Middle Managers Find It’s a Buyer’s Market : With glut of job applicants, employers in many industries can afford to be choosier and do without headhunter firms.
There wasn’t anything special about the Help Wanted advertisement that Special Devices Inc. placed in newspapers around the country last October. “Fast-paced, rapidly growing company seeks individual for planning and scheduling the manufacture and purchase of parts,” the listing began.
Tracy Koll, personnel director at Special Devices, said the Newhall-based company had advertised similar job openings in previous years and received “maybe 100 responses, and 10 would be people you would put in a ‘potential’ file.”
Not this time. Within weeks, Special Devices, which makes explosive devices used in products ranging from missiles to car air bags, was swamped with 1,200 applications. After taking two months to sort through the resumes, the company finally hired a soon-to-be unemployed aerospace worker who happily accepted a $30,000 pay cut to take on the $60,000-a-year job.
“Because of the economy,” Koll said, “the game has changed.”
The massive cutbacks, layoffs and firings that devastated Southern California’s economy over the past five years may finally be subsiding, but, as Koll’s tale indicates, their impact on the local job market remains. Swamped with applications, employers have dramatically changed the way they fill openings, especially among the decimated ranks of middle management.
Employers are more picky, take longer making hiring decisions and often turn to candidates whose unemployment or previous high salary levels would have made companies reluctant to hire them not so long ago. Many employers have also found they can round up all the applicants they need without the help of expensive “headhunter” firms that companies depended on heavily in the tight labor market of the late 1980s.
Consider the stack of mail delivered to Tekelec Corp. in Agoura Hills on a recent Thursday morning. Among the usual bills, magazines and letters were these three missives:
“Is your company in need of an executive with 15 years of domestic and international experience?” asked the current chief operating officer of an electronics company.
“Could you benefit from a financial executive with experience in the communications industry?” wrote a financial officer from a giant telecommunications firm. “My total compensation has been in the range of $130,000 to $175,000.”
And from the vice president of a manufacturing firm: “I am writing with the hopes that your company has a current need for a senior executive who is enthusiastic, energetic and an outstanding motivator.”
Scott Gardner, personnel director at Tekelec, said such queries have become commonplace in recent years. The company, which makes testing equipment used by big telecommunications firms and employs 330 people, receives between 45 and 60 applications each week, up from 15 a week four years ago, and the volume doubles when the company lists an opening.
Gardner, whose personnel department shrank from seven employees to four when Tekelec eliminated 37 positions around the company in 1993, said he spends up to 15 hours each week sorting resumes and sending acknowledgment cards to applicants. In a vault near his ground-floor office, Gardner keeps about 15,000 resumes Tekelec has collected in recent years. Another 15,000 are in an off-site storage facility.
*
Like many applicants he sees, Gardner spent the bulk of his career with shrinking aerospace giants, including Rockwell Corp. and TRW Corp., before joining Tekelec in 1991. “My dad was a 35-year Rockwell employee, and he thought I was nuts to leave,” Gardner said. People felt the larger companies were more secure, he said. “That has changed.”
Small high-tech companies like Tekelec and Special Devices are popular job-search targets for refugees from the aerospace industry, which has shed tens of thousands of jobs in Southern California since the late 1980s.
About one-third of the 125 applicants who made the first cut for Special Devices’ opening last fall were from area aerospace companies, said Leonard Brown, director of manufacturing in the company’s automotive products division. In fact, Brown said, the winning candidate was about to lose his $90,000-a-year job at Allied-Signal’s aerospace plant in Sylmar, and was delighted to get the Special Devices position, even though it paid 33% less.
Five years ago, Brown said, the labor market was so tight that Special Devices would have been hard-pressed to find an experienced manager without turning to employment search firms. These so-called “headhunter” agencies specialize in locating candidates for management jobs and charge fees of up to 35% of the annual salary for the position filled.
But when a classified ad can prompt 1,200 responses, “we really don’t need agencies,” Brown said. “It wasn’t like we had to hire a headhunter to steal candidates from other companies because there were plenty who wanted to make a change or were not working.”
That’s grim news for headhunters like Marshall Mahl, who operates an executive search business from his home in Woodland Hills. Mahl, a 19-year veteran in the industry, said he has watched his business drop at least 20% over the past five years, partly because companies aren’t hiring as much as they used to, but also because when they do hire they can do it without his help.
“The only time they need me now,” Mahl said, “is when they need to make a discreet change and can’t advertise in the newspaper.” That usually happens when a company plans to fire a manager and needs to line up a successor before dropping the ax, Mahl said.
When companies do turn to Mahl these days, they tend to be harder to please, and take much longer to reach decisions, he said. “It’s a . . . kid-in-the-candy-store syndrome,” Mahl said, in that employers face too many choices. But it also reflects employers’ reluctance to hire after making so many cuts in recent years, he said.
Employers know they can fill slots more cheaply, Mahl said. After sending a top-notch credit manager to interview with a garment manufacturer two weeks ago, Mahl said he got an increasingly common response. “We like this guy,” Mahl said the company told him, “but we want to see if we can hire someone for $50,000 rather than $60,000.”
In the booming 1980s, Mahl said, most companies would have been reluctant to hire managers cut loose from higher-paying positions elsewhere, for fear these candidates would be unhappy with a pay cut and wouldn’t stick around very long. But these days, employers know such candidates are happy just to find work.
*
At Great Western Financial Corp., a Chatsworth-based savings and loan with 15,655 employees, recruiter Teri Forsythe said she has filled 15 positions since the beginning of the year and five of her hires are making less than in their previous jobs.
“Five years ago people were asking for a 15% increase, and no one was batting an eye,” Forsythe said. “Today they call you and say, ‘Look, I know it’s a cut, but it’s OK.’ ”
Great Western fielded about 60,000 job applications in 1994, up 20% from five years ago, said Robin McNeill, vice president of employee relations. To keep from being buried under a resume avalanche, Great Western bought a $250,000 computer system that scans resumes, stores them electronically, and can group applications by skill category. Since Jan. 1, more than 5,500 resumes have been loaded into the system, McNeill said.
Of course, not all employers are swimming in resumes. St. Joseph Medical Center in Burbank, for example, has had trouble luring applicants for certain jobs because health-care reform has made the future for hospitals uncertain. St. Joseph, one of the largest hospitals in the San Fernando Valley, has found it especially difficult to attract applicants for management positions.
Last year the hospital advertised an opening for a senior marketing manager, a position that would have lured at least 75 applicants five years ago, said Nancy Rubin, associate director of personnel at the hospital.
“We knew other hospitals were downsizing, and we were expecting a ton of applications,” Rubin said. “We got 10 responses. It was shocking to us.”
Rubin attributes the disappointing turnout partly to the tarnishing effect the 1992 riots, floods, earthquakes and recession have had on Southern California’s once-golden image. Many out-of-state candidates “would just laugh” when we contacted them, Rubin said, and last year a job candidate from Pennsylvania walked out of an interview when an earthquake aftershock rattled the hospital.
Many candidates are also spooked by health-care reforms driven by cost-cutting health maintenance organizations. Starving for patients and revenues, hospitals have been consolidating at a desperate pace in recent years. “People are leaving this field,” Rubin said. “It feels unstable to them.”
*
When it comes to hiring practices, no industry has changed more than aerospace. Lockheed Corp., the giant aircraft manufacturer based in Calabasas, employed 13,664 workers throughout Southern California five years ago. But today there are just 3,782 employees, almost all stationed at the company’s Palmdale plant.
Grace Jones, a staffing director in Palmdale who has worked in Lockheed’s personnel department for 16 years, knows she has witnessed the end of an era. Last year, Lockheed’s Palmdale unit filled just 50 positions, and spent about $100,000 advertising job openings. But in the late 1980s, the company’s annual ad budget had topped $1 million, Jones said, and Lockheed was scrambling to hire 700 workers locally a year.
“We used to do searches and use agencies,” she said. “We had radio advertising, billboards and television.”
When the company held a job fair in the late 1980s at the Airtel Plaza Hotel in Van Nuys, she said, “people flew in from everywhere. It was such a scary situation, we couldn’t handle the crowds.”
But at Lockheed and other aerospace firms, the million-dollar ad budgets, far-reaching headhunter searches and massive recruiting drives are distant memories.
As Jones said, “Those days are gone.”
