What is the Executive Recruiting State of the Industry 2020/2021?

I want you to imagine a simple unemployment graph with a low and stable trendline month over month in 2019. Now, imagine a huge mountain skyrocketing in the middle of the graph around March 2020. Then, see a slow slope gradually decreasing without coming anywhere near the low and stable line in 2019. Based on the 2020 alone, you could probably take a good guess at what is happening in the overall job market, but what is actually happening at the executive job level? If you are an executive, hiring manager, or HR member looking for top level talent, 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 to executive hiring
  • Introduce a unique executive search solution

If you are feeling like you need more information after reviewing this post, we are offering a free download of the Hunt Scanlon report about the state of the executive recruiting industry in 2020/2021.

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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 new increased demand in services and goods. In the negatively affected industries, many executive level and mid-management positions were eliminated due to losses in revenue. Larger organizations weathered through the economic crisis by consolidating roles and reducing non-essential positions. This helped organizations save cash to ride out a volatile marketplace. Smaller organizations had to eliminate non-essential and essential roles to simply stay afloat. Some shut down their businesses altogether. To say the least, the executive search industry has mirrored the businesses 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 major decreases in profit than staffing agencies.

Hiring Trends

Due to social distancing and safety guidelines, there is a huge increase in virtual interviewing and onboarding across industries. Covid-19 has force companies to conduct virtual video interviews with candidates to evaluate their behaviors and skills, and some companies will make offers and onboard candidates in a remote, virtual, and work-from-home environment. Therefore, executive search firms have been able to facilitate the process in a different manner than before with a good amount of technology and software to support. The results seem to point in a positive direction by saving costs during the interview process, reducing scheduling conflicts, and speeding up the hiring process.

We are also seeing 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 increasing. The pandemic has caused a jump in the implementation of applicant tracking systems, automation processes, and advertising/marketing campaigns to efficiently screen talent. 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.

Business team having video conference in the conference room

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]. To say the least, there is large 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 solely focused on diversity and inclusion. Executive search firms that are worth their salt are taking notice and adapting to the inclusion and diversity needed in their clients’ executives. Chapel Hill Solutions agrees in the importance of identifying and recruiting diversity individuals for our clients.

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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 greatly help the industry rebound. Of course, many of 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 are implemented goals and procedures to meet a rapid rollout, and we have 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 on why executive search is important during normal economic periods… Now, there are even more reasons why an executive search strategy is important during a pandemic or economic downturn! To be blunt, there shouldn’t be any difference between hiring during a crisis than hiring in ‘normal’ times. Companies should have a well thought out strategy to hiring and recruiting, and 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 candidate pool is growing even smaller due to the apprehension in 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 are actually hiring 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, and 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 a number of reasons:

  • Organizations have shown their true colors during this crisis
  • Many talented executives have been caught in downsizing measures
  • Certain industries are benefiting/growing from the pandemic

Businesses need to capitalize on this situation. It is important for companies and our clients to think in a strategic manner 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 opportunity to grow with the right person in the right role.

The executive search industry’s health will be an important 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 financial forecast to start this investment. Companies need to partner with experienced and modernized search consultants that have adapted to the current environment, and Chapel Hill Solutions is always 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 that is based on a pay for performance model that produces real results. Many retained search firms send you a bill at the end of a search no matter how they performed. Did they actually hire the best person? Did they present you anyone from their own sourcing? Did they even present any candidates?

Chapel Hill Solutions offers a pay for performance search that is only billable until certain key 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 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 key roles within their organization.

To Sum It Up

Overall, we have found the executive search industry's recovery is not equally distributed across the economy, and 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 at some point 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 with you 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.

 

[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/

Download the 2021 Report Here!