A Varied Outlook for the Year Ahead

What does the executive search industry look like in 2023 in Central Europe? A new report calls on IIC Partners search consultants from five countries in Central Europe (Germany, Austria, Switzerland, Czech Republic, and Slovakia) to discuss the executive search industry outlook, along with other HR trends. Let’s take a closer look!

January 20, 2023 – The executive search industry has been extremely strong over the last two years. After the initial shock of the pandemic, organizations looked to grow and recover, and they needed executive talent with new skills to lead the way. This led to a heightened war for talent, with salaries increasing dramatically. We are now approaching a period of increased economic uncertainty and rapid growth has begun to slow. However, the outlook is highly variable, says a new report from IIC Partners. Some markets, industries, and roles are still on ascending paths of growth. The firm also sees an increase in demand for interim management and coaching services.

“Another key trend is the shift towards an employee market where high competition for talent has led to employers being more flexible and offering benefits such as 100 percent remote working and four-day workweeks,” the report said. “If competition for talent slows, there could be a rebalancing of power. Yet, we are confident that many improvements to working life are here to stay.”

How strong is the current demand for executive search services? IIC Partners and its member firms shared their views:

According to IIC German member firm Marlière & Gerstlauer, the demand for search services is decreasing as employers prepare for a potential recession. “However, there is still strong demand for smaller positions below an annual salary of 85K,” the firm said. “Large organizations are trying to complete searches first with in-house resources before engaging a search firm.”

In medtech, pharma, and biotech there is high demand up to the director/VP level to fill the retirement wave of Baby Boomers, according to member firm Ingeniam. “There is also strong demand for transformation managers to help fill the post-pandemic supply shortage,” the firm said.

Eblinger & Partner, meanwhile, notes that in Austria the demand for search services is high, not just for the senior level, where headhunters have always been requested, but also for mid-management and specialists. “Even blue-collar positions and entry-level positions are hard to fill,” the firm said. “Managers are desperate and ask us (by mistake) for help. As an executive search firm, we recommend contingency recruiting agencies for these lower-level positions.”

Related: Retaining Your Employees During the Great Resignation

Level Consulting explains that the demand for search services remains strong as Switzerland continues to be in a growth market: two percent, according to the Swiss State Secretariat for Economic Affairs, with the inflation rate of three percent being low compared to other European countries. “The shortage of skilled workers has been observed for some time, especially in healthcare, IT, industrial, and finance, and is leading to high demand for executive search as well as interim management solutions,” the firm said.

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Member firm Teamconsult says that there is an above-average demand for executive search services in Slovakia, especially at the top management level. In the Czech Republic, the demand is more on an average level, mostly focusing on senior specialist and mid-management positions.

Which industries and functions are most in demand?

Marlière & Gerstlauer says in Germany that branch managers, middle management, and plant managers in the industrial sector are currently in high demand.

“In medtech, pharma, and biotech, the functions most in demand are marketing and sales, business development, and research and development,” Ingeniam said. “However, successful candidates must show experience in transformation.” Eblinger & Partner notes that in Austria finance and IT positions are most in demand and very hard to fill.

Level Consulting says its much the same with Switzerland. The industries and functions most in demand there are healthcare (board, C-suite, medical staff), IT (CIO, head digital officer, IT project leaders), finance, and industrial (digitalization, quality management, and sales),” the firm said. “Across industries, we are seeing more demand for head of HR/business partner positions and for roles that manage compensation and benefits and digitalization in HR, which requires new skills. There is also an increasing demand for interim management.”

Teamconsult, for its part, says that in the Czech Republic and Slovakia there is strong demand from the professional services industry, especially for senior lawyers and tax advisors.

“Manufacturing companies are looking for supply chain and quality managers, as well as plant managers and CEOs,” the firm said.

How are salaries changing in our markets?

Marlière & Gerstlauer notes that in Germany salaries have risen significantly across all sectors. “But for some time now, we have seen this trend stagnating due to companies attempting to slow the continual rise,” the firm said. “Despite this situation, candidates are demanding higher and higher salaries due to the current inflation. This naturally impacts passive candidates’ willingness to change roles if employers cannot meet their expectations.”

“There is a substantial increase in middle management salaries,” Ingeniam said. “However, we are also hearing from many job seekers who would love to sacrifice part of their salary for more freedom and work-life balance.”

Salary expectations are increasing, and for positions in high demand, we are seeing increases of up to 40 percent in Austria, according to Eblinger & Partner. “High competition for talent is providing candidates with multiple competing offers, and there seems to be no limit to requests for higher compensation,” the firm said. “Secondly, there appears to be a generational shift where Gen Y and Z are very confident in asking for higher income or four-day workweeks for the same salary.”

Level Consulting explains that in Switzerland in general, salary increases due to inflation have become very common and a tight market for talent is boosting salary expectations. “We expect this to peak in the first half of 2023,” the firm said. “In healthcare, non-medical management positions have been on a continual upward trend due to backlog demand, which is now flattening.”

Salaries in the second quarter of 2022 in the Czech Republic rose by 4.4 percent, but real wages dropped in the same period by 10 percent due to inflation. “Inflation has continued to grow and reached 17 percent in September,” Teamconsult said. “Pressure on employers to further increase salaries is therefore very high.”

What are some other HR trends we are seeing?

Marlière & Gerstlauer notes that in Germany employees want more free time with the same salary and are increasingly demanding permanent 100 percent remote working, as is common in the IT sector.

Ingeniam notes that in medtech, pharma, and biotech, HR teams are increasingly using recruitment process outsourcing for middle management positions, and there is a higher demand for interim management.

“There is an increase within Austrian positions that offer four-day workweeks for the same salary as five days, and there are more 100 percent remote roles,” said Eblinger & Partner.

Level Consulting in Switzerland said: “The development of an employee market continues, and companies must consider how they can remain attractive to applicants and stand out. That includes more flexible working models in less rigid structures, remote work, four-day weeks, and working in project organizations.”

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In the Czech Republic and Slovakia there is more demand for coaching services, including for employees below the top management level, according to Teamconsult. “Companies are hiring for more project-related positions, offering only limited contracts, and interim management is in high demand,” the firm said. “Remote working has become standard practice after the pandemic.”

What is the search market outlook for 2023?

We see continued demand within Germany for smaller positions while demand for C-suite and senior management will decline,” said Marlière & Gerstlauer. “And should a recession occur, we will see a decrease in vacant jobs. In addition, both candidates and clients are becoming more selective in their requirements, making it harder to complete searches.”

Ingeniam added: “Very high demand for people who do the groundwork (blue collar) and a restrained market for management and C-level positions if economic and geopolitical circumstances do not improve.”

“In Austria, we expect the search market to continue to be in high demand as there is no solution on the horizon to increase the number of participants in the labor market,” said Eblinger & Partner. “Only a recession could decrease the number of vacant jobs.”

“Within Switzerland. we expect the demand for search services to remain high and the shortage of skilled workers to become more acute,” said Level Consulting. “Furthermore, digitization and other triggers for transformation lead to more complex skillsets and candidates are expected to have a large intersection of technological and people management skills. In addition, clients are seeking more diversity and gender equity at the executive level. As a result, they require a better representation of women in candidate pipelines. Demand for career coaching services and interim management solutions continues to increase.”

Within the Czech Republic and Slovakia area, for the last 10 years, companies have searched for managers to handle growth and increased demand, according to Teamconsult. “For at least the next two years, we expect a different type of manager to be in demand: Budget control, cost-cutting, and restructuring will be the new key qualifications on a manager’s CV,” the firm said.

Related: Hiring Top Talent in Unprecedented Times

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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