February 25, 2021 – America’s CEOs are increasingly convinced that the COVID crisis, which has crushed the global economy, will soon come to an end. In Chief Executive magazine’s latest poll of more than 300 U.S. CEOs, a growing number of business leaders now forecast growth in revenues and capital expenditures. In the poll, chief executives rated their confidence in future business conditions at 7.1/10 on average — a two year high. Meanwhile, they rated their confidence in current business conditions “good,” at 6.2 out of 10 on a one to 10 scale (+1 percent since January).
“We are still recovering from the COVID-related issues that impacted part of our business [but] I expect relative normalcy in 12 months,” said the CEO of a global specialty retail company, who rates his outlook for this time next year an eight out of 10, up from a six today. “COVID should hopefully be mostly behind us,” said the CEO of a healthcare finance company to explain his forecast of business conditions 12 months from now. “We work with healthcare providers and expect them to see a rebound in people getting services that they put off during COVID.” Greg Peay, president of Bradsby Group, an executive recruiting agency based in Colorado, said “the virus vaccine is giving hope that as the year continues, business will improve for most industries.”
But not all CEOs agree. More than a third of survey participants responded with varying degrees of concerns over what comes next. Some believe that rising inflation and stimulus packages will put the U.S. economy at risk of a recession; others say less business-friendly public policies could impede the recovery; and others observe that their customers are still hesitant to move forward with projects until more clarity is achieved.
“COVID still [orders] some major uncertainties, as does the government transition,” said Norman Wolfe, CEO of Washington-based consultancy Quantum Leaders, although he is hopeful that “within six months, things will begin to sort out and a clear vision of what the future will look like will unfold.”
Mark Cohen, the CEO of Ntelicor, an IT staffing and recruiting agency in Dallas, TX, said: “I’m 100 percent uncertain about our political leadership and the impact of printing trillions of dollars, increasing taxes, etc. Will there be a systemic collapse despite today’s perceived growth and high-cap market valuations?”
Quentin L. Messer Jr., president and CEO of the New Orleans Business Alliance, said he anticipates that by “this time in 2022, we should be on the back side of the pandemic,” but he doesn’t expect business conditions to rank higher than a six out of 10: “The challenges with the vaccine rollout will delay large-scale immunity, which we delay a return to large conferences, festivals and business travel,” he said, adding that “not all of the jobs lost will return, which will put downward pressure on customer spending, which powers a lot of the U.S. economy.”
For those reasons—and others—38 percent of the CEOs surveyed showed either caution or pessimism in their outlook, expecting business conditions a year from now to be either unchanged from today or worse—at 23 and 15 percent, respectively.
The Year Ahead
While the proportion of CEOs expecting an increase in profitability remains unchanged since last month, at 72 percent, the number of those expecting growing revenues, capital expenditures and headcount is up four, five and seven percent, respectively—at 78 percent, the proportion of CEOs forecasting increasing revenues is now at its highest level since April of 2019.
Similarly, the proportion of CEOs planning to add to their workforce in the year ahead has reached a level unseen since September 2018, further demonstrating growing confidence in the recovery among CEOs. It is up over seven percent since last month.
Across sectors, the impetus is the vaccine and hope that business will reopen for everyone in the near term. On a year-over-year basis, the majority of CEOs across all sectors is forecasting “good” to “very good” business conditions by next February.
Optimism and Determination
Jessica Rudish, a principal at Rudish Health, expects a slow recovery. “As the business climate (hopefully) begins its move back towards something resembling normal, we expect plenty of trial and error, fits and starts as organizations test what works best for their teams in changing circumstances,” she said. “Plenty of turbulence ahead for sure, alongside real optimism and determination.”
“Rudish Health has worked incredibly hard to ensure that, even during these truly unprecedented times in the healthcare and talent industries, we continue to provide our clients with the absolute best solutions possible,” Ms. Rudish said. “As the pandemic has matured, our clients have refocused their attention on longer-term talent planning.” As a result, she that the firm has been busier than ever. “One thing the past year has really brought to light is the important place talent acquisition firms have in helping develop and sustain a more fair and equal society,” Ms. Rudish said. “At Rudish Health, we remain absolutely committed to advocating for diversity, both with our clients and ourselves. The work is not done.”
Back to Normal
“People are ready to get back to normal,” said Brooke Ziolo, president of Egret Consulting Group. “As more people are vaccinated and the amount of COVID cases drop, more companies will return to normal business and new construction or remodel projects that were stalled or put on hold will resume. This will increase demand for manufacturing. Sales people will be able to go back to in person sales calls instead of Zoom meetings to showcase their new products.” Ms. Ziolo said her firm saw a decrease in the “number of positions we had last year but the positions we did have were at higher levels, so we were fortunate to grow our revenue last year.”
“As a firm we’ve historically rarely traveled to meet our clients / candidates unless it was at an industry conference, so we didn’t change the way we recruited,” she said. “Our clients had to change their interviewing strategies and adopted video conferencing as a primary method for recruiting. Last year many of our clients hired candidates without meeting them in person, which was a first for us. I do think clients will continue to use video interviewing going forward which may replace the majority of phone interviews, but I think they’ll return to a final interview being done in person.”
“Our business (information technology focused search) has always been a good leading indicator of where business is headed,” said Gary Erickson, managing partner of Executive Search Partners. “Our search business dropped significantly last March when our clients recognized that the virus was real and would probably significantly impact their revenues. Our search business started increasing again in December.” He said he is now as busy as the firm’s best year.
“Our clients tell us that this is because they are seeing an increase in their businesses and are predicting that their revenues will accelerate throughout 2021 as a combination of more masking and more vaccines reduces the impact the virus is having on the economy,” Mr. Erickson said. “Additionally, many of those same businesses have adjusted their business models and employment models to incorporate more on-line/remote businesses and more employees working remotely. We have not had to adjust our business practices. We have been working remotely and using video interviews as needed since we started Executive Search Partners in 2003.”
Slow but Steady
“We’ve seen good recovery in most sectors,” said Steve Potter, U.S. CEO of Odgers Berndtson. “We think that the overall recovery will be slow but steady, with industries like hospitality and restaurants taking more time to get back to their pre-pandemic highs. The first six months of the pandemic, business was off considerably. But the fourth quarter was actually better than the previous fourth quarter, which meant that business was only down slightly over the course of the whole year,” he said. “What was different, however, was that a higher percentage of our searches were for replacements for existing positions, rather than for candidates moving into positions that were newly created part of a growth strategy. We also saw a lot of jostling, across all sectors, for tech talent.”
The firm’s recruiters have seen widespread use of Zoom (and similar platforms) to conduct interviews, which comes with pros and cons, Mr. Potter said. “On the con side, it’s harder to get a good sense of who someone is over Zoom. On the plus side, it’s really easy to schedule remote interviews, which means searches are getting done faster. Going forward we expect to use a hybrid mode: Initial interviews will be done over Zoom; late-stage interviews will be done in more traditional conference rooms / restaurant settings.”
Investing in Solutions and Teams
“Investing in new tools and technologies has always been important, but with teams working together remotely from all over the world, it is more critical than ever,” said Cameron Ireland, CEO of BoardEx, an advanced enterprise solution connecting users with an exclusive network of global business leaders and decision makers. “We found that investing in the right solutions amplifies the output of teams so they can seamlessly deliver differently. It also helps with employee morale since we are investing in places that help them individually and as a team.”
“Having directly experienced the upticks in the economy post-recession and other industry/economic challenges of the past decades, I remain cautiously optimistic and lean in the same direction of many of the executives I work with,” said Elizabeth Dahill, of The Dahill Group. “Successful companies will grow with improving conditions in the market and we will see a slow but steady recovery. The energy and natural resources industries, despite the pandemic and the significant 2020 economic challenges, continued to hire. With advancements in vaccines and other risk mitigators, we may see a sense of normalcy in the coming months/quarters.”
Finding the Right Talent
“As we expand our energy expertise and client base into other markets beyond traditional oil and gas, including natural resources and clean energy, we are continuing to see an increase in the number of searches for leadership roles, and unique individual contributor opportunities,” Ms. Dahill said. “With leaner budgets from 2020 crossing over into 2021, now more than ever is a time to seek out an executive search resource to be sure you are finding and attracting the top talent your organization needs to succeed in this stage of transformation, recovery and growth.”
A Delayed ‘V’ Recovery
“I think this recovery is already occurring within the U.S.,” said Constantine Alexandrakis, leader of the Americas region for Russell Reynolds Associates. “It started with a few industries leading the way – examples include pharmaceuticals, med devices, biopharma, technology, some areas of financial services, and consumer products – and some of those never even saw a downturn. Their progress was followed by subsequent upturns during the fall in others like industrial, education, and health services. In effect, it has been almost like a ‘delayed V.’ And although the relative unemployment rate is high and is likely to stay there for the medium term, it feels like it’s the result of a combination of some sectors that are still suffering (for example dining and travel) and other sectors that are thriving but are transforming and driving manpower efficiencies to cut costs for their new reality.”
Given that Russell Reynolds Associates is a global recruitment and leadership assessment firm that works across multiple industries, Mr. Alexandrakis said that it is hard to completely generalize the answer. “But I can say that last spring we saw client demand drop significantly across many of the industries we serve,” he said. “While in some cases demand did not drop at all, in many cases it dropped as much as 50 percent. But by late summer and early fall, demand started to recover significantly. In fact, in many cases, the fourth quarter of 2020 showed growth over the fourth quarter of 2019, which itself was a time of record high demand. So, taken altogether, I can say that our teams across the U.S. and across the world are in high demand by our clients as they drive the transformation and repositioning of their organizations for the long term. We are working hard each day to help our clients improve the way the world is led and improve the way it will be led in a post-pandemic era.”
Thanks to significant investments in the latest hardware for all of the firm’s employees, as well as major software innovations, the search firm was able to seamlessly move from an in-office environment to a 100 percent work-from-home model, according to Ms. Alexandrakis. “Since then, depending on the country, some of our colleagues have returned to the office, or at least periodically work there,” he said. “Like most of our clients however, we are still months away from a normal in-office regime.”
“That said, we expect to remain flexible and committed to an agile, hybrid work approach for the future,” he said. “This means depending on client needs, colleague needs, and any other factors, allowing our teams to work from where makes the most sense and to have the flexibility to adapt as needed. The new reality is also driving us to innovate in how we drive apprenticeship and mentorship for our teams and reinforce and strengthen our culture, which is one of our most important assets. And with respect to how we deliver our projects to our clients, the replacement of client and candidate phone calls and in-person meetings with Zoom meetings is likely to continue, although in-person meetings are bound to return.”
Looking Past the Pandemic
Gary Calega, managing partner at RevelOne, said his firm is already seeing a strong initial recovery as leaders of tech start-ups seem to be looking past the pandemic and making strategic investments in their growth teams. “We anticipate that the increasing momentum and clarity about the timing of the vaccine rollout will further accelerate this growth and optimism,” he said. “The job market is the hottest we’ve seen in many years with pent-up demand due to companies that froze hiring or made draconian cuts last summer are now rebuilding core marketing teams and capabilities. This, combined with the cheapest access to capital we’ve seen in a decade, means start-ups are flushed with cash and looking to invest aggressively to catch up on the ground they lost last year and still meet their long-term financial goals.”
During the height of the pandemic in the spring and early summer, “we saw new role starts decrease overall,” Mr. Calega said. “The strength during that period came from deep tech enterprise clients, especially in security, big data, and cloud services, which were relatively less impacted than other industries. Coming out of the summer, we’ve seen a steady accelerating demand for marketing roles, particularly at the executive level. With ecommerce trends accelerated and the adoption curve of key technologies pulled forward literally by five to 10 years, we expect to continue to see strong hiring and a tight labor market for digital talent throughout 2021.”
Another key shift due to the pandemic is the firm is conducting more searches for companies that are open to permanent remote employees, said Mr. Calega. “Prior to the pandemic, less than five percent of our clients were flexible on this requirement, but it’s now closer to 40 percent.” This means that companies can tap into broader pools of talent, starts-ups in expensive cities can tap candidates in lower cost geographies, and those outside of the top tech hubs now have access to a greater number of opportunities than ever before which has the additional benefit of increasing diversity in talent pools, he noted.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media