Canadian Executive Search Market Adapting to Change and Moving Forward

February 17, 2022 – For executive recruiters, Canada has been a particularly good place to set up shop. The country hosts an expanding number of diversified industries and dynamic growth sectors that are well-positioned to beckon talent.

The pandemic has changed the business landscape for everyone from recruiters to businesses to candidates. Innovation has been the key to meeting the challenges brought by COVID-19, and many recruiters continue to thrive. Competition, however, is heated and the best candidates are seeing multiple offers.

For many organizations, hiring and retention of key talent is now more vital than ever. The problem, say recruiters, is that there are more job openings than prospects. Compensation matters, of course, in winning the best talent. But positive culture, sustainability, career development opportunities and flexibility on remote work arrangements will all play a big part going forward.

“We are continuing to see a strong market for the executive search space in Canada at the leadership and professional level,” said Pamela Ruebusch, founder of TSI Group. “It is clear ‘attracting talent’ takes more effort than ever before right through to the final signing of offers and confirming the onboarding plan. Clients in manufacturing, supply chain, transportation and distribution are competing for talent at all levels. This is driving up compensation bands and candidates are looking more and more for roles where they can have a flexible work-life balance. We will continue to see this trend we expect throughout 2022, which means having a talent acquisition strategy that is innovative is key.”

COVID is still putting constraints on businesses, according to Ms. Ruebusch. “More than ever, HR departments continue to pivot and are being tasked with keeping ahead of COVID protocols to ensure overall employee safety and wellness,” she said. “The business landscape has changed forever. Working from home or a hybrid model seems to be here to stay. Sales departments have had to think outside the box on how to engage with clients. Employees who need to physically be at the employer locations are concerned and anxious with getting or passing COVID on.”

TSI Group has seen an increase in competition for top talent and candidates becoming more selective on what they are looking for. Therefore, more conversations on alignment of what the candidate and client are seeking is happening from the professional level up to the C-suite. “With the start of the year, there are always more sales and sales leadership roles,” said Ms. Ruebusch. “We are also seeing an increase in leadership roles in operations and more opportunities at the GM/president level. We recently completed a COO role for one of the largest Canadian poultry processors. We secured a VP of operations search for a major food wholesaler in Ontario. We successfully completed a director of inventory management and planning hire for one of the fastest growing PPE medical products companies in Western Canada. In 2021 we also secured a CFO for the largest specialty manufacturer of wax products throughout North America.”

Increase in Turnover
“There is a significant increase in turnover at all levels of leadership brought on by the demographics of an ageing workforce and fueled by the impact of COVID-19 on job security, work/life balance and the continuing growth of a skills-based economy,” said Tony Woolgar, senior partner and head of national healthcare leadership practice at Legacy Executive Search Partners. “For larger organizations this has been reflected in a trend towards downsizing to optimize efficiency including a reduction in management costs and overheads and delayering of management structures. For smaller organizations the challenge continues to be to ensure sustainability in the market rather than target growth and increased market share.”

“COVID-19 has provided an exciting opportunity for us at Legacy Executive Search Partners to prove to all our clients and potential candidates that we can still offer a personalized and flexible approach to every search despite every aspect of the search process being carried out remotely,” Mr. Woolgar said. “Being a boutique firm respected as a preeminent search firm in municipal government, broader public sector, healthcare and the not-for-profit sector we have been able to grow our business across each of these sectors by being adaptive, responsive and resourceful in supporting organization development and redesign to meet the unique challenges presented by COVID-19 for each organization.”

“I think the search business will continue to thrive in certain industry segments as there is a clear shortage of skill-sets which have been highlighted through COVID,” said Kartik Kumar, partner and national practice leader municipal government at Legacy Executive Search Partners. “Although there were some price pressures in the initial stages of the pandemic as everyone was trying to reduce recruitment costs, through adjusting our fee structure and leveraging our excellent client management tool to provide a real-time communications channel, we have streamlined each step of our recruitment process to create the best value proposition for each client.”

“Most importantly, the realization that the mission and mandate of every organization has been impacted by COVID-19 and the normal approach to, and timelines for, recruitment have changed considerably,” said Mr. Woolgar. Hiring to new and existing leadership roles has involved working more closely with recruitment committees, leadership teams and boards to balance short-term (operational) needs with longer-term (strategic) direction in determining the ideal candidate profile. COVID-19 has also accentuated the need for many organizations to develop stronger collaborative partnerships with industry, sector or community partners, as in many cases collaboration has taken the place of competition in response to COVID-19. This trend has required the candidate profile to reflect these leadership attributes in contrast to a previous (pre-COVID) organizational culture.

“On a daily basis, we see North American business leaders constantly and simultaneously wrestle with trying to mitigate business risk and conversely how to manage, or prepare for, historic growth,” said John Watts, founder and partner at Forward Path Group. “Certain industries such as ecommerce and technology have had incredible growth during COVID and, those sectors that are hardest hit, are scrambling to be the best prepared to ride the ‘post-COVID’ wave. Arguably, the strongest of those hardest hit sectors will be in an incredible position to drive significant profits and shareholder value. There is a definite ‘have and have not’ situation in the 2022 Canadian economy.”

“Regardless of the sector, all of our clients are learning how to best balance a home-office workforce and none of our clients see a return to the pre-COVID office,” said John Watts, founder and partner at Forward Path Group. “This workforce evolution is different for each sector and company, but none are immune to the migration to more remote-based employees. CEOs across Canada are competing to attract talent working remotely that can drive growth, who are continually productive and add to the company culture. Unfortunately for those have- not sectors, the companies who have grown during COVID (i.e. Amazon) have the financial means and brands to bully the market and attract the best talent.”

Booming M&A Market
“Fortunately for some, and unfortunately for others, we believe the M&A market will explode in 2022 and 2023,” Mr. Watts said. “The ‘have’ companies and those who best prepared in their sector will be extremely active to gain market share and diversify. Although top line revenue for many companies have decreased, many also saw their bottom lines become much stronger resulting in more cash. An active M&A market will only escalate the war for talent.”

“From the search business perspective, we see fewer people in person,” Mr. Watts said. “Clients are more and more comfortable with interacting remotely, but we try to meet safely 1:1 as much as possible. Human nature is to gather and share, and we feel this need. From a candidate perspective, there are advantages and disadvantages by being remote. It is easier for candidates to click a video link than dress up and meet at a coffee shop. It is also more convenient for the recruiter. But efficiency and quantity does not mean quality. To ensure we are finding great talent for our clients, we improved our remote interview techniques and leveraged assessments.”

“I believe that most businesses that were successful pre-COVID all took a pretty good punch on the lip in the early stages of COVID,” said Bruce MacDonald, founder of MacDonald Search Group. “Like every major change, it took time to understand. Once they settled in to what the impact of the pandemic meant to their business, they realized they needed to keep moving forward. So, they began to re-embark on the growth strategies they had on the chalkboard. Then those successful pre-COVID companies began to thrive. I guess the one exception would be the hospitality industry which continues to struggle under the government health restrictions. This led to a 2021 of robust business growth for many of our client base.”

“From a candidate perspective, their needs became more paramount,” he said. “They all went home to work, their companies eventually flourished and now, they are more convicted in meeting their needs – work from home, on their terms and with flexibility. The net result is a super-heated recruitment world that swayed the pendulum to the candidate. In 25 years in the business, I have never seen such a candidate driven market.”

Mr. MacDonald’s initial thought was there wouldn’t be much change in the short term from COVID. “However, we are in February 2022 and Omicron is making its impact felt,” he said. “Businesses, especially public facing ones, will all face a short-term struggle from more of a staffing perspective than a revenue perspective. We are all in the middle of the storm. The good news is we are starting to see case counts peak in those parts of the world where Omicron emerged earlier than here in Canada and hospitalizations are nowhere near the percent of cases counts as they were last year.”

“In the long term, I see two things affecting business,” said Mr. MacDonald. “One, I think the big question businesses need to find an answer to is, What do we look like post-COVID. Work from home? Back to the office? Or some sort of hybrid? I think that will be the prevailing question of the day. I’m hopeful we see a return to the workplace. People need human interaction and businesses need to ability to have their employees collaborate without scheduling a video meeting. While many candidates and employees now see themselves as working from home, I see it as ‘we are in the middle of a world changing event and are finding ways to continue our work while at home.’ Second, what/how does/has the worldwide supply chain shortages affect inflation and how will that affect the economy? Inputs costs are increasing across the board and prices are beginning to follow.”

“There is still and will continue to be a war for talent in 2022 creating a tremendous need for executive search,” said Jeanne Branthover, managing partner, global financial services & fintech practices at DHR Global. “Clients with the large amount of hiring that they are experiencing cannot successfully focus the attention needed to each opening to identify qualified talent, attract that talent and close them. Search firms have a proven process that works. Clients through the pandemic now have a true understanding of partnering with a search firm to complete their searches.”

“They have come to appreciate the search process and the caliber of candidates presented that will make a significant contribution and positive impact on the firm,” she says. “Clients continue to build their human resource department but are still overwhelmed and recognize the need to hire a search firm on crucially important searches. We are in a highly competitive market and companies recognize the need to spend the money on their most important asset…their people.”

“In 2022 financial services will continue to redefine what it is in this ever-changing environment,” Ms. Branthover said. “It will continue to grow and expand products and offerings through digitalization transformation, ESG initiatives, investing in top talent, rethinking the work environment, culture and figuring out ways to be more efficient and innovative. In financial services and Fintech we expect to see a continued focus on hiring exceptional talent with the skill set that is needed today in each functional role,” she says. “Companies continue to evaluate who is in each seat and if they have the right qualifications to be successful. Fintech companies will continue to hire to achieve their goal of going public or being acquired. Bank technology will continue to explode with fintech partnerships and financial services embracing the fintech movement. Banks will have increased competition for talent with crypto and fintech firms contin- uous hiring. Firms will try to attract and retain talent through offering higher pay, additional benefits and a better work/life balance.”

Canadian Employers Recovering
Large and mid-sized Canadian employers are recovering from the impact of the initial phases of COVID, according to Michael Henry, managing partner of Massey Henry. “They are experiencing labor demand pressures and supply chain challenges,” he said. “In addition, many businesses are working through the longer-term implications of digitization and hybrid employment models. COVID will continue to impact businesses in 2022 and beyond. That said, COVID has accelerated digital transformation and a rethink of traditional work models. This acceleration now has its own momentum apart from the impact of current and potentially successive COVID waves. COVID has acted as change agent affecting many areas of work and family life across the globe. In combination with climate change and ESG adoption, business and employment models will undergo dramatic change over the next five years.”

While COVID has changed the way we conduct business, it hasn’t yet affected client demand. Financial services and fintech executive recruiting remain robust, Mr. Henry said. “We believe that the demand in financial services is a direct reflection of digitization
and business model adaptation

that has been accelerated by COVID,” he said. “The change has been most significant in candidate outreach and selection. Many searches are fully digital with no in-person contact from initial outreach to offer letter. While this has been a more prevalent model in mid and junior-level positions for some time, it is new at the C-suite level. Many selection committees and hiring managers still prefer in-person interviewing and finalist selection processes. Nowadays, however, many of these executive searches have not included any in-person contact, or only limited contact at best. Additionally, it is important to note the impact on client origination. As with all professional service firms, in-person contact has been a foundational element in new business development. All firms have had to adapt to the realities and limitations of virtual outreach and relationship building.”

“While there is a wide breadth of roles trending in today’s market, we continue to see organizations focusing on finding the right chief risk officers and cybersecurity leaders at the helm,” Mr. Henry said. “As ESG, information security and risk management continue to increase in importance, it will be critical for organizations to stay ahead of the curve by hiring or retaining executive leaders who understand these emerging areas. This is commensurate with the conversations we have had with executive leaders on the ground, as well as with our advisory board, made up of prominent financial services and public sector leaders from some of North America’s most renowned organizations.”

Hiring and retaining key talent has suddenly become the No.1 priority for organizations across Canada, according to Corey Daxon, president and managing partner at Feldman Daxon. “Post-pandemic growth, the Great Resignation and remote work have combined to create the perfect storm for organizations as they look to keep their star performers and add new employees to support growth,” he said. “The number of job openings significantly exceeds the number of job seekers, creating a candidate driven market that hasn’t existed in decades. And it is expected that employee turnover will continue to increase in 2022. With the balance of power shifting toward candidates, organizations, talent acquisition professionals and recruiters will have to find ways to stand out to successfully attract candidates. In addition to salary and benefits, the ability to clearly demonstrate positive culture, sustainability, career development opportunities and flexibility on remote work arrangements will be big factors in securing new talent.”

Excess of Opportunities for Candidates
“As we head in to 2022, the excess of opportunities in relation to candidates is expected to continue to increase,” Mr. Daxon said. “Workplace changes that COVID necessitated, including remote work and the technology we have all adapted to support it, will continue to be a part of organizations even as the pandemic fades. As will the psychological changes many have made regarding work-life balance and an increased value on mental health and career satisfaction. Companies are already seeing a significant decrease in the number of responses to job postings. Candidates are being much more selective and picky versus replying to anything that remotely resembles their experience. As a result, the value of proactive, targeted recruitment has increased substantially. Successful employers will use recruitment tactics that focus on reaching out to passive candidates versus posting and hoping for the best.”

Top employers are also shifting to more of an internal focus. “With the employee market that COVID has created, retention strategies are critical,” said Mr. Daxon. “Holding on to talent is a priority as employees are being presented with more job openings than they have seen in their career. Key offerings including employer brand, onboarding programs, benefits, salary, culture and career planning are being upgraded in the effort to retain. Organizations are also investing more in leadership development. Working with executives to help define company culture and ways to make their organization attractive to employees has become even more important. Developing an employee value proposition that resonates with top talent can be a major differentiator that attracts critical hires.”

It’s definitely a talent market right now, according to Catherine Graham, founding partner at ivy group. “We’re seeing an ultra competitive environment in ways that we’ve never seen before,” she said. “Wage inflation keeps our clients up at night as they are having to be aggressive in comp and in return we are seeing more counter-offers as companies who face losing talent will do anything to hold on to them. At the same time we’re seeing culture remain hugely important. So if your house is not in order on the culture side, people will leave. Things like remote work and hybrid work – that used to be carrots, are now the norm thanks to COVID. This takes us down to the studs of culture and if you ar- en’t providing a healthy environment that nurtures development and growth you won’t survive. People have been through the trenches in the past two years – if they aren’t finding meaning and purpose with their employer, 10 other people will be knocking on their door with a better offer.”

“We’ve believe that virtual/remote/hybrid will continue to be a theme,” Ms. Graham said. “Enabling a remote workforce in a meaningful way – where you are creating virtual situations that produce the same sort of organic results that stopping by the water cooler or grabbing a coffee in somebody’s office, will continue to keep hiring organizations up at night. And while we haven’t solved this, we have seen remote first cultures that were built prior to COVID, survive and thrive so it’s a matter of continuing to orient ourselves around best practices for building culture in this new world.”

“Initially we all thought we were toast,” Ms. Graham said. “We were like, it’s been fun trying to build the business together – see you in your next life. After two months of crickets, the phone rang and it hasn’t stopped. Our past two years have been our best two years and we know we’re not alone here. Through death comes disruption and while we watched certain sectors implode their traditional models, we saw a ton of innovation and re-invention. Much of that involved technology and new ways of solving old problems creating new positions and growth,” she said. “It’s been a devastating and challenging time for many and on the flip side, it’s also been a rebirth. We’ve been incredibly privileged to play a part in finding exceptional talent to fuel this growth and we don’t take our good fortune lightly. In return we feel like we’ve changed a lot of lives by connecting talent with life changing opportunities.”

Business and digital transformation that might have been five to 10 years out for some companies is happening in an extremely accelerated timeframe. This has literally turned some business on its head and has driven the demand for new talent as business models have changed drastically, according to Ms. Graham. “There is much more of a focus on personal fulfilment in the workforce,” she said. “You can’t just be a company – you need to be a lifestyle destination. As an organization, how are you supporting mental health, how are you supporting growth, how are you supporting not only professional development but personal development. And this is at the leadership level too. How are you supporting your leaders who are burnt out from having to navigate through a two year storm.”

“Top quality talent is tough to find in today’s world, so while organizations are trying to become more efficient with costs and outsourcing, they are also struggling to find the right people for their senior C-suite or financial role to be filled,” said Paul Verriez, president of Verriez Group. That’s where we can come in and ensure we find the best talent for their long-term needs.”

Mr. Verriez also thinks COVID will still impact how organizations spend, but also realize that they need invest more in their people, “whether that is their internal people and providing upskilling or professional development opportunities to ensure that they can retain them, and/or they can continue to collaborate with search firms, like ourselves, to find the best talent to fill the gaps that they have or might not have uncovered yet,” he said. “This will set them up for success for the upcoming year ahead, while still dealing with the effects of COVID. We have also noticed that more companies are realizing that remote work can have a positive effect on productivity and employee satisfaction, and that more candidates have been asking about remote work policies when we are recruiting.”

“Although we do have an office downtown many of us have been remote for a few years now (prior to pandemic) so it has not affected us from that perspective, other than internal in-person collaborative events,” Mr. Verriez said. “Other than that, travelling and being able to see both clients and candidates in person has been constantly placed on and off hold, so it will be nice to resume normal activities for a long period of time. Conducting candidate interviews via Zoom or Microsoft Teams we have found our delivery time to our clients has been reduced as we have not had to organize travel schedules to meet them in person. We have also had to discuss vaccination policies with clients, and how that affects recruitment.”

“Since travel has been placed on hold, we’ve taken the opportunity to collaborate both internally and externally with Microsoft Teams and Zoom,” said Mr. Verriez. “We’ve also taken the opportunity to utilize and invest more into our CRM, search and marketing initiatives that require technology to become more efficient. Candidates are now, more than ever, concerned around the financial health and future growth prospects of a prospective employer. Previously, there was often an assumption that a hiring company was a growing and healthy company. Now, employers are having to open up and share more with respect to their financial health.”

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