Entering the New Frontier in Executive Recruiting

Two years into the pandemic and executive search firms are overflowing with assignments in a work world they never could have predicted pre-COVID-19. Search leaders from Daversa Partners, Artico Search, Diversified Search Group | Koya Partners, The Christopher Group, Prodigy Search, Fenway Consulting Group, Bespoke Partners, ON Partners, The Tolan Group, Academic Search, True Search, Hudson Gate Partners, and DHR Global all weigh in. Welcome to the new age of hiring!

January 19, 2022 – The last 24 months have changed everything. For businesses. For leaders. For employees. For executive recruiters. Now, as the dust settles, one fact becomes clear: Power has shifted. From organizations to people. From profit to mutual prosperity. From ‘me’ to ‘we.’ According to a recent Korn Ferry report, employees are now starting to ask human questions about the work they perform. Why am I doing this? What is it for? How can we do it better? Many are choosing to leave their jobs. It is all making the competition to attract, recruit, train, and retain new talent fiercer than ever.

It also poses an existential threat to businesses everywhere. “An organization is only as good as the people it employs; those organizations that want to survive and thrive in 2022 will need to respond to the new power dynamic in kind,” the Korn Ferry report concluded. “Look beyond financial goals to consider the needs of all their people. Treat employees as human beings, not parts of a machine. Break down silos and overcome remote working challenges to ensure people feel connected to the company purpose and vision and each other. Embrace the possibilities of the future and make work, work for everyone.”

Hunt Scanlon recently spoke to top executive search consultants to explore how this new age of the human will play out across the areas that are dominating future of work trends in 2022. Here are some the excerpts from those discussions.

Redefining Work

Inflation will continue in 2022 and will create a tidal wave of interest in decentralized currencies, said Paul Daversa, CEO of Daversa Partners. “Global investors fending against the dollar collapsing will further validate smart contracts, digital exchanges and create demand and innovation that will continue to fuel blockchain adoption,” he said. “All of this will drive an exodus from traditional corporate career paths to the new frontier and put even more pressure on the FANGS to retain their talent from the allure and seduction being ushered in the form of a decentralized economy that will emerge.”

Twenty-four months ago, the onset of the COVID-19 pandemic suddenly served as a test case where over one billion knowledge workers tested a global working infrastructure on the internet…and it worked, he said. “That event transformed work as we define it forever. Executive recruiters will no longer spend five hours on a flight when they can produce twice as many video experiences. The train has left the station on the how we work, where we work, and when we work.”

Counteroffers Rising

Matt Comyns, co-founder of Artico Search, said he is seeing strong competition for top talent across the security space and no slowdown in the demand for leaders across the security space. “Counteroffers and multiple competing offers are increasingly creating a challenging operating environment; special attention to detail and communication between accepted offer and start date are critical; and there is a continued increase in compensation packages and retention packages at all levels of the security organization.”

Negotiating for Remote Work

“We expect that the competition for talent will continue into 2022,” said Molly Brennan, global managing partner of non-profit practice at Diversified Search Group | Koya Partners. “I talk to many candidates who say they’ve never been recruited more heavily in their careers, and many recruiters say they’ve never seen a talent market as competitive than the one we’re in now. We are also seeing candidates continue to negotiate for remote work arrangements while clients are starting to push harder on expectations for in-office work. This will likely continue to be a tension as we move into the next phase of the pandemic.”

“Search firms adjusted quickly and effectively to the remote environment,” Ms. Brennan said. “We did see a minimal return to in-person engagement this fall, though that swiftly dialed back with the Omicron surge. I think we’ll continue to see the bulk of our work unfold remotely through the spring. But I wouldn’t be surprised if there was a strong push for more in-person engagement with search consultants and candidates as we move into warmer weather and learn how to live with COVID as an endemic virus.”

Candidate-Driven Market

“At the top of my list is the fact that it will continue to be a candidate-driven market,” said Nat Schiffer, managing partner at The Christopher Group. “This will manifest itself in many ways. Some of the chief ways include continued pressure on total rewards and market pricing. I think hiring authorities will in many cases be surprised by the disconnect between internal equity, compensation data, and the real time cost to hire a candidate. Another area in which this will manifest is employee well-being. I expect employers to innovate in areas such as wellness, childcare, PTO and more. Small changes in this area could produce big increases in employee engagement. Finally, I expect the art and science to continue to converge for the best executive search firms. The best of us are exceptional problem solvers. The individuals at the helm of these firms have long had an innate ability to navigate a myriad of variables to find great candidates who can technically do the job but also fit into the employee culture.”

“Human resources will continue to be a corporate function whose stock rises dramatically in 2022,” Mr. Schiffer said. “Diversity initiatives, COVID, hybrid work, talent shortages both in senior level roles as well as in frontline jobs, culture and engagement, rewards and recognition, and more. When you think about the talent that a great CEO wants to go to battle with, it is no longer just finance and marketing. You better bet it includes great strategic HR leadership.”

Creating DE&I-Specific Roles

“We believe there is a real potential to bring in candidates from outside of our sector (sports and entertainment) to address critical DEI roles,” said Scott Carmichael, founder of Prodigy Search. “The DE&I function within organizations has become more critical and needed than ever before. Another function that we continue to see expanding and becoming a critical new hire is in the business intelligence and analytics area – both on and off the field of play. We believe employers will act more swiftly and decisively knowing that there is strong competition for talent. We have seen timing on completion of searches being much more accelerated due to the competition.”

As there is a continued push around the industry to promote diversity, equity and inclusion, there is a rising need to create a DE&I-centric position, he said. “As the sports and entertainment industries continue to place importance on diversifying their respective organizations, the help of a DE&I-specific position can help ensure and continue to create meaningful change within an organization and within the community. These roles can focus on recruitment, hiring practices, or overall external partnerships and practices.”

Search Firms Matter More than Ever

“Our specialty is the CFO suite, placing professionals in a variety of senior level financial positions across a broad range of industries, from life sciences and technology to manufacturing, distribution, construction and professional services,” said Brian Cuddy, co-founder of Fenway Consulting Group. “Over the last two years, our placements in the biotech, pharma and medical device fields have accounted for approximately 50 percent of our revenue. We expect the activity levels in these industries to continue at similar levels in 2022,” he said.

“In our current environment, using a search firm is more important than ever to identify top talent,” Mr. Cuddy said. “It is typically not possible to conduct as many levels of interviews that you might have conducted in the past. In light of that fact, it is critical to rely more heavily on the advice, feedback, and reference information provided by a recruiting firm, especially if they know the candidate well or have some history with them.”

High Demand for Seasoned Executives

“At Bespoke Partners, revenue from our search and leadership advisory services skyrocketed by 55 percent last year and we anticipate more growth ahead,” said Eric Walczykowski, president of Bespoke Partners. “2021 was a blockbuster year in private equity deal volume and fundraising. The industry analysts at PitchBook say 2021 broke records and 2022 is starting with the potential to set new records in funding and deal-flow, with lots of dry powder to put to work.”

Private equity firms consider human capital the primary lever for creating value and achieving the investment thesis for a portfolio company these days,” Mr. Walczykowski said. “So, for executive search, these trends mean an already tight market for talent is getting even tighter. There’s no longer a waiting list of qualified executives for each new portfolio company. An executive who has a good private equity track record has a choice of many opportunities. Of course, no one knows how the broader economy will change and affect the talent market or private equity prospects in general. But we always see high demand for seasoned executives who know how to manage through economic cycles.”

Change Drivers

“We expect that our clients will put an increasing value on executive leaders that bring demonstrated success in driving change through digital and data innovation,” said Lynda Robey, partner at ON Partners. “With the ever-increasing pace of change, our clients see these as foundation elements to business, from driving scale to optimizing costs. Given the likelihood that the recent trends of remote work and distributed teams will continue to evolve, we find that clients are placing a high value on an executives’ communication skills and presence, as this is more critical than ever in motivating and retaining teams.”

Validating Leadership Success

“Remote recruitment is the new norm,” said Tim Tolan, managing partner of The Tolan Group. “I don’t see this changing anytime soon. Most C-level roles we fill for private equity are virtual if they are in the same time zone relatively speaking. Virtual interviews have been adopted by almost all organizations and it’s a real time saver and the most effective and proficient way of completing the initial parts of the hiring process. Virtual recruiting is more than a trend and this change in the hiring process will remain prevalent for the foreseeable future,” he said.

“Today, we are looking for the executives that have built platforms at scale previously and have the PE expertise to hit the ground running with the appetite to want to do it again,” said Mr. Tolan. “We want to present candidates that have successful exits as our PE partners want to hire experienced leaders and operators. We also want to be able to validate their success metrics and the PE space is a very small world with just a few degrees of separation between firms. We want to know how the executive led their team through the pandemic as that either demonstrates and validates their leadership – or not. In the PE world investors want to grow and scale their platforms so understanding the executive’s ability to drive growth both organically and through mergers and acquisitions is critical,” he said. “We also want to understand them as a leader so often time we will talk to direct reports who can validate success metrics and a candidates leadership style.”

Shortened Search Timeframes

“One trend we have seen is the need to fill positions on more condensed timelines than in the past,” said L. Jay Lemons, president of Academic Search. “The turn to conducting searches primarily in a virtual setting will likely continue in 2022, which also aligns with allowing for greater flexibility within the shortened search timeframes. Candidates are also now seeing more options for potential next steps in their careers and using that to their advantage, but with this, we are unfortunately seeing many missteps by candidates at the finalist stage of the search process, especially in their interactions with hiring authorities. The churn in higher education leadership will continue well into 2022,” he said.

Search firms are a resource for institutions and higher education associations and groups, according to Dr. Lemons. “As consultants, we can advise, inform and facilitate a search process that allows for greater emphasis of best practices and create an environment in which all constituent groups feel that their voices are heard and that they are able to contribute to the search process,” he said. “We continue to be able to offer a service that generates a deeper and more diverse pool of individuals from which committees can evaluate and select candidates for more in-depth consideration in ways that many institutions do not currently have the resources or capacity to achieve on their own. The work that search firms provide is a proactive recruitment that most institutions and organizations do not have the ability to do. In this era of fatigue and competing demands, we can extend the reach of institutions and provide an objective view of the work of the institution, skills of the current team, and the leadership needs for the institution in the decade to come.”

Deployed Capital Outstripping Available Talent

“We have already seen a shift back to video interviews and communication vs. in-person and air travel,” said Andy Towne, True Search climate practice co-lead and co-founder and CEO of Hobbs & Towne, which True acquired late last year. “The broader climate technology category continues to be white hot. Climate intelligence, hydrogen and technologies around EV, solar and storage are booming. The demand across all functions is high, with CEO, CFO and CHRO at the top of the list.”

“There is so much capital in the market funding growth companies,” Mr. Towne said. “The biggest differentiator becomes talent, and demand for talent has never been greater. Talent leaders are overwhelmed and need outsourced resources (partners) to engage and attract top talent. Bottom line, deployed capital is outstripping available talent, so organizations need the best (search) partner to be competitive. On the flip side, candidates are inundated with opportunities and leverage long-term relationships with search firms to help them identify the best opportunities.”

Leveraging Technology

“Adaptability will be the hallmark of search work in this COVID era,” said Alyssa Gruber, head of administration and management search at Hudson Gate Partners. “With this labile virus still circulating our globe, most interviewing will be done virtually. This is not new, per se; but how we leverage this technological opportunity is. The question of how we best optimize virtual interviewing without sacrificing the merits of meeting someone live becomes the impetus for innovation.”

“Candidates need to develop a suite of interviewing skills in which they represent themselves well, in the absence of in-person dialogue,” said Ms. Gruber. “Search professionals will need to create virtual explanations of firm culture, office architecture, and the like as candidates might never see their potential new job site and we do not want these factors to hamstring the hiring process. Best-in-class recruiters see this as an opportunity to capitalize on all of the technology available to us. Welcome to the new age of hiring.”

“Dynamic is the word for 2022,” said Lisa Walker, managing partner, global industrial practice at DHR Global. “With changes in business models driven by COVID, the Great Resignation, and the accelerated retirement of many Baby Boomers, this will be a year in which recruiting top talent will be driven by creativity, employer brand, and speed. Employers as well recruiters will need to be agile, decisive, move quickly, and offer flexibility on relocation and time-in-office to attract the best talent,” she said.