The Myths about Jobhunting in a recession

The job market over the last two years has been one of the worse in the City, and just when you thought that the job market couldn't be worse, more and more news came out about layoffs, hiring freezes, pay freezes, bankruptcies (Lehman, Bear) and mergers that proved fatal for a number of employees (Dresdner/Commerz, BoA /Merrill Lynch). It's no news: investment banking is cyclical and one day or another, you'll end up looking for a job in a recession, either because you've been cut or because you're not being paid.

But it's not all bad, and I'd like to destroy common myths:

1. No one is hiring

Big layoffs are well publicised in the news, but banks, even those laying off employees, are still hiring, albeit "selectively". The dirty secret of the City is that recessions and losses are good excuses for some "clean up": replacing the bottom performers with fresh talent coming to the market. For example, when Lehman Brothers went down, it is no secret that the very banks that were firing staff were in fact discretly courting those well trained Lehman bankers that they could get on the cheap (no sign-on or guaranteed bonus, no promotion, etc.). This has been the only time second or even third tier banks and boutiques got their hands on top tier bankers. In 2008-2009, even as nobody was apparently hiring, Lehman brothers bankers managed to be quickly, silently absorbed back in the City.

2. If I loose my job, the first thing i need to do is to call up the headhunters

Unless you were laid off from a top tier bank, headhunters are unlikely to be helpful. This is because they will have a large number of applicants for very few jobs, and, typically, being fired does not reflect very well on your potential job performance (unless if you were cut because of a merger or some other reason not related to performance). Naturally, they will want to send out the top guys to the interviews so that they can secure their commission fees. They will ignore you at best, and send your CV to irrelevant jobs and crappy boutiques in the worst case.

If you get laid off, your first move should be to talk to your boss and ex colleagues and ask for recommendations to other banks, clients, PE shops, etc. Unless you were total rubbish, they should be able to make some intros for you or at least point you in the right direction. Your second move should be to contact your friends at other banks. In a recession, networking is what works best, because due to the large supply of people in the market, banks will feel that they don't need to pay headhunters to find good people. MDs will typically ask their VPs, Associates and Analysts to obtain a few CVs from their friends at other banks, and interview them this way. In addition, banks do not want to be seen as simultaneously firing AND hiring people (it opens to door to bad press and potential lawsuits), so they won't use headhunters. Your final step should be to call the headhunters and signal that you are looking (do not sound desperate!), in case something interesting comes up.

3. You should be open and apply to every job to see what you can get

Being open to different ideas is a good thing where it makes sense, such as:
- Geography change: you might be able to keep your job and avoid the layoffs by relocating to your home country, or going to high growth places such as HK, Dubai, Singapore, etc. Even if you don't plan to stay there long term, it should be relatively easy to come back when the market picks up thanks to your network of friends, colleagues and ex-bosses that will stay behind. It also protects your CV: staying with the same company during a recession looks much better than not having a job or jumping to a worse ship.
- Job function change: spots may open up in different divisions. If you worked in M&A, you will have a skillset that can be used in a very large variety of roles, some of them that can be quite appealing: restructuring, financing, corporate banking, principal investment, DCM, strategy.
- Industry change: many people decide to spend a few years with a corporate. It could actually be beneficial and be a nice addition on your CV. For example, if you were a research analyst in the Media sector, working for Google would be a good option. Similarly, business development roles in corporates is has been a traditional refuge for bankers during recessions and that can potentially make your CV more appealing. High-profile strategy consulting firms such as McKinsey, Bain&Co, BCG, AT Kearney, etc. also typically continue to hire during recessions and quite often hire bankers. You even might be able to find spots in private equity firms and hedge funds if your experience is good enough.

What doesn't make sense though is to rush to dead end jobs out of desperation: governement jobs (regulators, researcher at central banks, etc.), the small specialised boutiques (good luck trying to come back to a bulge bracket, even if you were thinking it would only be a short-term job), back office jobs, etc.

Also don't forget that headhunters and banks will be aware that you applied to 150 jobs in efinancialcareers (headhunters really like to gossip about who's applied to 20 different jobs in one day) and this can seriously damage your reputation and credibility in the short term.

4. After 6 months out of the market, I am unemployable

Well, after an extensive period out of the market, it is true that you become slightly less attractive compared to those that are currently employed or those that have just been laid off. But in my opinion and by looking at friends that have been unemployed for 1year+ and still found great jobs, persistence always pays off - so don't rush into a crappy job unless you can't afford to stay unemployed financially. What will happen is that you will become less appealing to headhunters, because they will think that you have a low probability of getting the job (they'll assume that you either failed all your interviews so far or didn't get any). Therefore, you will need to rely more and more on networking with friends and ex-colleagues.

Nevertheless, don't forget that investment banking is cyclical and that the recruiting market will always picks up at some point, and more often faster than you think. If you can do the job, show that you stayed in touch with the market and the business news, and do well at the interviews, people will be understanding and give you a chance. Another important factor that plays in your favour is that bankers tend to move around much less in recessions and will hold on to their current job. That means that competition is less intense overall, as you are not competing from the guys at the top banks who are happy to still have their jobs. Also, as time passes, the people that have been laid off will have found something at another bank, have left the industry altogether, or taken some job in some low-tier boutique and damaged their CV in the process, destroying any chance to move back in a decent institution.

5. Going to a boutique will destroy your CV

This of course depends on the boutique. There are some high profile boutiques such as Greenhill and Perella Weinberg who will look great on your CV, and some other ones such as Moelis and Evercore that are doing quite well too.
What is risky and is likely to destroy your CV is to go to the very small, niche boutiques where you'll either work on very small deals, or not be working on deals at all. Before considering a move to a boutique, do your due diligence, look at their track record, and don't be fooled by ex-MDs from Goldman and Morgan Stanley spinning a story on how working for this boutique will represent a tremendous growth opportunity with more responsability. If they are so good, the deal they have clsoed in the past should speak by itself.