Is being unemployed still considered the scarlet letter of job searching? Do younger generations tend to leave jobs without having their next step lined up, and if so, how does this trend impact the perception of hiring a candidate who is currently unemployed? Does the duration of unemployment or recent layoffs affect the likelihood of securing a dream job on the buyside? In light of the recent frenzied job market, we aim to gain a deeper understanding of the stigma, or lack thereof, associated with being unemployed by evaluating these aforementioned questions.
Historically, unemployment has carried a negative connotation, whether it was right after graduating from undergraduate or postgraduate studies or during career transitions. Firms often assumed that if a candidate was still on the job market, there must be a reason for it, and this was enough of a red flag to dismiss their resumes. Hiring managers would question the value of interviewing an unemployed candidate when they could instead consider someone who was currently employed and performing well in their role.
Apart from the market factors, which we will discuss later, it is unrealistic to expect that the younger generation behaves similarly to previous generations such as millennials. The traditional idea of working for the same company for four decades and climbing the corporate ladder is no longer the norm. Therefore, it is difficult to apply the same assumptions to unemployment. It's essential to acknowledge that there is a shift happening due to the younger generation's increased risk tolerance and macroeconomic factors affecting job losses. Unemployment no longer carries the same stigma as it used to, and it cannot be viewed as a scarlet letter on your resume.
The process of securing a job on the buyside is highly competitive. Firms seek a particular type of candidate, and if the market is already saturated with candidates possessing the right qualifications (such as M&A experience at a top investment bank, experience doing diligence at a leading consulting firm, etc.), then unemployed candidates may face an uphill battle. Historically, recruiters in this space have been hesitant to present candidates who are unemployed, citing reasons such as the hiring firm may assume that the candidate was not a top performer or that there are other employed candidates who may be a better fit. However, although this has been the status quo for years, there has been a noticeable shift in the market's tolerance for a candidate's end date in their previous role.
Firstly, it seems that Gen Zers (those in junior-level Analyst and Associate positions at investment banks and buy side firms) do not share the same concerns as older generations regarding job-hopping. Candidates in their 20s are generally more comfortable leaving a job without having another role lined up, particularly if they find the job unfulfilling or do not want to sacrifice their personal time to work harder. The traditional mindset of paying your dues no longer resonates with the younger workforce. This change in mentality has led to an increase in candidates leaving their jobs without another role secured. Therefore, it's no longer reasonable to assume that if a candidate is unemployed, they must not have been a top performer. Many candidates opt to leave their jobs to take a break and find a role that is more flexible and meets their requirements.
For these reasons, being unemployed no longer carries the stigma it once did. However, it's important to note that the reasons behind your unemployment still matter. You must be prepared to explain why you left your previous position and what you're seeking in a new role that you didn't find before. Additionally, it's worth considering the length of time you've been unemployed, as there's a negative correlation between the duration of your job search and the type of role you end up accepting. For example, if you've been on the market for a year, you may be more likely to settle for a suboptimal role. Data also shows that the longer you're unemployed, the harder it is to find a job. So, while there's no longer a scarlet letter associated with being unemployed, it's important to approach your job search with a clear understanding of how to explain your situation and the impact that timing can have on the outcome.
The current business landscape presents several challenges, with a difficult environment for closing deals and a downturn in investor sentiment. Furthermore, the job market has been hit hard this year, with a record number of layoffs occurring since 2023. Even the largest players in the industry, such as Goldman Sachs, have cut thousands of employees, as reported by Forbes. This trend is not limited to big banks but has affected smaller and regional institutions across different locations. In this highly competitive environment, being unemployed can put you at a disadvantage as hiring managers and recruiters tend to eliminate resumes with an end date instead of "present" in the last position. Although there is no longer a stigma associated with unemployment, it is crucial to have a well-prepared story, network with professionals, and leverage your connections to increase your chances of landing a role. Despite the changing attitudes towards unemployment, it is still a challenging and competitive process that requires a strategic approach.
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