Taking the Safe Route: Risk takes a dive despite the economic recovery
Risk taking has taken a dive during the current economic recovery, particularly among job seekers, according to the outplacement firm Challenger, Gray & Christmas Inc.’s latest job-market index. A quarterly survey of 3,000 discharged managers and executives found that relocation among job seekers is down 39 percent from recent highs; business start-ups are 30 percent lower; and the willingness to change industries is nearly 10 percent lower than in 2002.
“Combine these declines with the fact that corporate spending on research and development and on new capital equipment has been slow to increase and you have a picture of a risk-averse economy that is destined to stagnate,” says John A. Challenger, the company’s chief executive officer. “At a time when indications of a strengthening economy should be prompting people and companies to take more risks, they appear to be going in the opposite direction,” he continues. “This will not bring the recovery to a halt, but it will certainly keep it in the slow lane.”
The index shows that the percentage of jobless managers and executives relocating in 2003 fell to an annual average of 13.9 percent, the lowest figure since Challenger began its tracking in 1986. “Relocation has always been considered a risky but often necessary step to accelerate the job search,” says Challenger. “From 1991 to 1993, when the economy was recovering from the last recession, nearly one out of three jobless managers and executives relocated for new jobs. The fact that relocation is currently more than 50 percent lower than during the last recovery stems in part from a post-September 11 desire to stay close to friends and family. It may also be related to the fact that many risk takers got burned when the dot-com bubble burst.”
• The percentage of jobless managers and executives starting their own businesses fell to an annual average of 6.8 percent from 9.6 percent in 2002, the lowest annual average since 1997, when 6.5 percent of these job seekers started firms.
• Industry switching decreased in 2003, with an average of 46.5 percent of job seeking managers and executives going to new industries, down from 50.5 percent a year earlier.
“The problem with staying with the safe route when job seeking is that it invariably prolongs the process,” says Challenger. “Those who choose to expand their search to cities or states or who look at a variety of industries where their job skills fit are going to significantly improve their chances of success because they are opening themselves to far more opportunities.”