May 26, 2021 – As we entered 2021, many in the executive search industry were still trying to figure out how to “go back” and “get back to normal.” As the industry became more clear-eyed that a backward focus is rarely a sound path to the future, things began to change, according to Mike Myatt, founder and chairman of N2Growth. As with any crisis of significance (public health, business, economic, social, financial, political, or military), it takes a season in time for governments, businesses and people to find their sea legs. Mr. Myatt said it reminds him of an old Terry Jacks song, “Seasons in the Sun.”
“Not in any way meant to minimize the tragedy of 2020, but as a crisis typically does, it also gives birth to a new way forward,” Mr. Myatt said. “A crisis rewards the agile thinkers, risk takers, and those with a bias to action. As much as we don’t want to sound crass in naming winners and losers during a pandemic, some search firms clearly came out of 2020 better and stronger than others. The pandemic ripped the bandages off the covered wounds of a legacy-based search industry and exposed the weaknesses of even the biggest search firms,” he said. Regrettably, many of those weaknesses were also prevalent in smaller firms that did not survive, as well, he added.
To regain a certain footing as an industry, everyone should harken back to 2019 to really understand what happened in 2020. As Mr. Myatt thinks back to that year, his playlist has shifted from “Seasons in the Sun” to the Cars song, “Let the Good Times Roll,” he said. 2019 was a banner year for most search firms. The search industry was feeling invincible – times were good. Large firms were getting larger and new search firms were entering the market at a blistering pace.
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In retrospect, said Mr. Myatt, “and if we are brutally honest with ourselves, most of the executive search industry was asleep at the wheel headed into 2020. Large global search firms had become lazy, confusing strength of brand with a good business model,” he said. “They carried huge amounts of bloat into 2020. They had too much debt, too many people, and broken, outdated business models. They had to furlough and/or lay off large amounts of their workforce to remain afloat. Newer, smaller firms in the market may have had thoughts about certain aspects of market innovation, but most lacked stickiness in their client relationships, and lacked financial resources, and the necessary resiliency to survive a crisis, much less a crisis with the magnitude of a global pandemic.”
Lack of Innovation
2020 ended up shining a very bright, and long overdue light on the executive search industry, Mr. Myatt noted. His mental playlist is now reminding of the Tom Petty song “Free Falling.” The pandemic, he said, “simply exposed our industry’s dirty secrets about the lack of existing innovation around leadership practices, product/ service development, process, pricing, methodology, contracting, teaming, delivery and execution, technology, research,” he said. “The list goes on and one. The executive search industry has fallen behind other industries and segments, and it better catch-up quickly or the carnage that we will see due to a lack of innovation will be larger than anything the pandemic through at us in 2020.”
It became glaringly apparent that many search firms were AWOL when their clients needed them most, he said as he looked back. “Search firms, big and small, simply couldn’t help clients during their greatest time of need, because they had failed in building sustainable businesses themselves,” said Mr. Myatt. “Most firms simply weren’t prepared to add any value to clients if they weren’t hiring or assessing talent. Clients saw most search firms as irrelevant and unqualified to solve their problems, and you know what? They were right,” he said.
Evolving Faster than Clients
The big question for 2021 is now in front of us: Will search firms do the heavy lifting needed to truly become value-added talent advisory firms, or will they just lick their wounds, weather the storm, and continue with business as usual? “As an industry, we need to actually evolve faster than our clients if we’re to be seen as advisors who can offer valuable insights, guidance and counsel,” Mr. Myatt said.
Two new surveys – one from Bullhorn, the other from Hunt Scanlon – reveal that most senior leaders in the recruitment industry are optimistic for the year ahead. The Bullhorn report also showed the degree to which the pandemic is accelerating change, with 43 percent of global recruitment firms now having a digital transformation strategy in place, vs. 25 percent just a year ago. “The challenges facing firms over the last year has underscored the need for this approach,” said Bullhorn.
“In order not to repeat mistakes that led to search firm vulnerabilities exposed by the pandemic, we must let go of insider arguments that add no value to the client,” Mr. Myatt said. “I’ve always shared with clients that the fastest and most sure path to the future begins with a very harsh and critical analysis of the present. If you are not willing to be brutally honest about what’s wrong, you’ll have a difficult time in fixing it. This holds true for the executive search industry as well.”
Mr. Myatt is a leadership advisor to Fortune 500 CEOs and their boards of directors. He has worked directly with hundreds of public company CEOs and board members globally, and his representative corporate clients include: Accenture, AT&T, Bank of America, Deloitte, EMC, Humana, IBM, Lincoln Financial Group, McGraw-Hill, Merrill Lynch, PepsiCo, and other leading global brands.
Mr. Myatt joins Hunt Scanlon Media next week for the second installment of this feature on constructing a new way forward for executive recruiters.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media