The Current State of Leadership Hiring 

Demand for executive hiring is declining, searches are taking longer, and executive compensation is climbing a bit. A new report from Thrive says that despite search being down from last year, the story could well turn out positively by year’s end.

February 24, 2023 – Throughout 2022, recruiters witnessed a rapid decline in leadership hiring–dropping 43 percent in the fourth quarter compared to the first quarter. In total, leadership hiring was down 14 percent vs. 2021, despite starting the year at an all-time high, according to a just released report from Thrive. “Tough public and private market conditions directly impacted leadership hiring and greatly reduced demand for new executive roles,” the report said. “As interest rates increased to combat inflation, tech and other high-growth areas of the market saw valuations plummet. As the economy cooled off, companies pivoted from a focus on grow at all cost to efficient, sustainable growth–creating demand contraction.”

Despite the significant decrease in demand for executive hiring, the recruiting process didn’t appear to make it much easier on talent partners: The Thrive report found that searches took longer to complete—search duration increased 12 percent year-over-year in 22Q4—and executive compensation (OTE) was up one percent over the same period.

The biggest takeaway from the report was that search was down, according to Mike Mooney, SVP of revenue of Thrive. “We all knew that, I think, but quantifiably the numbers maybe frame the story better,” he said. “Comparing 2022 to 2021, search volume was down 20 percent. In 2021, search volume was up more than 100 percent over 2020, so the drop feels really pronounced. In reality, though, we’re not in a terrible position. Zooming out, we’re still up from where we were a few years ago—and, if this ends up being the floor, it won’t be as bad as the headlines make it seem.”

“In fact, if public market performance continues the way it is and some of the dry power in the private markets is released, we may find ourselves back to some level of positive headlines before the end of the year,” Mr. Mooney said. “With search volume down, however, there’s an increased need for proactive pipelining and having a strong pulse on the market from a compensation perspective.”

Private Equity Hiring

Like all asset classes in the Thrive report, private equity saw a significant decrease in leadership hiring in 2022. That said, the report explained that PE performed relatively well last year based on historical measures and compared to venture capital. In the last quarter of 2022, PE-backed company searches decreased 37 percent from its peak in the first quarter of the year. In comparison, VC searches dropped 50 percent over the same period, according to the report.

“This is likely due to the conservative nature of PE compared to VC,” the report said. “High-growth, VC-backed companies have felt the brunt of recent market conditions. This dynamic can be seen in a similar trend in deal value when comparing the asset classes. U.S. PE deal value in Q4 2022 was down 26 percent from its Q1 2022 peak, while VC deal value was down 54 percent over the same period.”

Despite the decrease in demand, PE executive compensation was up 10 percent year-over-year in 2022. “This is likely due to a lagging effect as the average executive search takes more than three months to complete,” the Thrive report said. “Zooming in, we could be seeing signs of PE compensation decreasing as median OTE in Q4 of 2022 was down eight percent compared to the previous quarter.”

Related: Retaining Your Employees During the Great Resignation

Private equity didn’t have quite the hiring spree that VC had last year, so the hiring crash story isn’t as strong, according to Mr. Mooney. “In fact, most of that crash happened in the first half of the year, with search volume roughly normalizing in Q3 and Q4,” he said. “There are, too, signs of traction within the asset class: CEO and president roles grew both quarter over quarter and year over year in PE, suggesting a new leadership type is needed in this market.”

Perhaps for the same reason, marketing and sales roles were up within PE quarter over quarter, as well. “Compared to VC, that’s a huge outlier,” Mr. Mooney said. “It may suggest that PE’s more conservative nature is allowing them to continue to invest—and doing so with more deliberate, high-fit placements—at a time when others are pulling back. If this is the case, we may see more M&A and take private action in the coming quarters, which would likely accelerate search openings within PE, as those deals often come with reorg efforts and finding leadership that better fits the new operating plan.”

Venture Equity Hiring

Venture capital is volatile by design. It’s no surprise that the Thrive report found that VC saw the highest highs during the post-COVID boom in 2021 and the lowest lows during the market correction in 2022. VC leadership hiring was up 135 percent YoY in 2021 and down 20 percent YoY in 2022 despite a strong first half of the year. While leadership hiring peaked in the first quarter of 2022, it steadily declined throughout the year–down more than 50 percent in Q4 2022 compared to Q1 2022.

Taking a closer look at VC stage, the Thrive report noted that it was clear that late-stage VC saw the sharpest decline in leadership hiring. Late-stage VC executive openings were down 57 percent in Q4 2022 compared to the first quarter of the year. In comparison, early-stage hiring was down 40 percent over the same period.

Despite the contrast in dynamics between late- and early-stage VC, both saw little change in executive compensation (OTE)–up two percent and one percent YoY in 2022 respectively. Zooming in on Thrive’s most recent comp data, both stages saw a bump in executive comp (OTE) in Q4 2022. Late-stage VC executive compensation was up 12 percent QoQ and early-stage was up nine percent.

While VC deal flow and hiring were down significantly in 2022, VCs raised a record amount of capital for the second consecutive year. U.S. VC dry powder is at an all time high–nearly $300 billion, according to Pitchbook.

Still, VCs might not be pressured into deploying capital. According to a SaaStr post by Jason Lemkin: “While you’d think all this so-called ‘dry powder’ will create investment velocity, really for now, in 2023, it’s the opposite. Right now, VCs’ own investors (LPs) just don’t want them to call it and invest it. They’re overloaded already.”

PE Talent Can Drive Value in a Tough Market
The uncertain state of the economy as well as the ongoing war for talent, among other issues, pose major challenges for talent leaders and recruiters for private equity firms across the board. At Bain Capital, Susan Levine has the ideal seat for seeing the big picture as we move into the final quarter of 2022, from progress in diversity hiring to the rise of the chief human resources officer, that will take us into 2023 and beyond. August Leadership’s Christine Sobhani and Greg Gerson recently sat down with Ms. Levine to discuss the type of talent that will succeed in today’s uncertain market.

“For now, it seems like the trends we saw in late 2022 will continue into 2023,” the Thrive report said. “There is plenty of VC money to go around and cash-strapped companies will likely need to raise capital to stay afloat, but we’ll need to see broader macroeconomic improvements before deal flow and leadership hiring starts to pick up.”

“Overall, leadership hiring in VC was down 20 percent year-over-year compared to 2021, a significant drop given that hiring had doubled in 2021,” said Mr. Mooney. “While we’re still up over 2020 numbers, you do need to dig a little deeper, since early- and late-stage VC companies generally follow the same trendlines, they do have key differences right now. In fact, early-stage VC looks more like PE than late-stage VC right now.”

Mr. Mooney pointed to two examples: “Early-stage VC search volume somewhat flatlined in Q4 (about a quarter after PE) while late-stage VC search volume persisted in its quarter over quarter drop,” he said. “Like PE, early-stage VC saw QoQ growth in Q4 on opened searches for CEO and president, as well as marketing. Late-stage PE remained down across all functions.”

“Compensation, of course, is another story,” he said. “In late-stage VC, the numbers are relatively flat or modest in growth—both YoY and QoQ. But early-stage VC seems to be resetting with more declining comp or even more modest growth.”


“That said, we’ve found comp to be a lagging indicator,” Mr. Mooney said. “It takes three months to complete a search, and opened searches (as we mentioned before) lags market performance. Given that, you could see a six-month lag between changes in market performance and comp for placed talent. We’re hearing—though not fully seeing yet—that comp is coming back down to earth after the inflationary numbers we saw in 2021 and early 2022.


Thrive says that certain roles are regaining traction, particularly on the PE and early-stage VC fronts, and that comp is a mixed bag, depending on asset class. “Regardless of where the overall market heads, keeping tabs on the more granular view will help provide more consultative, advisory services in the run-up to opening new searches,” said Mr. Mooney. “And that has meaningful value: search duration continued to lengthen over the course of 2022, but that delay in completing a search almost exclusively came after the placement was identified.”

Shortening that process can be a competitive advantage right now, especially since companies seem more focused on landing high-fit candidates, according to Mr. Mooney. “And stronger pipelines—on traits and experience sets that fit what companies have aligned around from an operating plan perspective—can deliver that,” he said.

Related: Hiring Top Talent in Unprecedented Times

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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