Here’s an excerpt from a comment posted by Mason on another column, Get Hired: No resume, no interview, no joke:

The problem is this. Employers actually LOVE this current job market. They can control costs by paying exactly what they want for a given job/position…and they have an ENORMOUS pool of willing applicants from which to choose. Some of them, I would say most of the Fortune 1000, are doing well and extremely profitable. There is little reason or incentive for them to hire more people.

I just got rejected after 9 AM in the morning after I applied for a job at midnight. Something tells me a human didn’t actually read my application.

Companies who treat the employees like crap will be emptied out of their good employees once the economy gets better. Of this I am convinced. If a company craps on people in the bad times, they certainly cannot be trusted in the good times….

I think Mason is right. I saw his prediction come true in Silicon Valley more than once, after a bust cycle turned into a boom. Here’s how it works — and you tell me if you agree.

During a bust, revenues and profits crash. Business tanks, and companies lay off workers because they can’t afford them. As the cycle turns and we start toward a boom (or think we are, anyway), sales take off, revenues spike, and profits surge.

Junk profitability

The dirty little secret, though, is that a big part of the soaring profits stem from higher productivity that results from lower staffing levels. Fewer workers are doing more work, which yields higher profits for employers. This is nice. But it’s unsustainable. It’s junk profitability.

While some of the higher productivity can be attributed to increased efficiencies created by technology, much of it is still due to artificially low staffing levels. Companies today are teetering on the bleeding edge of high profits, and they really don’t want to start hiring again if they can avoid it.

Where the talent is ripe for the picking

The question is, how long can they sustain these levels of productivity and profits? Over-worked employees will leave the minute someone makes them a better offer.

And that’s an enormous opportunity for companies that get it. Riding the wave requires deft skills, and greed just causes more crashes. Some top-notch workers are already looking for better deals — because the economy is at a tipping point.

If you want to recruit top talent — dedicated workers who are ready to move — you need look no farther than the most profitable companies that haven’t been hiring. They may be advertising jobs, but as Mason suggests, they’re just pretending. They’re not hiring at levels significant enough to sacrifice their artificial profits. Their best employees are ripe for the picking.

Note to those employees whose eyes are wandering — these signals point to renewed freedom to negotiate really good compensation and benefits deals. I believe it’s always good to leave a few bucks on the table when negotiating, as a sign of good faith, but don’t leave too much. As Mason suggests, you still can’t really trust them, so take some profit of your own on the front end.

What’s your take?

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  1. I went through what Mason went through–posted application to company and was rejected in less than 12 hours. And, the relative who suggested I apply said they really need people, especially those with your skill set.

    I forwarded the rejection email to the relative who works at this company and wrote “you’ve got to be kidding.”

    I also agree that when the economy improves, good employees will hemorrhage from companies that have treated them poorly or worked them into the ground.

    But, it is an employer’s martket now and applicants are plentiful.

  2. @ dlms and Nick,

    It might be an employers market, but applicants still have to stand firm in ther salary/benefits requirements, especially if they are still employed.

  3. I don’t think I agree that it’s an employers’ market. Companies are crying talent shortage. Yet according to Wharton researcher Peter Cappelli they’re not willing to pay more to get who they need. Interesting, eh? There are several factors contributing to the employment problem, as viewed both by employers and workers. It hasn’t been teased apart yet. But the strain on the system (and on conventional wisdom) is showing.

    I agree with Dave that it’s important not to lose sight of the objective. If you can afford to stand firm, I think it will pay off in the next year or so. At what point will the cost of NOT getting a job done so exceed the necessary cost of hiring the worker — that companies will boost their offers?

  4. This may be true what the others are saying but it is one of the only many variables of factors of what is going on, in my opinion. Nick, I still believe in your earlier theories of it’s in our approach of finding opportunities, as well as making sure to avoid HR and other eat you alive staffing firms. I don’t think it’s an employers market either. I think that it just isn’t enough of people who are searching doing it correctly, not knowing the right tools to negotiate comparably with their talent and so on. So companies take advantage of our ignorant bliss and thrive. There are more people than companies and actually the power would tip in our favor if we knew how to navigate. It’s basic math in an otherwise obvious equation. Peter Capelli is exactly right. There is no shortage of talent. Think about it. About 57% of Americans have a BS or BA degree, depending on what statstical survey you subscribe to. That’s over half of the freaking population!!! Another blogger I love said it best. And this is in response to Peter Capelli’s research of companies not willing to pay what they need to get what they need. What people say they want is not always in correlation with what they REALLY want. You just have to have the marketable skills to prove they will want you.

  5. @Gwen: Many employers are trying to have it both ways right now. It will end when low staff levels can no longer deliver the necessary work, even after the whips come out. Hiring will pick up, and smart job hunters — the most talented ones — will hold employers over a barrel for good deals. I remember the heady days of Silicon Valley, when engineers could command BMWs as starting bonuses. A few years later, some of them were living out of those same BMWs, but that’s another part of the cycle…

  6. All good observations. But I still think it is an employer’s market. I know talented people who spent a year or more searching for work, at least in my area of the country.

    Here’s my question: What do you do when you make direct contact with the hiring manager, avoiding HR, but the hiring manager either does not want to talk to you or insists you go through HR?

    It is tough to get a face-to-face meeting with the hiring manager so you can show him or her how you would do the job well and profitably for the company.

  7. @dlms: I agree. It’s a real challenge to get to the manager. But the job you want is a challenge to do, too. How do you do your job when you face obstacles? Sometimes you have to “go around.” In this case, the manager is either lazy, or overwhelmed with such calls. So I’d find out who his/her friends are in and around the company. Approach the mgr through people he works with. This takes time. So does doing your job well when you have one. It’s not an instant process for a reason: Only the best, most diligent candidates should make it through to the manager. If someone the manager trusts says to talk to you, my bet is the manager makes the call.

    That’s what I’d do.

  8. @Nick: Yeah. Right now employers are trying to have it both ways. Only the people looking for new opportunity who know the “game” will navigate well. I know a lot of people right now who are miserable in their jobs because they are doing what used to be two or even three people’s former jobs. It’s about to change.

    @dlms: Nick told you right. Now is the time to start being a game-changer. Do google searches on finding the non-traditional methods of landing a job. Better yet, even Nick has material to buy to give you the nuances and edge. It’s worth the investment. And there are people like Ramit Sethi (one of the leading forward thinkers that help people change careers, find dream jobs and start entrepreneurship) that talk about non-traditional hiring methods in line with Nick that a lot of people don’t know to do because they don’t know the game. Nick, may I quote you on a statistic from your book? Nick and Ramit BOTH know that between 40-77% of jobs are acquired through doing the work of going around HR and getting to the people around the hiring manager or other key people. It’s not or, contrary to popular belief.

    I’ll give you one from my repertoire. Get connected to small business and entrepreneur meetups in your area, and go to the meetings and invaluably connect. Make friends and offer a free service to someone who has a business, etc. In other words, make genuine connections to people who may later in the future offer you a consulting opportunity or may even ask you to start up a venture with them because you built trust and friendship. You know the site, If you have decent interpersonal skills, you come off more transparent and may connect to others quickly. Meetups are usually free to attend or a small fee (maybe 5 bucks)to go to. The price of a latte. Anyway, market yourself to people that matter is the point. And there are a plethora of ways to do it.

  9. My company had all of us go through a new reality training session. One of the things that stuck in a lot of minds was this statement:
    On payday when you receive that paycheck, we are even. The company doesn’t owe you anything more.

    This is a 2 way street. If you want to treat me like a resource, then I am free to act like one.

  10. @Jeff, do tell us more. What other kinds of reality were you trained in?

  11. @Jeff: I suppose that means if you find a better gig, wait to get your next paycheck, and leave. No need for “notice.” You don’t owe them anything. Sheesh. What an attitude.

  12. @Jeff and Nick,
    From an accounting point of view, if you get paid on the last date of the pay period, then it is true, you and the company are even. I hope that is what they meant when they mentioned this.

  13. @Lucille: That’s the assumption. That they don’t owe you any money. Of course, wages and salary are usually in arrears, so you have to be careful. In the U.S., it’s illegal for an employer to withhold pay — even after you’re gone.