If you are like many Americans, you may have wondered at various times since November 8th, “Did that really happen?” It was as if the United States engaged in a game of Lunatic Poker with the United Kingdom: “We’ll see your Brexit and raise you a Donald Trump presidency.” Like it or not, however, the White House will take on a distinctly orangish hue in the coming days, which is what makes this 2017 outlook all the more interesting to write.
One the one hand, a significant roll-back of corporate regulations (think Dodd-Frank and Sarbanes-Oxley) could lead to a bevy of pink slips for Audit, Governance, Risk, and Compliance professionals. On the other hand, taking the hatchet to NAFTA or the H1B visa program could have a serious tightening effect an already overheated market. This would be particularly impactful in a place like the San Francisco Bay Area where perhaps upwards of 15 -2O percent of Audit and GRC professionals are working on some type of visa – and don’t expect an influx of resumes from highly qualified former coal miners to fill your Audit and GRC positions. By the same token, some estimate that the repeal of the Affordable Care Act may cost as many as 3 million jobs in the healthcare industry. About the only thing we know for certain, is that we don’t know anything for certain.
There are similarly confusing or contradictory trends in the economy at large. By most accounts, the economy is humming along as it hasn’t in quite some time. The stock market, corporate profits, automobile sales, and home prices are all up dramatically since the start of the Obama administration. Consumer sentiment is over 60%. Perhaps most relevant, unemployment is below 5% – in the range that most economists consider “full employment,” and for skilled labor positions (think Audit and GRC positions), that number is closer to 2%, or an average of one quailed applicant per opening.
But we also know that economic cycles do not last forever – and that which goes up, eventually tends to come down. I’m certainly not here to predict an imminent recession, but at some point over the next few years, it would not be surprising to see a downturn of some degree in the economy. And we may already be seeing some signs. For the first time in years, 2016 brought the word “layoff” back to the business section – though none impacting the Audit or GRC space. Another trend of particular note in Northern California is that the number of new IPOs, and valuations for those IPOs, have dropped precipitously in 2016, and certainly we have seen some chinks in the armor of even some of the bigger names of the most recent tech boom.
So what does it all mean?
The good news for Audit, Governance, Risk, and Compliance professionals is that it would take a monumental downturn in the economy to move the dial significantly in the job market for these highly impacted areas. My prediction is that the job market for these areas will continue to be strong, but that we may gently ease from what has been an insanely hot market into a sanely hot market. Quality candidates will continue to be in very short supply, and that shortage will continue to be particularly acute at the Senior Auditor or Senior Consultant level.
Some could be vulnerable
That said, as with all trends in the economy, not everyone will be impacted equally, and some professionals are likely to be more vulnerable than others. Among those that could be impacted: candidates lacking professional certifications or credentials, candidates with choppy resumes or career histories, and in particular, candidates in the final third of their career – Corporate America is never kind to this last group.
Candidates working in the U.S. on any kind of visa are going to be sitting on pins and needles. This is particularly important in the Bay Area, as if there is a significant cutback in the visa programs, technology companies are likely going to use those allocated visas on engineers and developers, not on Audit and GRC talent.
Another group that could be vulnerable are low level compliance professionals in BSA/AML, lending compliance, and even SOX. Banks in particular have been investing huge sums of money to automate those processes. If your daily tasks are repetitive and could easily be replaced by savvy software or off-shoring, you could be vulnerable.
This is also a good time to be cautious with regard to newer technology companies. Over the past several years, we have seen a dramatic proliferation of new companies in Cloud, Information Security, Social Media, FinTech, and App-driven companies. While these sectors will continue to grow and evolve, we have already started to see evidence of some of those companies falling by the wayside, and we will likely see further consolidation in that space.
Good time to be aware of your own personal risk appetite
During uncertain economic times, it is always smart to be aware of your own personal risk appetite. If you are young, single, and unencumbered by a mortgage or other financial commitments, you can afford to take more chances. If, however, you are in the latter part of your career, financially responsible for others, or have fixed economic commitments, you may wish to take a more conservative approach. None of us know for certain what the next four years will bring, but during uncertain times, I like solid companies, with a demonstrated history of profitability, and a track record of being able to fare well in good or less good economic times.