For most in the world of executive recruiting, 2020 felt like a roller coaster.
And while the proverbial ride may have settled down, the relative speed at which in-house teams are being asked to shift and adapt is no slower today than it was about a year ago. If anything, knee-jerk reactions and quick fixes to lockdowns and quarantines are in the awkward stage of becoming fully-baked processes.
Add a series of macro- and socio-economic trends, and it all gets a lot more complicated.
In order to stay competitive in the race for top leadership talent, in-house teams need to know about four critical executive hiring trends:
Trend 1: Executive hiring is increasing quickly
The Q4 search market is usually quiet. Not so in 2020, when the October-December timeframe was the busiest of the year, with both opened and completed searches hitting year-to-date highs.
Have we turned the corner on COVID-induced market suppression?
It sure feels that way.
In Q4, newly opened searches grew by 18% YoY—with half of the industries we track seeing opens grow at a rate of more than 50%. And even those industries that didn’t hit such a high bar still had significant growth (with one exception: business services).
Nearly all the most active industries and roles tracked by Thrive saw significant momentum swings in Q4:
Given historic market dynamics, this sharp upward swing certainly feels like pent-up market demand. While the trajectory may slow, don’t expect it to slam to a halt.
Sentiment from recruiting teams points to an optimistic market outlook. More than 60% of respondents told us in a recent executive hiring trends survey that they expect executing hiring to increase by more than 10% in 2021. (In fact, about 15% said they expect at least a 25% increase in hiring this year.)
That said, teams aren’t planning for much more headcount. More than 60% of respondents said they’ll keep their team “about the same.”
Depending on hiring plans and the existing recruiting pipeline, it’s worth a second look at capacity planning.
Trend 2: The pandemic changed executive recruiting for the better
That capacity and resource planning is more important now than ever, as virtual hiring has accelerated search velocity and opened up the hiring pool thanks to an increase in remote placements.
There’s a lot to unpack there, so let’s break it down:
Early into COVID, we recognized a trend that search cycles were shortening, with pronounced differences between the top quartile of searches and the second quartile. That trend hasn’t slowed down. If anything, Q4 showed that things aren’t just incrementally speeding up. They’re shifting into a new gear:
And while measuring search cycles is an accepted metric today, Simon Mullins of ESIX suggested to us recently that in-house teams may want to consider breaking that figure into two separate data points: The time it takes to present finalists, and the time it takes to hire one.
“It helps you manage your hiring manager better,” Mullins said. “A large chunk of the search is the time it takes, when we get the finalists, for us to go through the evaluation, the interview, the offer… That’s been compressed. And I think we should keep monitoring that: How long does it take us to find the finalist? And how long is the rest of the process taking?”
While shifting processes to move fast is hard enough, recruiting teams are now sourcing from larger talent pools, stretching networks and placements to a whole new level.
In Q3 and Q4, for example, bi-coastal hires (defined as candidates hired for roles on a US coast opposite where they live) grew faster than the overall completed search market after a relatively normal first half of the year.
In 2019, this type of hire accounted for roughly 4% of all executive search placements; that number jumped to just over 6% in 2020. While that figure is still relatively small, more than 40% of the bi-coastal placements in 2020 happened in Q4.
It’s possible that these remote hires will be expected to relocate once possible. Of the recruiting professionals we surveyed, though, 75% said at least half of all remote executive hires will remain remote.
Taken together, these two trends represent a significant shift in how recruiting is done. And while that budget and headcount planning we talked about before may have been enough in a pre-COVID world, you’ll want a pulse on your team’s efficiency and productivity in a way that supplements your gut feel.
Trend 3: Leadership hiring is the centerpiece to corporate DE&I initiatives
In our recent Executive Search Report, we noted that board searches were in high demand throughout 2020. A main driver of that, according to Larry Hartmann, CEO of ZRG Partners, was heavily related to DE&I initiatives.
“The push for more diverse boards has been the biggest factor and 100% of our board work has involved deep diverse slates of candidates,” Hartmann said. “But beyond diversity of view and background, we are seeing a view to expand the types of backgrounds candidates bring to the boardroom. The biggest ask has been around adding functional expertise and experience to boards in the area of digital transformation.”
It’s also apparent in our survey of recruiters.
Against a backdrop of societal pressure and changing public policy, companies and investors are setting DE&I targets, and talking about tactics—like the two in the pool effect—to hit those goals.
In fact, DE&I initiatives topped the list of executive recruiting trends by a significant margin:
You’ll notice in the chart above that many of these initiatives interrelate with each other. Two—DE&I and accelerating time to hire—match the trends we’re highlighting here.
Trend 4: Executive recruiting teams are increasing technology budgets
The other trends spotted in chart above are heavily intertwined with data and technology being key connectors.
Recruiting teams are being asked to source more diverse talent, from more regions and geographies, faster than they have before. That’s a tall order.
In order to meet the demands, teams have become more strategic in their initiatives. They’ve identified a need for more specific tools to track progress against goals and collaborate on candidate sourcing. And they’re allocating resources to buy technology that does just that. More than a third of the recruiters we surveyed expected to increase their technology budgets in 2021.
There’s certainly room to do that.
While half of the recruiters we surveyed are using dedicated executive search software, nearly 10% of recruiters said they are using spreadsheets to run their operations and another 34% are modifying applicant tracking systems and CRMs to meet their needs.
For in-house executive recruiting teams, though, the ability to collaborate with senior hiring teams is critical—though difficult with systems designed for applicant tracking and/or high-volume recruiting. Keeping data confidential, while having the ability to passively source talent for future needs and to report on critical initiatives (like DE&I targets) is now of increasing importance.
For in-house teams, then, the right tools can help accelerate a company’s ability to compete for talent in a demand-heavy market while staying ahead of the biggest executive hiring trends changing the industry. In the coming weeks, we’ll further explore these trends, including a deeper look at how companies are setting DE&I targets and how they’re planning to execute against them.