Dear New Employee: Welcome, and Goodbyegreenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread
For educational purposes only
Recall that I recently posted an article about Intel rescinding offers it had made to new university graduates. The enclosed article goes into this new practice in detail.
NBC Nightly News discussed this topic this evening too. (They used to put transcripts on the Web, but I can't find it.) They featured a new graduate of MIT who had accepted a job offer from Intel in January, to start in June, only to now have it rescinded. He as yet has no other job offer.
All this is in contrast to a CNN segment saying that it's still a red-hot market for new college grads, including high-tech. The person who sent it to me asked, "True or false?" Though it's too early to have any data, my students are telling me the answer to that question is False. The job market is poor right now, they say.
Yet Harris Miller of the ITAA was on CNN yesterday, apparently still claiming a shortage. (I don't mean to imply bias on CNN's part; they did ask me to appear too, but I had a time conflict.)
New York Times
May 4, 2001
Dear New Employee: Welcome, and Goodbye
By JONATHAN D. GLATER
Carol Halebian for The New York Times
Sandra F. Capel, a senior at Columbia, recently had a job offer rescinded. Some M.B.A. candidates and college students who thought they had lucrative consulting, banking or high-technology jobs nailed down after graduation are getting unwelcome calls and letters from their would-be employers, telling them to start work later or, in some cases, not at all.
Many students went through job interviews last fall, receiving and often accepting offers for jobs starting later this year. But in the intervening months, the slowing economy has led a number of companies to reduce or even undo hiring, leaving students out in the cold.
In an effort to cut costs without having to rescind job offers, which are usually nonbinding, consulting firms like PricewaterhouseCoopers and Mercer Management Consulting have informed future employees that they should seriously consider waiting, even until next year, to come to work. Technology companies like Cisco Systems and Intel have sometimes gone even further, paying new hires not to come to work at all.
Credit Suisse First Boston is giving some of this spring's college hires the option of deferring their start date for one year. Those students will be paid $20,000 though they will have to return the money if they do not eventually go to work at the investment bank.
"It's not necessarily just technology companies, but companies doing business with or catering to the technology industry," said Bill Coleman, vice president for compensation at Salary.com, which tracks compensation paid by various industries.
The employers' moves, an abrupt reversal of the head-over-heels hiring of recent years, are leaving students in limbo. "I figured companies would just come here and grab all the students," said Sandra F. Capel, a senior at Columbia University. Like many of her classmates, Ms. Capel had a job lined up last fall, but in March her prospective employer sent her a certified letter rescinding the offer. "I have been calling back companies with whom I was going to interview, or that I was interested in interviewing with in the fall," to see if they are still hiring, said Ms. Capel, who plans to stay in New York to look for work this summer. "I'm getting less and less optimistic as graduation nears, and I'll have to start paying bills. "You do all the right things, go to the right school, just to at the last moment lose out on what you had been working for," she added. "It's just bad timing."
One M.B.A. student, who did not want his name or the name of his business school used because he feared it might jeopardize his job search, thought he had a consulting job waiting, until he got a call in March telling him the firm could no longer guarantee its offer.
"They said, `If things pick up, maybe we'll be able to honor' " the offer, the student said. "Right now I'm still looking."
Some students sound remarkably calm about their prospects. Jason Barker, a graduating M.B.A. student at Georgetown University, has not found a job, but seems unconcerned.
"I don't think it's a crisis situation," said Mr. Barker, 31, adding that while he has loan payments to make, they are deferred until the fall. "There are plenty of jobs out there."
The steps being taken to defer and deter hires are evident at a number of high-profile companies. And career counselors at a range of colleges and business schools nationwide report that they are rushing to help students who have received bad news from expected employers.
With the economy slowing, not only is there less for current employees to do, but fewer older workers are quitting and more new ones are knocking at the door, employers say.
"A number of clients in a softening economy are going to delay certain projects," especially consulting projects and especially those that involve spending on costly technology, because such costs are often viewed as discretionary, said Bob Chrismer, director of global recruitment at A. T. Kearney, which is pushing the starting dates for some new employees back as far as January.
Like other consulting firms, he said, "we are all faced with this knotty little problem of balancing our resource capacity with client work."
At PricewaterhouseCoopers, the later a prospective employee accepts an offer, the later that person will be allowed to begin work.
Mercer Management Consulting told prospective employees who were slow to accept their offers that they would not be starting until January.
Employers find themselves in a situation the mirror image of last year, when students had so many options that it was often difficult for firms to draw them in. This year, 56 percent of M.B.A.'s who got offers from A. T. Kearney accepted them, compared with 42 percent last year. At Bain & Company, 70 percent of M.B.A.'s who got offers accepted them, up from 55 percent. At Boston Consulting, the acceptance rate rose by 15 percent even though the firm reduced the number of offers made this year, though the firm would not disclose its actual acceptance rates.
"We probably hit a record in acceptances," said Ken Keverian, a vice president at the Boston Consulting Group who is responsible for M.B.A. recruiting in North America. This year, Boston Consulting will let starting consultants elect to take an immersion language class, paid for by the firm, before they start work..
That should smooth the flow of new consultants into the company, Mr. Keverian said. Normally, "we get a large inflow of our talent within relatively few weeks" in September, he said, and that drives up costs all at once, though business may pick up more slowly.
Intel is not rescinding offers outright, but is offering payments to prospective employees who decide not to go to work for the company.
Intel would not specify the amount of the payment, but said it would vary with the job and the salary offered. If new graduates come to Intel anyway, they may not end up in the position they were initially promised, a company spokesman said.
Cisco has rescinded offers to about 25 percent of the college students who received job offers, but has tried to soften the impact by offering a consolation package consisting of 12 weeks' salary and assistance finding a job elsewhere. A Cisco spokesman attributed the move to overall softness in the economy.
Some companies are pretty much sticking with their original hiring plans. McKinsey & Company, a strategy consulting firm, has not changed its hiring or summer programs, a spokesman said, and a spokeswoman for Accenture, formerly known as Andersen Consulting, said the company was making only marginal changes to its summer program.
Similarly, Hewlett-Packard, which is in the midst of a restructuring involving the elimination of 3,000 jobs, reduced the number of people it is hiring but said it had not rescinded any offers.
Companies have also shortened the length of their summer internship programs, which are an important way to recruit future employees, business school career advisers say. Mercer, like the investment firm Charles Schwab, canceled its summer program outright this year.
Gregory J. Hutchings, associate dean for career resources at the Olin School of Business at Washington University in St. Louis, said summer internships had been "reduced from the normal 10 or 12 weeks to just 7."
The ultimate effect of these developments, which career advisers say have led recent and soon-to-be graduates to accept whatever offers they receive very quickly, may be a rash of job-hopping a few years down the road, said Lawrence S. Abeln, director of the M.B.A. program at the Georgetown University School of Business.
"If students are only receiving one offer and accepting one offer, it may very well result in a higher turnover rate in the first two years" after graduation, he said. "With only one offer, you're inclined, in this economy, to take it, and it may not be the right position for you."
-- K (email@example.com), May 06, 2001
In the temporary "leased manpower" job market, to which many older workers are consigned, (due to corporate concerns about age based health insurance costs); the situation is even worse. Most of these temporary jobs require employee to pay all upfront expenses of getting to the job, which is usually away from the employee's home. This means high travel costs, especially with higher gasoline prices. At best, a fixed partial travel reimbursement is made, but this is often contingent on actually working for a time, usually one month.
These temporary job offers have always been subject to cancellation at any time, even after employee has travelled cross country at own expense. This results in the employee LOSING money in the JOB market. The rate of these financially disastrous temporary job cancellations or early terminations has risen sharply since 1998.
Part of the reason is reduced corporate computer system reliability. If the computer system is unreliable, work can't get done. This is a valid reason for temporary "contract" employee termination, at any time --- even before beginning work. Surely, at least part of the reason for this computer reliability problem is the Y2K bugs.
This posting reveals that this is not the only reason for the high risk of job cancellation for "contract" employees, resulting in losing money in the job market. Market hourly rates for temporary contract job assignments are higher, even though the supply of workers is greatly exceeding the demand. This seems to defy the law of supply and demand, but it does not: The pay premium is compensation for the now very high risk of actually losing money in the job market.
Needless to say, if this disaster befalls a temporary contract worker, especially if several times in a row; the supply of Risk Capital is exhausted. Once this happens, the worker then must accept whatever local (risk-free) job available, even if this means working minimum wage. If the local job pay is low, then the necessary Risk Capital for returning to suitable work for the employee's skills is never replenished. For older, minority, and handicapped workers, the prospects for re-entry to jobs using the employee's skillset are even more remote.
For affected workers in this segment of the job market, the Y2K Bugs have "bitten" hard, indeed. In 1999, it was "lockdowns" and remediation induced computer reliability and bottleneck problems. Then post-roll, the problem has been residual Y2K Bugs. The second variant of the Leap Year Date Bug, the so-called "Y2K+1" Bug, which hit on 12/31/00, has substantially delayed any prospects for the computer reliability situation returning to normal any time soon. Now, as this posting indicates, add to this risk factor the economic uncertainty that is a second order effect of Y2K (a cascading effect.) The result is that working temporary leased manpower jobs away from home has become as risky and speculative as trading futures or options. So many older skilled workers are now underemployed long term, as a result, which does not bode well for the Nation's economic future. This problem will inevitably impact national productivity and personal income levels, as well as being a disaster for those individuals directly affected by "losing" in this new very high risk job market.
-- Robert Riggs (firstname.lastname@example.org), May 06, 2001.