I've been developing this theory for some time and I'm calling it unemployment wave theory. Whilst I'm sure it there are significant cracks in the logic, I'm confident there is some basis to what I'm saying based on my experience. Hard data however is yet to be gathered to back up my opinion. I'll get to that later.
Picture for a moment the waves coming into shore, one after the other. Now image that the first wave is unemployment going from 4% to 6%. Contray to common belief by many in the market this would mean that there is a sudden flux of exceptional candidates in the market. True there are good people coming onto the market; there always are, however lets be brutally honest, 90% of those being let go when the market goes from 3-4% to 6% are not the mission critical employees, they are the ones you want to have when your business is booming (3-4% is arguably the margin of error in unemployment and would almost certainly mean full employment and as of the writing of this blog unemployment in HK is about 4%). Now this is not meant to be offensive to anyone who has just lost their job because there are people currently who are vitims of bad circumstances and bad luck, investment bankers being a prime example.
Employers need to understand that whilst there is a in flow of more candidates onto the market this does not mean that they represent the exceptional talent they maybe seeking. Sure there will be good ones but most employers want the "superstars" however the reality is that the superstars aren't on the market, they never are unemployed, thats why they are superstars!
When you hit the first wave, you have good people but not superstars coming onto the market. This doesn't mean there is not a lot of great talent out there but in a time when companies only want to hire the best due to the economic downturn hiring managers need to understand that just because unemployment is on the rise doesn't mean its going to be easier to hire a superstar.
Second wave is when we go from 6-8%; Now things are going to change a bit in this wave as this is when you start to see companies having to let go of some of their best talent. Typically smaller businesses are the biggest hit in this wave as they don't have the financial power of the large MNC's and as a result the people that drive these businesses are forced back onto the employment market. This is the point at which you can say as an employer that there should be a lot of good talent on the market and you'll be right but once again employers understand superstars aren't on the market in vast numbers, good talent is now in the market.
Third wave is when unemployment goes above 8%. If my memory serves me correctly during SARS in 2003 unemployment went to about 8.6%. Now this is truly an employers market, this is where you really have a chance to look at a much broader and more qualified group of candidates. There will be a lot of exceptional talent on the market and arguably a great time for companies to look at upgrading their own DNA for higher calibre candidates. However once again SUPERSTARS aren't actively looking and probably still aren't part of this group.
So I hear you asking "when are the superstars coming onto the market?". Well the bad news for you the employer is; they're not! Sure there will be a few that will come onto the market due to factors beyond their control. e.g. Company closes operations, changes business model but thats going to be only a few. This is why I never fear my industry will go out of business (the recruitment/search industry) is because I know the best people are never really looking, they don't need too. They are so good at what they do they are getting approached and they are doing well where they are so they are not insecure nor are they actively looking. They are the play makers the people that are the life blood of their respective companies. Their current employers treat them well, pay them well, reward them openly and keep them happy. So for all employers out there looking for SUPERSTARS I hate to break the misconception but the reality is if you want a superstar you're going to have to hunt them out.
If your looking for good talent in vast numbers then you'll need to wait for >8% unemployment but I would argue that unemployment going to >8% is not something your company wants either. So bottom line is that you can't kid yourself into thinking that superstars are easy to hire in this market. In my experience all these cycles do is adjust people's expectations on compensation, benefits and entitlements.
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