Many things about the dotcom boom were, in retrospect, obviously unsustainable: absurd stock-market valuations, 24-year-old CEOs, dogs in the office, investment bankers clad in khakis. But perhaps nothing was quite as surreal as the white-hot condition of the labor market. Talk about bargaining power! Freshly minted college grads of no particular distinction commanded salaries that their parents worked a lifetime to achieve. Run-of-the-mill software developers were hotter than first-round NBA draft picks. And the biggest challenge facing an aspiring "biz dev" wizard was deciding which of several competing offers was most likely to end in a Porsche Boxster.
In case you hadn't noticed, the party's over. In the first five months of this year, U.S. companies cut 652,410 jobs — 38,650 more than in all of 2000, says John A. Challenger, CEO of the international outplacement firm Challenger, Gray & Christmas. Some 41% of those cuts have come from the technology and electronics sector, he adds. And we're not just talking about lousy companies. Some of the best-known, most highly respected companies in the world — companies that we've celebrated in the pages of Fast Company — are cutting jobs by the thousands, even the tens of thousands. Cisco. Intel. Dell. Hewlett-Packard. They are the great names of the new economy — and their plans for the future seem to involve getting there with fewer people.
Which brings us to the topic that we plan to explore all week: How does a smart person with big career ambitions adapt to the drastic changes in the labor market and retool for the challenges ahead? How do you respond to the new era of downsizing without downsizing your dreams? We begin with some tough love — a collection of lessons that aren't always pleasant to hear, but which we think will prepare you for the challenging months ahead. We talked to CEOs of major corporations and executive recruiters at some of the nation's top search and outplacement firms. We've distilled their insights into a short, unsparing — but not unhopeful — list of 10 hard truths about layoffs that your father, your college recruiter, and your local HR representative likely never told you.
But don't forget the most important lesson of all. Markets go up, and markets go down. Digital technologies catch fire and then burn out. But through it all, the defining truth of the business world is that people are still front and center. If you're a talented person with a real passion for your work, you are living in the right times — layoffs or not.
1. There are worse things than being laid off — like staying in a bad job for "security."
For the past five years, everybody's had the same dream: to find work that doesn't feel like work, where every day is a new challenge, where what you do really matters to your company — and to you. In a period of economic doldrums, it's natural to let that dream fade — to hang by your bloody fingernails to the edge of your desktop, even if the job you're holding doesn't pass your personal desirability test.
But is that really how you want to spend your days? Is downsizing your ambitions the right way to respond to a downturn? It's true that good jobs are harder to find now, and nasty things like mortgage payments and phone bills conspire to make chucking it all unrealistic. But the soul-deadening effects of a bad job reverberate far beyond the 40 hours you spend grinding through the workday.
So, if you're in a crummy job, don't give into the temptation to just keep toughing it out because it's safe. And if you've been "downsized," don't rush to settle for the first job that comes your way. One of the new realities of the next economy is that a patchy résumé is no longer considered cool, says Philip D. Simshauser, president of the Center for Executive Options at the outplacement firm Drake Beam Morin. "Job-hopping used to be about chasing growth or following technology," he says. "But now, saying you've only been at a job for a couple of months because you made a dumb decision doesn't play well. Having multiple short jobs on your résumé damages your credentials."
So be sure your next move is to a place where you're likely to stay a while. And if it takes a little longer to find that job, so be it. Make sure that when you next hear "Welcome aboard!", your first reaction won't be to run for the gangplank.
2. In fact, losing your job may be the best career move you'll ever make.
Let's not be Pollyannaish about being laid off. Being out of work is no picnic, especially in such trying times. But if the Internet economy lured you into a job that wasn't really such a great fit, now may be a good time to rethink what you originally planned to do with your life.
"Layoffs provide a good time for reflection, a time to rethink who gets the privilege of having you work for them," says Rayona Sharpnack, founder and president of the Institute for Women's Leadership. "So don't frame the event as a personal failure. Losing a job doesn't make you a ne'er-do-well or a throwaway. Make yourself a promise that this time, you're going to find work that fits your terms. Ask yourself this: As the architect of your own life, as the creator of your own future, what are the criteria that you have for who gets the privilege of having you? That's a totally different — and healthier — mind-set."
A side note: Challenger says that opportunities still abound in the education, health-care, and energy industries — none of which depends on the sale of banner advertising for revenue. Think outside the employment box. There are plenty of appealing options in less-hyped industries.
3. But don't be surprised if you are unemployed longer than you expected at first ...
Data on length of job search is contradictory: One study by Challenger, Gray & Christmas says that the first quarter of 2001 had the shortest median job-search time — just 2.27 months — in the firm's 15 years of tracking this index. But a more recent study by Drake Beam Morin says that the median length of time it takes to land a new job is starting to rise. Drake Beam Morin's data says that the average job search now clocks in at between 3 and 4 months, depending on industry and position.
Companies are taking longer to fill positions. Or they're postponing expansion plans that would have created new jobs.
Bottom line: The days when you could post your résumé on a Web site, or tell a few friends you were in the market, and then sit back to wait for the offers to pour in are gone. So you may want to reconsider blowing your entire severance on a two-month trip to Europe. Tuck some in the mattress for rent should the search prove more arduous than anticipated.
4. ... Even though it often pays off to move fast.
After a couple of years spent working 24-7, it's tempting to wait out the downturn with a well-deserved break. Travel a little. Catch up on your reading. Get your head together. But, our sources say, you do so at your own risk. Nobody's predicting a turnaround before the fourth quarter, and some industry veterans who have lived through previous corrections are downright gloomy about prospects for a robust recovery before early next year.
Their advice? Get out on the street, and do it fast. "Don't take the summer off," says Challenger. "Don't go on sabbatical. The unemployment rate is still only 4.4%, but it may get worse. In 1982, it was more than double that. Move while there's still some luster on your résumé."
5. By the way, the Internet won't necessarily solve your job-search problem.
If you think moving fast means posting your résumé on the Net and spamming prospective employers with email, you're living in the past. That strategy is so 1999. For all the Internet's wonders, the Net still can't touch person-to-person networking when it comes to finding good jobs.
In 2000, the vast majority of Drake Beam Morin clients — 61% of them — found new positions through networking, while only 6% found them through online job searches. Keep in mind, Simshauser says, that this not a paper process — it's a people process.
So spend the evening doing your research or surfing the job boards. But spend your days out of the house. Go to professional meetings. Join organizations. Get involved in local government or volunteer work. Even pink-slip parties are worth a look since they're filled with fellow job seekers who may turn up leads that are better suited to your skills than theirs. "This is still a world where the best way to convey who you are is through somebody else's recommendation," says Simshauser.
6. You might have to settle for less money too.
Remember those giddy days when employers were forking over signing bonuses, paying bounties, and promising rafts of options to everyone from the CFO to the office admin? We regret to say that those days vanished along with record highs on the NASDAQ. Drake Beam Morin's Simshauser says that the offers he's been seeing are flat. "The high salaries have gone back to their old-economy standards," he says. "There's still a premium for good people at all levels, but right now, there are a lot of good people in the market."
The good news? Many companies are offering more cash and less equity. Two years ago, that policy would have been a deal breaker. Today, it just makes sense. You can't pay the electric bill with underwater Yahoo! options.
7. And you might find yourself at a more conservative company.
Suddenly, those old-fogy companies with org charts, dress codes, and silver-haired CEOs are looking a little more attractive. Have they gotten sexier, or is it just their earnings statements that have a certain pheromonal appeal? Our sources tell us that even some new-economy diehards are now open to overtures from the larger, more-established companies they once spurned.
"Candidates who dismissed old-economy companies as not being exciting enough now place higher value on stability and a big paycheck," says Marc D. Lewis, managing director of the technology and venture practice at the executive-recruiting firm Christian & Timbers.
This is not to say that everybody's going to work for insurance firms and machine-tool manufacturers — although there's nothing wrong with that. But even the hottest CEO candidates are being downright fussy about their next gig, veering away from companies whose ideas may be promising but whose funding may be dicey, to those whose prospects seem more secure. And many are opting for Global 1,000 companies, where they can apply their Internet experience within the enterprise, but without the constant pressure to achieve profitability.
Challenger suggests that job applicants lose their new-economy arrogance. "Don't reject a company out of hand because it doesn't have the appearance of the dotcom culture," he says. "You can find pockets of excellence in many companies."
8. You may also have to consider a different city.
Remember the old real-estate mantra, "Location, location, location"? Same thing's true in the job market. For the past five years, the Bay Area has been as potent a magnet as Haight-Ashbury in the Summer of Love. But the dotcom debacle, coupled with a cost of living predicated on a healthy market for IPOs, has had a drastic effect on the city's workforce.
"California seems to have been hit by an earthquake," says Lewis. "The number of people pulling the rip cord and trying to get out is gargantuan." Data from U-Haul's Mountain View office in Silicon Valley indicates that from December 2000 through February 2001, some 43% more families left the region than entered. That's compared with only 7.5% for the first half of 2000.
Where are they heading? Challenger says that Houston, with its energy businesses, is hot again. Charlotte, North Carolina is still healthy, with its combination of high-tech and banking. And overall, the Northeast, which has more medium- and large-sized companies and a more diversified base, seems to be holding up better than some other regions, according to Lewis.
9. For all the turmoil, never forget that your professional life span is longer than that of most companies.
Still, maybe the thought of going to work for a large conglomerate in Chicago or Dallas just isn't doing it for you. Maybe a layoff is a way of telling you that you were never meant to work for a big company. Consider working for yourself. Then all staffing decisions will be yours and yours alone. And besides, you're likely to be around longer than Napster, Netscape, or Megagigabyte.com anyway. "Free agency is often a better place from which to weather a bad economy, since your future is not lashed to one company or to one big client," says Dan Pink, author of Free Agent Nation. "When a company has layoffs, a lot of people think that they're better off buckling down and doing twice the work, but it's a fool's bargain. As a free agent, if one of five clients disappears, you can weather it.
Pink notes that the fundamental unit of business is still the individual. "There is a fairly sizable change in human longevity versus organizational longevity. Think about Netscape. It's unlikely that Netscape will exist in 10 years. But most people will. I'd put money on me over any company in the S&P 500. I'm not going to be acquired."
10. So your real job is to find what you love and then find a way to do it. (Return to point 1.)
Ultimately, your goal should be not just to find another job but to find work that feeds your soul — no matter the business climate, the state of the Dow, or the mood of Alan Greenspan. And that's the real truth.
Linda Tischler (firstname.lastname@example.org) is the Fast Company managing editor of new media.