Operations take a big hit in recessions; but those skilled in teaching other operations managers how to work more efficiently will find big opportunities.
By Kevin Fogarty
In most professions, when people realize the light at the end of the tunnel is a train, the normal response is, “Uh-oh.”
In operations management, it's more like, “The shipment's here so we can finally get to work.”
The tunnel's not getting lighter yet, but some in the operations market are starting to feel rumbling on the tracks.
"We're starting to see signs of a turnaround," said Jeff Chaponick, president of MAC Executive Recruiters Inc., a Texas executive-search company with a focus on efficiency experts in supply-chain, logistics and distribution functions. "The business-development folks in my organization spend all day on the phone with potential clients and, for a long time, the answer was usually, 'We don't have any jobs to fill' or, 'Call back in six months.' Now we're either getting the work or they're saying, 'Call back in two weeks.' "
That's not an indication that the economy as a whole is recovering Chaponick said — or even the overall market for operations specialists. MAC's specialty is placing operations managers certified in Six Sigma — a complex discipline whose goal is to identify errors in production that lead to defects in a product or an inefficient process that wastes time and resources.
Lean Production (or Lean Six Sigma) can be applied to any business process, not just manufacturing or distribution, said Tim Noble, managing principal of The Avery Point Group Inc., a search firm in Alpharetta, Ga., that also specializes in efficiency expertise. Applied correctly, working lean can improve efficiency and reduce costs so dramatically that the processes themselves become even more attractive to companies that understand how to benefit from them, he said.
In a lean economy, lean production becomes a necessity, and the expertise remains highly prized. Lean-Production and Six-Sigma jobs have proven more immune to layoffs and declines in hiring than operations jobs outside the specialty, Noble said.
"That said, we still see a lot of companies that aren't fully committed to Lean or Six Sigma laying off their continuous-improvement staffs," Noble said. "And there are obviously a lot of losses among operations staffs in general. But for people with Lean and Six-Sigma skills, things are a lot healthier than in the broader job market. What these folks are about is taking out costs, improving businesses, improving services — all the things a company should be doing during tough times."
Bright spots in ops
In general, operations employment has suffered. The industries most reliant on operations professionals are shedding jobs faster than the national average. Between March 2008 and March 2009, manufacturing jobs declined 9.2 percent, durable-goods jobs dropped 11.29 percent, and automotive-parts and assembly jobs fell 24 percent, according to the Department of Labor’s Bureau of Labor Statistics reports.
"There has been a pretty heavy hit in supply chain, manufacturing, engineering — either in layoffs or pay cuts — whatever it takes to cut their direct labor costs," Noble said. "Especially in places like automotive, where Chrysler, Ford and GM sit; their volume is down 30 or 40 percent. That cascades right through the supply chain, and there's nothing you can do. There are a lot of ‘A’ players out there who are out of a job."
But other operations sectors have fared better in the recession – primarily those involved with moving things from one place to another. Transportation and warehousing jobs actually rose 8.9 percent while employment in the trade, transportation and utilities sector is down 3.14 percent, and wholesale trade is down 3.9 percent in the same period, according to BLS data.
The decline in available positions resulted in a backlog of candidates for recruiters and hiring managers to sort through, something Noble and Chaponick referred to as the “C” players problem.
"Employers are definitely leveraging the economy to save on their payrolls," Chaponick said. They’ve taken advantage of cost cutting to drop second- or third-tier performers from their roster. The result is a lot of "C" players looking for the same jobs as “A” and “B” players, he said.
That makes getting hired a tougher prospect for anyone who's out of a job, Noble said. Recruiters are having to spend a lot of time figuring out if candidates are "A" listers out on the street through no fault of their own, or "C" listers who might be competent enough, but don't have the chops to make it in a market where employers have such a wide selection of candidates.
The hiring cycle is much longer now, Chaponick said: A hiring decision that might have been made in seven days a year ago is taking three and sometimes four weeks now.
In operations, job descriptions and lists of requirements have not gotten longer or more onerous, Noble said. By contrast, in sales, marketing, IT and other functional areas, recruiters complain that employers use long lists of skills to filter the mass of candidates down to a few that match specific requirements.
In operations, hiring managers seem to be enforcing much more consistently the requirements they already had and pressuring recruiters to vet a candidate's qualifications more thoroughly before they'll schedule an interview, according to Noble, who said he hasn't seen any clear signs of an economic turnaround.
"A lot of companies are in wait-and-see mode, and they're all being much more selective because there's the perception that they can be," Noble said. "They want to make sure that if they bring a person on board, it's someone who can contribute right away and is accretive, additive to their situation."
That abundant supply has also driven down salaries about 10 percent, even for those with Six Sigma and other special skill sets, Chaponick said. And it has reduced or eliminated benefits like relocation expenses and help selling a house.
"Two years ago, companies might have a program to help a good candidate sell their house, and if they didn't, to buy it from them as part of a relocation package," Chaponick said. "That's completely gone; no one's doing it. We deal in a higher salary range, so our clients generally keep their houses and rent them out until the economy turns around, but they're not getting much help from employers."
But there are signs of overall recovery for operations managers, Chaponick said. His business remains below what it was a year ago, and he doesn’t see a dramatic turnaround, but his clients are calling, he said. They’re booking his company to vet operations specialists for a host of new positions.
"Our revenue for April will probably be about the same as for last month, which is somewhere between 10 percent and 15 percent down from last year," he said. "But we're definitely seeing an uptick in response and things are starting to move a little faster. If (job openings) we're tracking come down from 90 days to 75 days (to hire a candidate and finish the contract) that will be a really big deal."
Kevin Fogarty is a general assignment reporter for TheLadders.