Executive Search Firms Adapting to the New Normal

April 15, 2021 – 2020 was an unprecedented year in most respects, and a challenging year for many in the executive search industry. Senior executives across the sector, however, are generally optimistic in their outlook for the year we’re in now. According to two leading reports, one from Bullhorn and the other from Hunt Scanlon Media, optimism reigns supreme. According to Hunt Scanlon, 93 percent of recruiting leaders said they are expecting growth in 2021, while 80 percent are bullish on business prospects for the new year. A full 75 percent of search executives in the 2021 Hunt Scanlon Pulse Rankings survey said they expect full growth to return by June. Fifty-nine percent of those polled said they expected to meet their targets for 2021, while 41 percent said they would exceed targets set for the year.

Last year also saw a dramatic rise in the number of executive search firms employing a digital transformation strategy, according to Bullhorn‘s 2021 Global Recruitment Insights and Data (GRID), a survey of more than 2,000 recruitment professionals. Forty-three percent of global recruitment firms now have a digital transformation strategy in place, compared to 25 percent a year ago. Eighty-two percent of those firms with a strategy in place (and two-thirds of all respondents) said that COVID-19 directly caused them to adopt or ramp up their digital transformation efforts.

“Leading recruiting firms today are focused on digital transformation, a three-pronged journey that combines the digitization of huge volumes of data with automation and, eventually, artificial intelligence, to unlock new levels of productivity and truly transform the way businesses operate,” said Matt Fischer, president and chief technology officer at Bullhorn. “The challenges facing firms over the last year has underscored the need for this approach.”

Bullhorn asked respondents, “How do you expect revenue to change in 2021?” Seventy percent said they expected revenue to increase and just three percent expect a decrease. Firms that had a good year in 2020 were even more positive about their outlooks in 2021 (80 percent of these respondents expect an increase in revenue). Will agencies ramp up their investments in 2021? Roughly two-fifths of businesses plan to bolster their tech and operating budgets in the year ahead. Asked about changes in their business in the new year, search firms said they were most likely to invest in technology, with more than half of the respondents (54 percent) expecting to increase their budget for tech investments.

Customer Challenges

Building customer relationships is a top priority for search firms in 2021, but what’s standing in the way of that goal? While COVID-19 introduced some new complications into the mix, according to Bullhorn, many of the top challenges to winning and maintaining clients are all too familiar to recruitment firms. When Bullhorn asked respondents what their biggest obstacle was to winning new clients, nearly a third said client demand (hiring freezes or a lack of budget for staffing services). When asked what their biggest challenge was pertaining to their existing clients, respondents said changes to job requisitions — either reductions in volume or increasingly challenging asks. This accounted for more than half of reported answers as the biggest challenge when it comes to maintaining clients.

The search industry changed in 2021 in expected and unexpected ways. When asked what would be the one thing they could change about the search industry for the better, recruitment professionals overwhelmingly said they were concerned about the reputation of the industry, though some believe the negative reputation is merited. Client relationships came in a distant second. Respondents said they want better communication, more transparency, and better rates from clients.

The Impact of COVID-19 on the Recruitment Industry

It is hard to overstate the impact of COVID-19 on the recruitment industry. How will it impact the entire sector in 2021 and what will be the lasting legacy on the industry? A fifth of respondents believe the effect of COVID-19 on the unemployment rate will have the largest impact on the industry in 2021, but the majority of respondents still think they will have to contend with a talent shortage this year.

When asked what will be the largest impact from COVID-19 on the way recruiting businesses operate, respondents largely pointed to remote work. Remote recruiting (31 percent), reduced office space use (24 percent), and remote onboarding (23 percent) were the three most chosen impacts. What will be the largest impact from COVID-19 on the staffing and recruitment industry at large? Since COVID-19, respondents have reported placing candidates in remote roles they never before dreamed possible.

Training and Technology

Recruiting technology is a substantial investment, but the majority of businesses expressed adoption woes. While many of the obstacles that prevent adoption are internal (lack of time and high turnover), the most common explanation falls on the vendor: limited training.

When Bullhorn asked respondents how they would evaluate their team’s adoption of staffing technology, just 16 percent reported full adoption of their staffing technology. Last year, one-fifth of respondents reported full adoption, suggesting remote workplaces have had a possible effect on adoption.

Bullhorn also asked what the top obstacle was preventing internal adoption of their staffing technology and why businesses weren’t making better use of their recruiting technology. For the second year in a row, teams across all segments and sizes reported that a lack of training was the culprit: training-related reasons account for half of all responses. If limitations are preventing adoption, it might be time to consider a change in technology. However, one-quarter of respondents have either never changed recruiting technology providers or haven’t changed in a decade.

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