The COVID-19 Impact on Executive Search
April 27, 2020 – The COVID-19 pandemic has had an impact on every business sector, executive recruiting included, costing organizations billions of dollars in lost revenue. Goldman Sachs estimates that economic growth around the world will be zero in 2020 thanks to the virus. To many, even that seems grossly underestimated. But the coronavirus is causing far more than just financial damage. Leaders are scrambling to secure supplies, trying to keep fearful employees motivated to work and, in some cases, maintaining bold strategic plans that have been years in the making from falling apart.
Over the past two weeks, recruiting software provider Thrive interviewed dozens of leaders, CEOs, founders and managing partners from top executive search firms. “They candidly shared how COVID-19 and the resulting social and economic impact will affect the executive search sector,” said J. Reed Flesher, founder and president of Thrive, which develops software for recruiters and talent executives.
Here are some excerpted conclusions from those discussions:
1. Like it or not, it’s wartime
While many executive search leaders are optimistic that the crisis will be short lived, nearly all agree that the severity will be high. “Firms are hoping for the best but preparing for the worst — redoing their planning and forecasts, reducing budgets and revising cash-flow plans,” said Mr. Flesher. “Simply put, it’s wartime.”
2 New Recruiting Guides Focus On Adaptation, Forecasts and Recovery
The nation’s vast executive search community and their clients are quickly adapting to the new realities of Covid-19 – and what it means for hiring in 2020 and beyond.
Hunt Scanlon’s latest executive recruiting industry sector report series will be available in 30 days. Hunt Scanlon Media will offer its two-part ‘Executive Recruiting State of the Industry Report’ focused on the Covid-19 pandemic and its aftermath. Part 1, ‘Adapting in Uncertain Times’ will examine how executive recruiters are resetting expectations in the midst of an unprecedented interruption to their business.
The part 2 installment, ‘Forecast & Recovery Strategies’ is our aftermath report – and provides critical data to guide your decisions and inform you on forward-thinking recovery strategies. Industry experts from across the talent and recruiting spectrum offer up their wide-ranging opinions, definitive viewpoints, and expert forecasts.
Many expect a significant pause in business, followed by a sharp rebound later this year. We talk to the experts, uncover the opportunities, pick the sectors and reveal how search firms and talent organizations are navigating and adapting in uncertain times. Hear from top talent experts, including: Frederickson Partners; CBIZ CMF; Russell Reynolds Associates; Odgers Berndtson; Options Group; ZRG Partners; Wilton & Bain; Diversified Search; Caldwell; Hanold Associates; True Search; Slayton Search Partners; Coulter Partners; Cejka Search; Solomon Page; Acertitude; McDermott & Bull; Academic Search; Beecher Reagan; Bowdoin Group; Kingsley Gate Partners; Comhar Partners; ON Partners; Perrett Laver; CarterBaldwin; Stanton Chase; Buffkin/Baker; Major, Lindsay & Africa; WittKieffer; Klein Hersh; Furst Group; Invenias; PierceGray; LifeSci Partners & more! Buy Both Reports Now!
In his epic 2011 article, “Peacetime CEO/Wartime CEO,” Ben Horowitz wrote that a wartime leader “cares about a speck of dust on a gnat’s ass if it interferes with the prime directive.” And the prime directive, according to leaders that Thrive spoke with, is strengthening relationships — through flawless execution, extreme attention to detail, and empathy and transparency, Mr. Flesher said. “That means making short-term concessions like adjusting fee and pricing terms to add as much value as possible today,” he said. “It means being equipped with real-time information about a client’s search, or providing reassurance and honesty around what’s realistically attainable in the near term.”
Related: Companies Planning Big Comeback Post-Pandemic Crisis
Thrive found that firms are doubling down on client service, shifting their resources from practice areas and industries that have slowed down to those that remain active. They’re adding more associates to those searches. “The hope is that the extra attention will lead to finding better candidates and close searches faster,” said Mr. Flesher. “Every executive search firm claims to be a trusted advisor. The next few months will show which ones actually are, and clients will remember who was there for them when the crisis is over.”
2. Recruiting will feel the impact earlier and rebound later
Over the past two weeks, Thrive also found that many firms have seen a significant drop in new searches. “Many active searches are now on hold, waiting for the dust to settle,” Mr. Flesher said. “Late-stage searches are also stuck, as face-to-face meetings are impossible with social distancing and travel restrictions. We’re also seeing that top candidates are unwilling to leave their current posts while their companies are in crisis.”
On the positive side, firms aren’t seeing a dramatic increase in canceled searches yet. And recruiter activity seems to be at or near average rates. “We’ll see how these metrics change over the coming weeks,” Mr. Flesher said. “For now, it seems like firms are preparing for the worst while trying to stay as productive as possible.”
3. Social distancing isn’t having the impact many expected
Mr. Flesher said that by speaking with recruiters he found that firms of all sizes are pleasantly surprised that transitioning teams to working remotely has been easier than they expected. In fact, many firms report that communication and team collaboration has increased.
Related: Is Hiring on Hold? Not According to Some Recruiters
The secret behind the great results? “Empathy and compassion,” Mr. Flesher said. “Everyone is impacted by this crisis, some more than others. Most leaders are showing understanding and flexibility with remote working hours and arrangements. Firms are adjusting by using video conferencing for daily standups, regularly scheduled meetings, and fun cultural events like virtual coffee, watercoolers and happy hours.”
Executive Recruiters Roll Up Their Sleeves as COVID-19 Crisis Unfolds
The COVID-19 pandemic has had an impact on every business sector, executive recruiting included. Kenneth Vancini of Innova International brings us the latest thinking after convening recent conference calls with 23 leaders from search firms across the country. Also, we have the initial results from the latest Hunt Scanlon Media ‘Pulse Survey’ of leading U.S. recruiters. It’s a full docket!
“The main social distancing-related issue we’re seeing is the lack of face-to-face meetings between clients and candidates,” he said. “Few companies are willing to hire an executive without meeting them in person. We’ll see how this situation evolves if isolation, social distancing, and travel restrictions continue to increase.”
4. Business development is hard but not impossible
As mentioned above, new searches are hard to come by right now. Many leaders from executive search firms are unsure how aggressive they should be with business development and where to start. “It’s a hard time for people around the world, and it looks like it might get harder,” said Mr. Flesher. “Unemployment rates are expected to skyrocket. Owners and executives from search firms need to keep their lights on and provide a safe and fair work environment. And the need for strong leaders inside and outside of their businesses has never been higher. For those reasons, many firms are actively going after new business from new and existing clients.”
Leaders Thrive talked to noted business development success in certain areas:
- Current booming industries/categories:Online learning, shipping and delivery services, remote communication/collaboration companies, healthcare, gaming and entertainment.
- Long-term, heavily funded industries/categories:Robotics and automation, AI, emerging life sciences and large-cap private equity.
Related: Leveraging Existing Response Plans to Tackle COVID-19
“On the other hand, venture capital and private equity firms, traditionally a major source of business for executive search firms, have been hard hit,” said Mr. Flesher. “Many are in crisis-mode, redoing their planning, selling assets and asking portfolio companies to make major cuts. Executive search leaders are reaching out to talent partners to offer introductions, market intelligence and even recruiting resources for employees that have been let go from portfolio companies,” he said. “While this might not lead to new business immediately, the trust and goodwill it builds will pay dividends in the long run.”
Leaders Need Now More Than Ever
This is an unprecedented situation, said Mr. Flesher. Leaders and teams that made it through the 2008 and 2001 crises have scars that remind them of what perseverance looks like. That mindset coupled with smart, long-term conservative planning seems to be the approach most leaders are taking for managing the coming months/quarters.
“Now from my perspective, a belief in the power of strong leadership is what got most of us into the executive search market, and it’s strong leadership that will get many companies through the economic fallout of this crisis,” said Mr. Flesher. “During times like these, leaders put companies on their backs; they inspire employees and build new leaders in the process. In the end, those leaders and companies will come out of this stronger than before. For that reason, the executive search industry will always be important and relevant.”
“For the next few months, we will continue to monitor how the executive search industry is being affected by the economic impact of the COVID-19 crisis,” Mr. Flesher said. “We will provide insight into how firms are navigating and responding to market changes via blog posts, peer roundtables, webinars and social content.”
Related: Managing Through the COVID-19 Pandemic
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media