Canadian Executive Search Market Shifts to Meet New Demands

March 1, 2024 – Throughout 2023, executive search consultants have Hunt Scanlon Media that the Canadian executive recruiting market experienced shifts in response to the evolving demands of a rapidly changing business environment across the country. Amidst the ongoing transformations in executive recruiting, the Canadian business landscape has become increasingly competitive, requiring a strategic approach to talent acquisition.

Recruiters also say that the demand for executive leadership with a profound understanding of global market trends, technological advancements, and new soft skills. While the Canadian market does have some similarities as the U.S., there are some profound differences facing Canadian recruiters including the need for bi-lingual executives, a bleaker outlook on the economy, and a smaller pool of candidates to select from. However, cross-border hiring remains strong and Canadian companies continue to look to the U.S. for talent.

Providing More Services

Moreover, the role of executive recruiting firms has evolved beyond conventional search and placement. In 2023, recruiters have told Hunt Scanlon Media that these firms demonstrated a heightened focus on offering comprehensive talent advisory services. Beyond merely filling vacant positions, they played a pivotal role in helping organizations shape their leadership pipelines, conducting talent assessments, and offering strategic guidance on succession planning. As the business environment continues to evolve, executive recruiting firms are expected to play an increasingly strategic role in partnering with organizations to align their leadership capabilities with future challenges and opportunities, ensuring a seamless integration of executive talent into the broader organizational strategy.

Within Canada we are seeing activity across all major markets with industrial hub’s leading the way,” said Dominique Fortier, partner in charge of Heidrick & Struggles’ Toronto office and leader of the financial services practice in the Americas. “Our business in Western Canada, across energy, infrastructure and consumer markets is the strongest it has ever been, managed out of Calgary. Our office in Montreal continues to grow, working across industry verticals. In Toronto we have seen a lot of private equity and resources activity and following a slowdown last year in the tech and financial services markets, early signs of demand picking up there as well.

“There is a casual neutrality when it comes to recruitment across most sectors in Canada,” said Bill Vlaad, CEO and managing partner of Toronto-based Vlaad and Company. “The economy is healthy but still cautiousness as it pertains to growth given global tensions. Most leaders will still entertain strong candidates that might high-grade their current team and are opportunistically adding individuals or teams that bring relationships or additional business.”

When discussing which regions have the most hiring activity, Mr. Vlaad explains that the combined market focus on energy transition and the current provincial government have together buoyed provincial employment concerns in Alberta. “The province is working hard to attract both outside provincial corporates as well as international firms looking to Canada for new investment,” he said. “Ontario continues to lead the country in services employment growth given its banking industry but also given it is absorbing the largest percentage of new Canadians entering the country.”

“There is still a premium paid to those that can deliver on relationships,” Mr. Vlaad said. “That holds true for those that can bring in more AUM or develop new or existing product lines. The slowdown in fundraising across direct investment has shifted objectives to focus on improving operations and asset management. Senior talent that have proven track records delivering operational results are in higher demand.

The impact of cross-border labor arbitrage has not changed materially in the last few years, according to Mr. Vlaad. “Working within U.S./Canadian international labor laws, firms continue to leverage the northern neighbor’s lower cost of living,” he says. “The real-life work from home experiment fast-tracked organizational designs improving remote work opportunities, even out-of-country. Senior talent are more able to work in Canada for non-Canadian employers, using the home-office mainly for administrative work and travelling abroad for business creation and development.

“For expectations for 2024, we expect to see some of the late 2023 trends continue,” said Brent Verriez, executive vice president at Verriez Group. “Candidates are more risk averse due to the bleak economic outlook in many industries, and stability is a huge factor as candidates may not want to leave their current employer, even if they are somewhat dissatisfied, if it means putting their current family’s financial requirements at risk. To that end, the challenge of finding the right talent continues to drive up compensation expectations in what is still somewhat of a candidate-driven market.”

A Look at the Private Equity Sector in Canada
Like in many other regions, the private equity sector in Canada is expressing a mixed forecast for the rest of this year. While some firms are experiencing healthy fund raising and deal activity, others are curtailing targets and managing LP liquidity concerns, given the 20-year low in equity financings to date in 2023, according to Bill Vlaad, CEO and managing partner of Toronto-based Vlaad and Company, an executive financial recruitment firm. “Many PE firms operating in Canada have diversified their offerings in recent years to include investment opportunities beyond our domestic border, investing into geographies and sectors appealing to a larger LP pool.”

Another big factor of success moving into 2024 is managing the balance between hybrid/remote work and in-office work,” Mr. Verriez notes. “Many companies are pushing to a return to office either full-time or three to four days as they work to increase morale, collaboration and productivity, but many candidates are holding out for more flexibility based on what they have been accustomed to since the onset of the pandemic,” he says. “How do prospective employers market roles that could be in-office or remote? and how badly do they stick to their guns when evaluating the talent pool?”

Busy Canadian Market

“Compared to the U.S., we would say we were busier in 2023 than many of our colleagues in the U.S. (specifically industry specialized firms) based on our conversations with other search firm leaders, but the issues faced in the market with respect to candidates and client expectations seemed to be the same on both sides of the border, and we expect that to continue into 2024,” said Mr. Verriez.

Within Canada, I wouldn’t say there are particular talent shortages we are battling with, but I am continuously seeing a larger trend of inquiries for financial and technology executives,” says Travis Hann, managing partner of Toronto-based Pender & Howe Executive Search. “One category, finance, which is the lifeline to one’s business, has faced challenges, especially in the last year with rising interest rates, making it difficult for finance leaders. The other category, technology, is experiencing a dynamic shift in talent and demand at lightspeed. Companies are constantly seeking avenues to keep up with the changing digital and technical world we are living in.”

“We have been navigating a turbulent and unknown economy for the better part of 12-18 months,” Mr. Hann said. “Last year, we witnessed many leaders staying in their roles to help steer their companies through those uncertain times as continuity in the C-suite is important. I predict that this year, we will see more movement, particularly in Q2 and Q3. Boards will have had time to review performance and results during these uncertain times. Similar to the uptick in talent requirements we observed post-Covid boom, I believe the same trend will occur when the markets start to take a turn.”

“While the Canadian search market is anticipating a stable but reduced hiring outlook for early 2024, signaling cautious employment plans, employers in Canada plan to progressively increase hiring through the first half of 2024 – reflecting market reliance,” said Mr. Hann. “Remote work continues to be a significant employment trend and an important element in talent attraction in 2024.”

“In Canada for 2024 employers are facing a record talent shortage, making for a challenging labor market,” said Karen Swystun, CEO of Waterford Global. “Talent shortages are being experienced in various areas and industries.” The first she points to is AI skills. “Artificial intelligence skills are in demand, with many companies in Canada including this skillset in their 2024 hiring plans.”

Related: Canadian Executive Search Market Recovery Expected

“The healthcare sector continues to experience a high demand for front-line healthcare professionals, physician leaders, and other leadership and technical talent,” Ms. Swystun said. “There is a significant shortage of talent, at all levels, in the construction and manufacturing sectors. Lastly, the mining industry is witnessing a surge in metal and mineral prices, coupled with heightened mineral exploration activity. These factors have led to an upswing in the demand for skilled professionals in engineering, technical, safety, and leadership positions.”

Demand for Senior Talent

While organizations in Canada experienced a highly competitive recruiting market in 2023, the demand for executive talent in Canada is expected to remain strong in 2024 with organizations across numerous sectors showing commitment to talent acquisition,” said Fred Loewen, chief operating officer of Waterford Global. “The Canadian talent market, in comparison to the U.S. talent market, is significantly smaller in size. Therefore, any search focusing on candidates within the Canadian geography must be carried out utilizing a high level of skill, not only in finding the right candidates and attracting them to the opportunity, but also in ensuring the highest standards of candidate care.”

“We have also found some common trends with markets in the U.S.,” Mr. Loewen said. “That is, across candidate markets in North America, we are seeing a continued reluctance in candidates wanting, or willing, to relocate, with many such ‘reluctant to relocate’ candidates preferring to work remotely and travel more as opposed to an outright relocation.”

Challenging Times

“We had a record year in 2022 but 2023 was a challenging year,” said Kevin N. Hall, managing partner of AltoPartners Canada. “While optimistic for 2024 we expect 2024 to be another challenging year. Political and regulatory uncertainty together with higher interest rates, inflation and reduced global investment into Canada will continue to negatively impact companies and the executive search market. We saw the mass retirement during and just after COVID. This led to talent shortages and a significant increase in our executive search business. We are now seeing a number of these retirees re-engaging with the workforce – I guess that the timing of retirement was just not the right decision for some.”

A Look Across the Canadian Executive Search Market
The executive search industry in Canada is positioned for continued growth and innovation as it continues to provide valuable services to both employers and job seekers in the country. Critical to its ongoing success is the industry’s ability to adapt to changing market conditions and leverage new technologies to identify top talent. Canadian businesses are investing more in digital transformation and adopting new technologies to improve efficiency and productivity, as well as to stay competitive in the global market, according to Jason Carmichael, founder and CEO of Oxford + Richmond in Toronto.

Canada has a very large natural resource sector, according to Mr. Hall. “The need to increase diversity at the executive leadership and board levels continues to drive demand for talented individuals especially those with operations experience,” he said. “Diversity reporting has, in part, driven increased activity. There is a need to do a better job of recruiting diversity candidates into this particular sector and then developing / retaining them. The financial services sector has seen significant turnover with competition for top talent with an established track record. Often an organization will just not recruit an individual but will recruit an entire team.”

Mr. Hall also notes that ESG activities, performance metrics and reporting has dominated external public communications and assessment of company performance. “Companies have already strengthened their teams in these areas or are considering adding talent to deliver on these initiatives,” he says.

“Companies are continuing to explore and figure-out the impact of AI and machine learning on their company (internal and external activities) and the broader industry in which they operate,” Mr. Hall said. “While we have not seen significant recruitment activities in these areas, this is something we expect to see over the next few years. Cybersecurity and cost/reputational risk associated with a breach continue to be top of mind for boards and executive leadership. When there is a breach there is always a mad scramble to recruit top talent into the senior digital leadership role almost at any cost.”

Related: Canadian Executive Search Market Adapting to Change and Moving Forward

Looking ahead Mr. Hall explains that we continue to see opportunities in digital technology (particularly in financial services), AI / machine learning, financial services, renewable / alternate energy, electronics, wealth management, geriatric healthcare and manufacturing.

The search landscape in Canada remains competitive, according to Jane Griffith, managing partner and founder of Toronto-based executive recruitment firm Griffith Group. “The broader public sector is still active in hiring, while the private sector appears to be continuing to be somewhat cautious as it continues to experience layoffs and right sizing,” she said. “We are still seeing talent shortages across many roles and sectors. In our opinion, many folks still seem to be burnt out from the three years in which Canada had lock downs during covid. We are seeing that some folks are less interested in moving into senior leadership roles as a result. The increase in pay does not, for some, seem to outweigh the added hours and responsibilities of the roles.”

Ms. Griffith is bullish on the economic outlook for Canada explaining that after a slower than usual fall, she saw a dramatic increase in RFPs in November-December, which has continued into January 2024.

“I think there are many areas of opportunity in Canada for both employers and employees,” Ms. Griffith said. “We are continuing to see change in the C-level, with a significant movement in financial roles. Organizations are seeking leaders who bring the required skills and experiences, but that are also strong and empathic people leaders, who can build and support customer service -whether that be to internal, or external customers.”

Talent Shortages Due to Population Size

“The Canadian market has a talent shortage across many functional areas due to the population size and the significant boomer retirements,” said Ian Brenner, senior managing director with the executive search & interim management practice at B. Riley Farber in Toronto. “We therefore have an ongoing need for specialized executive talent in these areas, which will be an ongoing challenge for businesses to solve. Similar to the U.S., there are heavily populated cities and vast rural or less populated areas. The smaller centers are struggling to find great talent eg. agricultural regions in Canada which are quite large, young adults have migrated to the larger areas for a better future and lifestyle opportunities. This problem will endure particularly in Central Canada, regions of British Columbia and Alberta and Eastern Canada. The Canadian recruitment space is crowded in the greater metropolitan areas, which has led to a highly competitive search environment.

Mr. Brenner explains that his firm continues to see shortages in the finance area, more in the mid-tier levels for VP of finance and director roles. “This is a trend we expect to be dealing with for a number of years to come, which will become more acute as the next generation of CFO’s retire,” he said. “With the retirement of experienced leaders in the past couple of years, we are also finding it harder to source experienced, battle-hardened leaders for president, COO and CEO roles. Clients are looking for leaders who have experienced adversity, and who bring diversity of experience, which is not that easy to find after a decade or so of uninterrupted growth and prosperity and easy money.”

“The good news is that companies are focused on growing their businesses and finding new sources of revenue, as a result chief revenue officers and heads of business development are in high demand and short supply,” said Mr. Brenner. “This feels different to what we experienced in the financial crisis of 2007/8 and for a few years thereafter; companies seem to be comfortable taking longer-term decisions on adding talent that will drive growth in a different and more creative way.”

The quality of the mandates B. Riley Farber is engaging on in 2024 is interesting, as companies seem to be focused on pivotal roles in their organization, including CEO, COO and CMO roles where a shift in mindset and capabilities is required to be successful in an uncertain and demanding environment, where funding is scarce and more costly and where the emphasis is shifting to more measured, profitable growth. Mr. Brenner also notes that “reduced M&A activity has delayed the typical cycle of new leadership teams being built by PE and other investors; however, we are starting to see these investors look to upgrade and/or repurpose their management teams in key positions,” he said. “Whilst we are not seeing fee pressure from clients, we are seeing more competition for roles, so it’s critical that one understands one’s value proposition and differentiators.”

“As a firm that conducts very specialized searches at the C-Suite and Board levels both in Canada and internationally, I would have to say that Canada’s economy has stalled somewhat in recent months,” said Jay Rosenzweig, the founding partner of Rosenzweig & Company. “The search market in certain sectors – high tech, financial services, not-for-profits – remains robust. And there is certainly an interest in identifying diverse candidates, including women and visible minorities, for corporate board positions. Indeed, many employers are also interested in such candidates for C-Suite positions. As a company that has promoted and tracked corporate C-Suite diversity for almost 20 years, we feel we are uniquely positioned to assist companies seeking a broader, more diverse range of candidates. Looking ahead, most economists and analysts are predicting the Canadian economy will pick up in the second half of 2024 as inflation abates and the Bank of Canada begins to walk back its interest rate hikes. Deloitte Canada recently reiterated that belief. That should have a positive effect on the overall search market.”

Ontario, Quebec, British Columbia, and Alberta currently have the most robust economies among Canadian provinces and are the most active in terms of search, according to Mr. Rosenzweig. “Some may be surprised by the inclusion of Alberta, but its oil and gas sector has recovered significantly and the province has been aggressive in seeking to diversify its overall economy,” he said. “But at the end of the day Ontario continues to be Canada’s economic engine and is well positioned to remain so. The current government is business friendly and has made significant investments in E-vehicle battery production and other industries with high growth potential.

Mr. Rosenzweig also notes that the types of organizations hiring are quite varied, everything from large multinational corporations to maturing start-ups looking for individuals to take a company to the next level. “Chief technology officers and chief information officers continue to be in high demand in Canada, as is the case in the U.S. and elsewhere,” he said. “AI talent is one area that is in particular high demand. And of course we continue to do work with larger companies across a broad range of sectors as well as government agencies and not-for-profits.”

Related: Women in Canada Lagging Male Counterparts in the C-Suite

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media

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