Kula Consulting Blog

Eleven percent!  Did I read the EDD press release correctly?  The unemployment rate in the heart of the Silicon Valley is currently eleven percent.  In March, 2008, four months into the recession (that we officially learned about in late August, 2008), the rate was five-point-three percent (5.3%).  We have doubled the unemployment rate in one year.  Are we done yet?  But, hey, 11% is still better than the 13% rate in Santa Cruz County, where Kula is headquartered.  Watsonville is over 24% unemployed.  I’m glad our clients are mainly in the Silicon Valley!  I have worked in this area for over 35 years and have not experienced anything like this.  The dot com bust was the supposed to have been the worst one, but, this time seems worse to me.  Is it just me? Kula Consulting is very focused on the technical accounting and tax professionals segment of the employment market.  This segment is normally thought to be one characterized by low-unemployment, high demand, in fact, shortage of talent.  That’s one of the main reasons we specialize in this segment.  To be successful, we need to directly source, recruit and evaluate people who do not have time to post their resumes on job boards or check job postings.  We listen to want they want and go try to find them their next great job.  We also help this same segment (SEC reporting, international accounting, revenue reporting, compliance and tax professionals) market their skills when they choose to work as contract or temporary professionals.  We have built a nice, boutique business with this market approach.  Even though the unemployment rate for our segment of the workforce is still low, and demand for their services is still higher than the rest of the job market, our business and all of our competitors’ business is down from last year. Companies are not able to get approvals for bringing on even part-time contract help to get the critical work done. And, it’s hard to justify a placement fee for a star talent when the CFO is telling everyone else to save money. Just work harder and longer seems to be the strategy to get through this downturn.  If that’s what it takes to make it, then I guess I understand it.

But, here’s a lesson I’ve learned from going through five previous economic downturns:  When the job market turns the employee turnover rate increases.  There is a lot of pent-up demand to change jobs that is released when the economy moves up.  All of the overtime, salary freezes, promotion freezes and extra stress (plus, some of the “survivor guilt” of making it through the lay-offs) fuels the need to seek new employment opportunities. To just start fresh.  When the market does turn upwards (2012?), there will be 50% less placement firms and many fewer internal recruiting resources available to find and evaluate the talent Silicon Valley companies will need.  It’s sort of a “pay me then situation”, since very few firms are “paying us now”.   Firms can mitigate this forecast by listening to their remaining employees and by bringing on at least part-time contract and temporary help to keep the work day to a reasonable level.  There are some real bargains available; just call me and I’ll share them with you.