Gauging the Forces That are Shaping Today’s Recruitment Environment
July 28, 2022 – For many in the tech ecosystem, 2022 has brought the first true, deep market correction they have directly experienced. Market caps have been wiped out, pre-IPO shares are once again starting to resemble wallpaper, and companies are beginning to initiate hire freezes.
But those who have lived through these dynamics know that the money does not necessarily evaporate — it largely just moves around, says Mike Doonan, managing partner of SPMB Executive Search, in a new report. “Investment firms that have raised hundreds of billions of dollars will still deploy capital,” he said. “They will just do so in different ways, instead choosing different asset classes and product categories, and recruiting executives with different skill-sets to meet their evolving needs.”
So why does this matter, asks Mr. Doonan, and where are people beginning to place bets?
Below are some of the prevailing themes — and real-time data — that the report shows to be shaping the recruiting environment and driving companies’ top talent priorities:
Due to market forces, SPMB’s technology officer practice has seen a major lift in technically-oriented roles across the board: Among those positions, SPMB Executive Search has seen increases in searches for chief technology officers (89 percent), chief information security officers (68 percent), product executives (51 percent), general engineering executives (48 percent), chief information officers (15 percent), and board members (19 percent).
A Perfect Storm
“The last two years have been a land grab with most companies doubling down on customer acquisition, conversion, and retention — all at the expense of crumbling technical infrastructure and customer-facing applications built with short-term goals in mind,” said the report. “Throw on top a few generational technology shifts – from cloud to dev-ops and AI/machine learning, plus a few front-page security breaches – and you’ve got yourself a perfect storm in which management teams and their boards are now rushing to play catch-up.”
Since March 2020, meanwhile, search cycle times (time to completion) have been in flux. “Search people do not like to admit it, but like many other businesses, we operate in a marketplace,” said SPMB. “For that marketplace to be healthy, you need an environment where clients are hiring and candidates are moving freely between companies. And as the demand for technical executives has increased, we’re also seeing more dramatic, almost chaotic, fluctuations in search cycle times — in ways we’ve never seen before.”
COVID also helped to produce the Great Resignation, “with many senior executives really evaluating their personal and professional priorities, and open to talking to other employers — our clients,” said the report. “This led to us being able to close search projects faster (by roughly 15 percent). Supply outstripped demand in many cases.”
The unintended consequence of this movement came in 2021 with significant wage inflation coinciding with an unusually bullish stock market, leading to significant golden handcuffs and an inability or unwillingness of top candidates to consider other options. “So while we had an unprecedented number of clients looking to hire,” said the report, “the candidate community would not budge, which led to much higher cycle times, close to 18 percent on average.”
Business as Usual?
“With the recent market corrections of 2022, these handcuffs have in many cases loosened or come off entirely, enabling us to move candidates into clients more efficiently, thus giving our clients more optionality and reducing the amount of time to close an executive search project,” said SPMB.
So where is the money going? “The short answer is, we don’t yet know — the data is telling us that it’s business as usual,” said the report.
“Earlier in the year, I predicted a major retreat from the public markets into privately held companies,” said Mr. Doonan. “Yet the numbers do not support this thesis — from where we sit, our public clients are about as active as our venture and PE clients, with only a five percent variance in our business mix in the last few months.”
“However, with significant dry powder on the sidelines, we anticipate many of our publicly-traded, PE and well-capitalized venture clients — particularly those that raised large rounds in 2021 — will take advantage of ‘more down-to-earth’ valuations, and for our business mix to reflect a soon-to-be robust M&A and take-private environment.”
Related: Staying Ahead of the Great Talent Migration
The bottom line, says SPMB Executive Search, is that these fluctuations are healthy in the course of a cyclical technology and investment market. “However, if organizations are not on the pulse of current recruiting themes and candidate priorities—and evolving their search process accordingly—they will find themselves playing a costly game of catch up and in the process, lose out on top talent to competitors playing the long game,” said the report. “This is particularly true within C-level technical talent as every company is now a tech company, and this leadership category is critical to the success of all organizations in today’s competitive environment.”
Building Executive Teams
Specializing in technology and innovation, SPMB Executive Search recruits upper management and board members to growth-oriented companies in tech, consumer, and sustainability industries. SPMB has also placed dozens of senior executives at the portfolio companies of leading private equity firm partners including Blackstone, KKR, and TPG.
Some of SPMB’s recent C-level technical assignments have included filling key roles for: Disney Streaming (media and entertainment), Google Cloud (cloud services), and Comcast (communications and media) among many others.
Mr. Doonan leads SPMB’s digital transformation and data practice and has successfully executed over 350 C-level and VP searches across all market verticals. Over the past 2 decades, he has earned a reputation as a strategic partner and leadership architect, helping his clients build executive teams that bridge the gap between innovation and scale. Mr. Doonan enables innovative pure-play technology companies such as Google/Cloud and Amazon/AWS to achieve scale by recruiting senior leaders that have been through large, complex growth scenarios. He also works closely with large incumbents such as Disney Streaming, Comcast, Capital One, and Under Armour to evolve their technology, IT, product, data, security, and digital capabilities.
Related: What Candidates are Really Looking for In New Jobs
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media