First, we want to acknowledge that there are far more important topics surrounding the impact of COVID-19 on the health and welfare of people around the world. We are taking the situation very seriously and have been extremely proactive with mitigation efforts across our company. We trust the experts to guide us in matters of public health and safety. We will continue to serve the people of our industry the best way we know how during this time, too.
In this post, we discuss how COVID-19 and the resulting social and economic impact will affect the executive search market. Over the past two weeks, we’ve met with dozens of leaders, CEOs, founders, and managing partners from top executive search firms. They’ve candidly shared how they expect the executive search industry to be impacted and what they are doing to prepare for those changes.
Below are four common themes from these conversations.
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 cashflow plans. Simply put, It’s wartime.
Wartime leaders, according to Ben Horowitz’s epic 2011 peacetime CEO/wartime CEO article, care about a speck of dust on a gnat’s ass if it interferes with the prime directive.
And the prime directive, according to leaders we’ve talked to, is strengthening relationships — through flawless execution, extreme attention to detail, and empathy and transparency. That means making short-term concessions like adjusting fee and pricing terms to add as much value as possible today. 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.
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.
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, many firms have seen a significant drop in new searches. Many active searches are now on hold, waiting for the dust to settle. 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.
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 thought it would
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.
The secret behind the great results? Empathy and compassion. 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.
The main social distancing-related issue we’re seeing is the lack of face-to-face meetings between clients and candidates. 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. 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 we talked to noted business development success in these 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.
On the other hand, venture capital (VC) and private equity (PE) firms, traditionally a major source of business for executive search firms, have been hard hit. 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.
While this might not lead to new business immediately, the trust and goodwill it builds will pay dividends in the long run.
Leaders are needed now more than ever
This is an unprecedented situation. 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. 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. We will provide insight into how firms are navigating and responding to market changes via blog posts, peer roundtables, webinars, and social content.
If you would like to join our community of executive search leaders and participate in roundtable discussions with peers across the industry, send an email to email@example.com.
We’re in this together.