I wanted you to imagine a simple unemployment graph with a low and stable trendline month over month in 2019. Now, imagine a vast mountain skyrocketing in the middle of the chart around March 2020. Then, see a slow slope gradually decreasing without coming anywhere near the low and stable line in 2019. Based on 2020 alone, you could probably take a good guess at what is happening in the overall job market, but what is happening at the executive job level? Suppose you are an executive, hiring manager, or HR member looking for top-level talent. In that case, this post will provide a snapshot of the executive job market, and this post will help you evaluate whether now is the right time to be searching for executive individuals at your company. In this post, we want to help you get a good grasp of what is going on by reviewing the below:
Highlight the key takeaways from a report by Hunt Scanlon on the executive search industry
Recommend strategies for executive hiring
Introduce a unique executive search solution
Suppose you feel like you need more information after reviewing this post. In that case, we are offering a free download of the Hunt Scanlon report about the state of the executive recruiting industry in 2020/2021.
What is the state of Executive Recruitment in 2020/2021?
In March/April of 2020, there was a dramatic reduction in recruitment in most industries. At the same time, some industries, like information technology and consumer goods, increased their hiring and recruitment to fulfill a newly increased demand for services and goods. In the negatively affected industries, losses in revenue eliminated many executive levels and mid-management positions. Larger organizations weathered through the economic crisis by consolidating roles and reducing non-essential functions. This downsizing helped organizations save cash to ride out a volatile marketplace. Smaller organizations had to eliminate non-essential and essential positions to stay afloat. Some shut down their businesses altogether. The executive search industry has mirrored the enterprises mentioned above, and the search firms serving these industries suffered the same fate. The economic impact of the Covid-19 era has not been equal, and there is a clear divergence of winners and losers playing out currently. Let's take a look.
Financials
Overall, it looks like most search firms are seeing a 30% reduction in profits in their businesses. Korn Ferry reported, "a total fee revenue dropped 29 percent in the first quarter of fiscal 2021 ($344 million) vs. that same period a year ago ($485 million), and its executive search revenue tumbled 37.8 percent (193 million to $120 million)." [1] A survey of recruiting professionals conducted by Bullhorn showed "28 percent of respondents reported that their bottom line was down by at least 30 percent." [2] The survey also showed that permanent search firms were facing more significant decreases in profit than staffing agencies.
Hiring Trends
Due to social distancing and safety guidelines, there is a massive increase in virtual interviewing and onboarding across industries. Covid-19 has forced companies to conduct virtual video interviews with candidates to evaluate their behaviors and skills. Some companies will make offers and onboard candidates in a remote, virtual, and work-from-home environment. Therefore, executive search firms have facilitated the process differently than before, with a good amount of technology and software to support it. The results seem to be positive by saving costs during the interview process, reducing scheduling conflicts, and speeding up the hiring process.
We also see an increase in digital screening methods to automate the recruiting process. The increased dependency on software to market, recruit, and advertise to candidates in the marketplace has been steadily growing. The pandemic has caused a jump in implementing applicant tracking systems, automation processes, and advertising/marketing campaigns to screen talent efficiently. We see a trend in companies creating a more formal application and interview process due to the implementation of these technologies. Searching for jobs online is becoming more common due to social distancing precautions, and search firms are taking advantage of this trend.
Diversity and Inclusion
According to the Center for Talent Innovation, only .8% of Fortune 500 CEOs are black people, which account for about 12% of the US population[3]. There is significant inequality in senior-level leadership at Fortune 500 companies in the US. After the social unrest and protests over the summer of 2020, the sands are shifting to create more equity in executive-level roles that reflect the overall US population. Many companies are now actively implementing diversity and inclusion strategies to bolster their workforce and executive representation. Many companies are now creating a senior-level role focused on diversity and inclusion. Executive search firms worth their salt are taking notice and adapting to the inclusion and diversity needed in their clients' executives. Chapel Hill Solutions agrees on the importance of identifying and recruiting diverse individuals for our clients.
All Depends on the Vaccine Rollup
We are finding that the future of our economy and the executive search industry will be dependent on containing the Covid-19 virus. The vaccination rate, safety precautions, and social distancing measures will significantly help the industry rebound. Of course, many people have grown tired of social distancing and mask-wearing, so the vaccine rollout and adoption will be a common denominator of how fast the industry will return to normal. President Biden and many national leaders have implemented goals and procedures to meet a rapid rollout, and we hope that a unified American effort will help everyone get back to work.
Why is Executive Search important in 2021?
Oh man, there are so many reasons why executive search is vital during normal economic periods. Now, there are even more reasons why an executive search strategy is essential during a pandemic or economic downturn! There shouldn't be any difference between hiring during a crisis than hiring in 'normal' times. Companies should have a well-thought-out strategy for hiring and recruiting. They need to have compelling, attractive, and unique selling points about their organization to attract the best talent. Executives search firms do all the above! In summary, executive search firms can:
Evaluate the strategic need for executive-level positions within the organization
Survey the competitive talent marketplace
Create a customized recruiting campaign
Screen and vet the best candidates to match organizations' needs
Secure placement of best executive talent to your organization
In 2021, it appears that the candidate pool is growing even smaller due to the apprehension of making a move during the pandemic. This smaller candidate pool will make the marketplace even more competitive to attract the best talent. In a report by Hunt Scanlon, their survey shows that 60% of employed executives are not considering a job change in the fall of 2020[4]. Therefore, many companies assume recruiting quickly will result in the best talent, but they hire the best available talent in the marketplace.
Therefore, it is best to take a strategic, thoughtful, unbiased, and systematic approach to evaluate all options in the marketplace to make the best hire. Many executive search firms have various solutions for solving this puzzle. Chapel Hill Solutions believes our customized approach, with our many years of experience, will help you fit the pieces in the right place.
We see that candidates are looking for a change for several reasons:
Organizations have shown their true colors during this crisis
Many talented executives have been caught in downsizing measures
Specific industries are benefiting/growing from the pandemic
Businesses need to capitalize on this situation. Companies and our clients must think strategically to search for candidates that will impact their organization's bottom line and elevate their overall culture. Even though the candidate pool is smaller, there is an opportunity to grow with the right person in the proper role.
The executive search industry's health will be an essential indicator of how the overall economy performs because it will show the liquidity in the marketplace to outsource and hire the best executives. Most companies will need a certain amount of cash and a financial forecast to start this investment. Companies need to partner with experienced and modernized search consultants who have adapted to the current environment. Chapel Hill Solutions is constantly adapting to better compete in the recruiting landscape.
Real Example and Solution to Executive Search in 2021
Chapel Hill Solutions offers a unique retained search solution based on a pay-for-performance model that produces accurate results. Many retained search firms send you a bill at the end of a search no matter how they performed. Did they hire the best person? Did they present you with anyone from their sourcing? Did they even present any candidates?
Chapel Hill Solutions offers to pay for performance search that is only billable until specific vital goals are achieved throughout the search process. We have found this makes a real difference to our clients in contrast to our competitors. See a few reasons below why it has helped during this crisis:
Helps cash flow
Creates investment by both client and search firm
Promotes collaboration
Incentivizes hitting key hiring goals
Strategically sources the best talent
For example, Chapel Hill Solutions has onboarded a new client with this unique solution last year for a Senior Vice President of Human Resources in the South. Not only were we able to identify the best candidates in the marketplace, but we fully integrated with the organization to assess, vet, and hire the best individual for their organization. The client is now a trusted partner utilizing this approach for other vital roles within their organization.
To Sum It Up
Overall, we have found that the executive search industry's recovery is not equally distributed across the economy. The recovery should happen sooner rather than later due to the bill passed in Congress and the increased vaccination rate in the United States. Many companies will start implementing growth strategies near the end of this year and into 2022.
Recommendations for businesses looking for executives:
Start strategically planning for talent needs now
Position your organization to market the benefits of working at your company during these times
Start recruiting for top-level executives because many are open to a conversation
We are happy to discuss the ins and outs of the above further by scheduling a virtual meeting with you and your team. Send an email to info@chapelhillsolutions.com to get started.
Finally, we wanted to share with you the full report by Hunt Scanlon regarding the state of the industry in 2020 and 2021. Please click on the link below to access it.
[1] Scanlon, S. (n.d.). 2020/2021 Executive Recruiting State of the Industry Report – Part 2 Forecast & Recovery Strategies (Rep.). Hunt Scanlon Media.
[2] Scanlon, S. (n.d.). 2020/2021 Executive Recruiting State of the Industry Report – Part 2 Forecast & Recovery Strategies (Rep.). Hunt Scanlon Media.
[3] Brooks, K. (2019, December 10). Why so many black business professionals are missing from the c-suite. Retrieved January 08, 2021, from https://www.cbsnews.com/news/black-professionals-hold-only-3-percent-of-executive-jobs-1-percent-of-ceo-jobs-at-fortune-500-firms-new-report-says/
[4] Zupsansky, D. (2020, September 23). Majority of Executives Not Planning to Change Jobs. Hunt Scanlon Media. https://huntscanlon.com/majority-of-executives-not-planning-to-change-jobs/
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