April Dashboard: COVID-19’s Impact on Executive Search

For the executive search industry, the negative repercussions of the COVID-19 crisis have been undeniable, but not always quantifiable. In an effort to provide market intelligence and best practices for firms navigating the new normal, Thrive is analyzing real-time search data to track performance and identify trends in executive search. 

Seven days after the United States declared the COVID-19 crisis a national emergency, we developed an executive search dashboard to track the pandemic’s impact on the executive recruiting industry. Two weeks later, we also began hosting leadership roundtables to create a forum where executive search leaders could collaborate with peers on ways to mitigate the impact on their businesses.

In this piece, we analyze trends from our executive search dashboard and share feedback from executive search leaders.

First Wave Peaked in Last Week of March

A national emergency was declared in the U.S. on March 13, and 10 states issued stay-at-home orders over the following 10 days. Not surprisingly, it was the week of March 23 that COVID-19 had its biggest impact on the executive search industry to date.

According to Thrive’s data, the number of searches canceled increased by a staggering 766% in the last week of March. That dramatic spike was coupled with a 340% increase in searches put on hold, as more and more businesses put their hiring plans on pause. It was also during the week of March 23 that new searches decreased by 48%, raising concerns around near-term cash flow expectations for many firms.

In the first roundtable discussion Thrive held on April 2, most executive search leaders confirmed that business had taken a hit. While a few reported only slight slowdowns, others shared that things had come to a complete standstill. Both search firms and their clients were eyeing the future with uncertainty; the industry seemed to suddenly find itself in stasis. 

Closed Searches Dipped Two Weeks Later

Based on leading indicators—canceled, held, and new searches—it’s fair to say that the first wave of COVID-19 on executive search peaked in the final week of March. The effect that the crisis had on closed searches was not as immediately apparent, though it seems to have followed the same path after a two-week delay.

Over the week of April 13, Thrive search data showed a 55% decrease in closed searches.

During this time, executive search leaders from our roundtables spoke to the difficulty of placing candidates in an era of remote work. While some reported being able to close searches through entirely virtual methods, those cases tended to be critical roles for clients—outlier examples involving specific industries and positions. 

For most businesses, social distancing presents an obstacle to both interviewing and onboarding new executives. Beyond new challenges with the hiring process, many companies are simply unsure of what the future holds and delaying hiring for non-critical roles. 

And even some of those who are able to move forward with placements are still playing the waiting game with wary clients, creating new challenges.

“We placed a candidate just before the COVID-19 crisis really started, and our client deferred the start date until August,” said Allicia Hahn, SVP at TalentRise. “Now, we’re trying to think of ways to keep both the candidate and our client engaged.”  

Financial Fallout Was Felt in April

In April, Thrive search data showed a significant dip in two key metrics typically tied to two-thirds of retained search fees: new searches and closed searches. Last month, new searches were down 36% on average and dropped 36% from the month before. Closed searches decreased by 32% in April, and were 26% lower month-over-month. 

In our roundtables, executive search leaders noted that new searches were now almost entirely confined to less-impacted industries and essential roles, such as financial and restructuring positions. And since nearly all firms have paused their typical business development efforts, new searches are only really prevalent for current clients—many of whom aren’t making any moves unless their new normal requires it.

In some cases, even the clients that were once in hiring mode now have freezes on contractor spending, making them unable to use recruiters. 

Recruiting firms that already had relatively diverse industry focuses are not taking as big of a hit in new and closed searches, but are still feeling a slow down.

“Retained search has taken the biggest hit for us, with our contingency pipeline also being well below normal,” said Leslie Boudreaux, senior managing partner at BVOH Search & Consulting. “We are seeing companies hire, but taking longer to do it; searches have been put on hold in the 9^th hour as execs grapple with uncertainty.” 

The biggest challenges are faced by the more niche firms, and especially those focused on a heavily impacted vertical. One executive search leader in the hospitality field told us that he’s preparing financially to not make another penny this year. 

Industry Has Found Its Floor (for Now), Hopeful For Bounce Back

Though the initial numbers haven’t been good, there is a sense that we’re seeing the floor of our “new normal.” And while some leaders predict that the initial wave of COVID-19 repercussions could be the first of many to come, others are more cautiously optimistic that the worst is now behind us. 

“Consulting and contract work took a major hit, but is starting to come back as companies adjust to working remotely, and oftentimes have hiring freezes but still work that needs to be done,” Boudreaux reported.

Amy Volas, founder and CEO of Avenue Talent Partners echoed a similar sentiment, stating “We had multiple, big deals pull immediately at the beginning of the crisis, but we’re starting to see a boomerang effect for many of those deals. These clients are adjusting to the new normal, but realize the ceiling isn’t falling down, and they still need to hire.” 

At the moment, firms are focused on doing what needs to be done now—strengthening relationships with existing clients, offering new services and more flexible fee terms, and investing in long-term success. No one in executive search knows precisely when things will get back to normal, but there are some pretty good ideas on how to operate in the meantime.

We will continue sharing our executive search dashboard data bi-weekly during our leadership roundtable discussions. If you’d like to join this peer community of executive search leaders and add your perspective to the ongoing conversation, please email leadercommunity@thrivetrm.com.