December 23, 2022 – Like every year, there were searches that caught the entire recruitment industry’s eye, and left competitors a bit envious that they had not won the assignment. Our story about TurnkeyZRG’s placement of Massachusetts Gov. Charlie Baker, nearing the end of his last term in office, as the new head of the National Collegiate Athletic Association (NCAA) was one such head turner. Others included Diversified Search Group | Koya Partners finding the new president and chief executive officer for Easterseals as well as ON Partners’ successful recruitment of the new chief people officer for Rent, the Atlanta-based provider of marketing software and rental management solutions.
Mergers and acquisitions also stayed in the forefront for the search industry in 2022, with one of our more noteworthy pieces being Arthur J. Gallagher & Co.’s acquisition of global HR search firm Frederickson Partners. What’s more, a report that we wrote about, from Recruitment Entrepreneur International, gave readers insight into building value in a search firm should a sale one day be in its future.
Macro events like inflation and the war in Ukraine, to name two, made for some tough headwinds for a number of search firms and clients alike. To meet the challenges of an ever-changing business landscape, companies saw a variety of key roles evolve and ascend in the corporate hierarchy, and search firms were there to ferret out the best talent for these positions. Daversa Partners, for instance, gave us the inside story in one well-received piece about finding leaders for cryptocurreny and NextGen companies, and for another article offered their insights into the rise of the general counsel position. In separate stories, Artico Search and Executive Search Partners spoke about the red-hot demand for top cybersecurity talent. And DHR International broke down how the chief human resources officer has become a key player for companies sponsored by private equity firms.
PE, for its part, continued to have a major impact on the search industry in 2022. At the same time, however, search firms have more than shown their mettle as partners. PE’s growing emphasis on talent has pushed the sector to evolve, and recruiters have been there to expertly guide them. Our interview with Anish Batlaw, managing director of General Atlantic, went a long way in explaining PE’s shift toward focusing on talent to drive value. Likewise, in another piece, Smooch Repovich Rosenberg, founder and CEO of SmoochUnplugged, shared her insights about the growing relationships between PE firms and search firms. Tim Russell, of The Tolan Group, meanwhile, told us how middle managers are the overlooked heroes of portfolio companies everywhere. And our coverage of Insight Partners’ investment in recruitment firm Riviera Partners, which specializes in finding senior engineering, product, and design leaders, was just one example of investors continuing to see big potential in search firms.
And like every year, Hunt Scanlon Media gave you the trends that are helping to change and define the executive search industry. Our articles about the rise in demand for interim executives, how the pandemic changed the job market, and the push for diversity, equity, and inclusion were all signs of these changing times. Two advice pieces, on how to avoid a bad hire and how to boost recruitment and retention were reader favorites as well.
Let’s take a look back at the top recruiting stories of 2022!
Talent has always been, and always will be, a driver of value creation. Talent management has been an important lever in the private equity industry for years, but it has never been more critical than today. Due to the scarcity of top-end talent in the labor market, it is crucial for private equity firms to have a talent function in place that successfully attracts and retains top performers to its portfolio companies. Over his 30-year career, Anish Batlaw has distilled talent management into a methodical science. Mr. Batlaw is a managing director at General Atlantic, where he leads the firm’s extensive human capital efforts in support of its portfolio companies. By merging his years of talent management expertise with General Atlantic’s long-standing talent function, he has helped unlock value in GA’s global portfolio companies.
Organizations are having to respond to the Great Resignation by looking outside of the traditional channels to source talent. And they’re finding one of the best ways to address skills shortages is to tap into a highly skilled, diverse interim executive talent pool that is readily available and adept at dealing with the ambiguity of our current times, says a new report from Sydney, Australia-based Watermark Search. “Rather than exiting the workforce completely, many more executives are now considering an interim executive career,” says the search firm’s 12th Annual Interim Executive Survey.
In the current and increasingly competitive business climate, with dynamic and shifting markets and associated customer requirements, the chief human resources officer is one of the essential links to the successful growth and profitability of PE sponsored companies. The top HR officer is at the vortex, with the CEO, in defining and cultivating the culture and driving the talent agenda so critical to meet value creation objectives, according to a DHR Global report authored by Christopher Knipp. “HR leadership and associated practices and policies have a direct bearing on the velocity and adaptability of a company’s approach to the market,” the report said. “The CHRO’s role — to develop leaders, attract and grow talent, and create a culture of engaged employees in a dynamic environment – can make or break a company’s ability to meet aggressive performance targets.”
The economic recovery over the past year has been remarkable: Most sectors have recovered their pre-pandemic levels of employment and the unemployment rate is almost as low as it was before 2020. Some sectors are struggling to find workers and hiring in all industries should remain tight. Looking beneath the surface, a new report by ACCUR Recruiting Services reveals several trends converging, and recent research by McKinsey & Company shows how and why jobs are shifting quickly. McKinsey found that the pandemic has accelerated a trend that was taking shape even before massive social disruptions: the fact that a number of workers will need to change jobs or even fields in order to stay employed. Jobs in healthcare, retail, and tourism have been eliminated en masse, while other sectors of the economy—like telemedicine, online banking, and streaming entertainment—have grown substantially.
Increasingly, organizations of all sizes are awakening to the perils posed by cyberattacks. For years, many groups tried to ignore the problem, dismissing cybersecurity as a concern only for the biggest, most high-profile entities, be they government or corporate. These days, more groups are coming to understand how ruinous such intrusions can be. A recent report by Juniper Research, in fact, predicts that over the next five years, companies will suffer $8 trillion in damages because of data breaches. And that’s to say nothing of the intangibles, like harm to reputation, loss of customer trust, and more. In recent years, cybersecurity recruiting has probably changed more than any other area of technology recruiting. It plays a key role in the success of every company and industry. Moreover, cybersecurity is critical to protecting the information of hundreds of millions of people all over the globe. So it is that the need for top-level cybersecurity talent is urgently needed and should continue to be in demand for the foreseeable future. “Cybersecurity recruiting is similar to recruiting for other IT related positions,” said Gary Erickson, managing partner of Executive Search Partners.
Joe Suliman, managing director and head of Daversa Partners’ Boston office, is bullish on cryptocurrency and NextGen companies in general. Supply is high, executives want to hear about opportunities with these businesses, and demand is through the roof. In 2021 alone, Mr. Suliman points out, the latest evolution of internet technology, known as Web3, reaped $33 billion from venture investors; $10 billion of that came in the fourth quarter alone, surpassing all such investment from the year before. “My opinion is that within the next year to 18 months, half the companies that we work with will be directly or tangentially involved in building the Web3 economy,” he said. “This isn’t going anywhere. This is the future of how technology businesses will start, scale, and generate liquidity for their investors and employees and the best-in-class operators.
TurnkeyZRG has assisted in the recruitment Massachusetts Gov. Charlie Baker as the next president of the National Collegiate Athletic Association (NCAA), the major governing body for intercollegiate athletics, effective in March of next year. Gov. Baker’s term as governor ends on Jan. 5. He succeeds Mark Emmert, who will continue to serve the NCAA as a consultant through June. “College sports is undergoing significant transformation,” said Len Perna, chairman and CEO of the search firm. “The legal and policy environments are shifting continually, threatening the NCAA’s ability to maintain a consistent experience and a level playing field for student-athletes across the country. The best way to continue to support student-athletes is for the NCAA’s next leader to bring a new set of skills that meet the challenges of the moment. Gov. Baker’s record of bipartisan leadership in both the public and private sectors will be invaluable in the hard but critical work of bringing Democrats and Republicans in Congress together to secure a stable, sustainable future for college athletics.”
After a rigorous national search, Diversified Search Group | Koya Partners has assisted in the recruitment of Kendra E. Davenport as president and chief executive officer of Easterseals. Alison Ranney, managing partner and CEO practice co-lead, led the assignment along with Corina Benitz, vice president and senior associate; Tiara D. Muse, VP and senior search associate; and Alison Salisbury, senior search associate. “Kendra’s strong record of accomplishment as a leader and senior executive makes her the right person to lead Easterseals as we enter our second century of service in responding to the needs of children and adults with disabilities throughout America,” said Alicia Georges, chair, Easterseals national board of directors. “Her capacity to lead complex organizations will serve us well as we advance a strategic vision for our future in areas of priority including advocacy, network advancement, brand management, and resource development in partnership with our 70 Affiliates which collectively serve 1.5 million people annually.” Ms. Davenport brings more than three decades of experience working exclusively in the nonprofit arena.
The private equity sector changed drastically in the past 30 years and even more so during recent times which have presented plenty of obstacles. However, private markets bounced back in 2021. After a year of pandemic-driven turbulence that suppressed fundraising and deal activity, private markets rebounded. Fundraising was up by nearly 20 percent year over year to reach a record of almost $1.2 trillion. A new set of risks emerged at the beginning of 2022 with the potential to undermine growth and performance. “With the pandemic’s effect on the talent equation, I believe PE firms have a clearer understanding that talent identification and recruitment of exceptional talent has become more highly competitive,” said Smooch Repovich Rosenberg, founder and CEO of SmoochUnplugged. “This is a direct result of CEOs, boards of directors, and overall management teams raising the bar on performance for those recruited into their leadership teams. In addition, I believe that PE firms are seeking more sophisticated search partners whose knowledge and expertise is not only highly focused such that they are considered subject matter experts, but there is a strong appetite to collaborate with firms who actually have long-standing relationships with specific talent sectors.”
ON Partners has placed Sheila Dehdashti as chief people officer for Atlanta-based Rent, a provider of marketing software and rental management solutions. Partners Jake Espenlaub and Tindall (Sewell) Hein, and consultant Whitney Craigo spearheaded the assignment. “Great news from our colleagues at Rent,” said ON partners in an online posting. “Sheila brings over two decades of experience in strategic global HR leadership and organizational effectiveness for companies including Fiserv, CH2M, and NCR Corp. Congratulations to Sheila and Rent.” Ms. Dehdashti joins Rent from Fiserv where she served as vice president of human resources, providing HR leadership and strategy for one of the company’s largest growth businesses, and previously CH2M Hill (now part of Jacobs), Radiant Systems (now part of NCR), and other companies. She is recognized for her collaborative approach in developing people and team effectiveness across small and large organizations.
Anyone who works in executive search right now has seen, and will continue to see, a push for more lists of diverse candidates for open roles. “We are also seeing organizations start to mandate diversity numbers as a benchmark for DEI success, and seeing an influx of diverse candidates at the executive level as a result,” said Ryna Young, head of the diversity, equity, and inclusion practice at Odgers Berndtson. It’s encouraging that companies are making an effort. “And yet, if you’ve been paying attention over the past couple of years, you know diverse candidates still have a lot stacked against them,” said Ms. Young. “Board representation is still very low when it comes to both gender and equity deserving groups. COVID added extra barriers and stress for women executives, exemplified by the numbers of women dropping out (and staying out) of the workforce. And companies are struggling to retain the diverse talent they are hiring.”
The clock is ticking the minute the deal closes. How quickly can you execute on the value creation plan and work toward your new private equity backer’s investment thesis? Every portfolio company CEO then must ask the critical related question: Do I have the right team to make that happen? “Data we collect and analyze in our work with private equity-backed software companies shows that virtually every portfolio company requires at least one new or changed member of the C-suite,” says a new report from Bespoke Partners authored by Eric Walczykowski. For example, recent research by growth advisory firm SBI found that many CEOs lack confidence in their go-to-market team’s abilities to drive growth in the current economic climate. Mr. Walczykowski says this means there is a good chance that CEOs of recently acquired portfolio companies will be looking to bring on new chief revenue officers and chief marketing officers. Therefore, the CEO of the newly minted portfolio company now faces one of the biggest risks they will encounter: making a bad hire.
Given the environment that businesses operate in today, the general counsel role has become a critical, and invaluable, member of leadership teams everywhere, with no end in sight for the demand for these leaders. With that said, lawyerly advice is hardly this senior executive’s most important contribution. With their insights into virtually every aspect of a company, general counsels are getting the recognition they deserve as key strategic players, and in increasingly more instances successors-in-waiting for senior-most positions. Virtually every scaling organization needs a general counsel. Like the chief people officer, the chief financial officer, and other roles that have evolved in stature in recent years, the General Counsel has historically been misunderstood relative to the true value within a rapidly growing organization. Those days, however, are all but gone. “We are seeing the perception of the function from an entrepreneur and investor perspective evolve from functional lead to operator and strategic business partner,” said Alex Lebow, who co-leads the general counsel practice for Daversa Partners.
Middle managers in any organization act as the glue that enables everything to happen. They connect, enable, and provide whatever their teams and first-line managers need to get their work done. But their role, according to executive recruiters and private equity talent leaders, is often overlooked and undervalued. A fundamental characteristic that PE firms are seeking in leaders of their portfolio organizations is a commitment to the organization’s success, said Tim Russell, managing partner of The Tolan Group (TTG). “Leaders who share the same level of commitment to the portco’s success are more often than not instrumental in accomplishing the growth and scale objectives of the investor,” he said. “PE firms are looking for executives who are leaders in action and not in title only.” Leaders who are attractive to PE investors, he noted, are those who provide direction, affirmation, inspiration, and collaboration. “Without these characteristics, the organization’s objectives risk not being recognized.”
The impact of a cybersecurity breach—be it from cyber criminals, business competitors, terrorist organizations, or foreign nations—is unsettling to say the least. In terms of dollars alone, the average data breach cost $4.35 million in 2022, an increase of 2.6 percent over last year and 12.7 percent since 2020, according to a new report by IBM. And for critical infrastructure organizations—like those in the financial services, industrial, technology, energy, transportation, communication, healthcare, education and public sector industries—that number jumped to $4.82 million — $1 million more than the average cost for those in other areas. And let’s not forget the damage to reputation and trust, shutdowns, harm to the potential sale of a business, lawsuits, even legal penalties that can leave a company reeling. All this has made finding top cybersecurity talent a growing imperative for organizations everywhere. And it’s not just the senior-most leadership roles like chief information security officers that are in demand. Search firms are being asked to build out teams, which in some cases can number in the hundreds of new hires.
What makes one recruitment business more attractive to an investor than another? Investors have their own strategic agenda; they may seek to invest in a particular sector or region and will measure value in their own unique way. But a “buyer’s” checklist will always be built on key principles. It’s important to focus inward first; your aim is to build a comprehensively structured business that holds value – not just in terms of income and profit but across all areas of the business, according to a new report from Recruitment Entrepreneur International’s James Caan. “The strength, depth and resilience of a business’ infrastructure, governance and internal processes is integral to its value – so strengthening all elements of a recruitment business immediately diversifies the potential buyer portfolio,” he said. Every strategic decision affects the way a recruitment business grows. In addition to aiming to increase top-line internal performance Mr. Caan says that you should work towards minimizing risk factors that may be detrimental to the end sale/purchase. He offers 10 drivers of a recruiting firm.
More than 47 million Americans quit their jobs last year, the highest number of resignations on record, and there was still recently a record 11.5 million job openings. As labor shortages continue, this year could go down as a “pit of despair for employers,” said one senior economist. “It’s not all bad news, though,” said Molly Brennan in a new report from Diversified Search Group | Koya Partners. “Data shows that most people aren’t exiting the workforce completely. Instead, they’re leveraging a strong job market to pursue more attractive opportunities, being more selective about the jobs they take and the organizations they represent.” Ms. Brennan offers seven critical actions to help recruitment and retention efforts.
Arthur J. Gallagher & Co., one of the world’s largest consulting and risk management companies, has acquired global HR search firm Frederickson Partners. Frederickson Partners has locations in a dozen cities across the U.S., including San Francisco, New York, Dallas, Chicago, Los Angeles and Nashville, and also serves global tech hubs in London, Berlin, Paris, Mexico City, Bogota, Seoul and São Paulo. Founder Valerie Frederickson and her team will continue to operate under the direction of Scott Hamilton, global managing director, human resources & compensation consulting for Gallagher’s employee benefits consulting and brokerage operations. “Frederickson Partners will expand Gallagher’s executive search capabilities across all industries and offers us significant opportunities for collaboration and growth,” said J. Patrick Gallagher Jr., chairman, president and CEO.
San Francisco-based Riviera Partners, a recruitment provider specializing in C-level engineering, product and design leader placements, has received an investment from global software investor Insight Partners. Privately backed since 2019, this investment allows Rivera Partners to forge additional opportunities for its recruiters and employees to scale into new markets and geographies. Riviera Partners will continue to operate independently. “With thousands of open engineering, product, and design leadership roles across Insight Partners’ portfolio, we know how in-demand top talent is,” said Allyson White, managing director at Insight Partners. “Riviera Partners has established a best-in-class, tech-driven approach to finding the best product and engineering candidates. Hiring is a critical component to a company’s success regardless of their stage, and we recognize that Riviera plays a large role in the health of the software ecosystem. We look forward to working with Riviera Partners as they continue to grow and place top technical leadership that will build the future generational companies.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media