percentage point below the national average.
Employers will continue to favour experienced workers as they take a more cautious approach to hiring and expand their use of outsourcing to better adjust to fluctuations in demand.
It will be critical that the employees who remain with the company are those who have built and maintained lasting relationships with customers. Companies cannot afford to lose any customers due to inconsistent service with recovery on the horizon.
John Challenger is the CEO of Challenger, Gray & Christmas, Inc., an international outplacement firm. The Job Market Index is based on a quarterly survey of 3,000 managers and executives from a wide variety of U.S. industries. For more information call (312) 332-5790.
