For some executive search firms, work has ground to a halt. For others, things have only slowed down a bit so far. But no matter which camp you’re in, it’s time to address the new normal.
There’s no industry untouched by the social and economic effects of the pandemic. Now, firms are facing difficult decisions to survive the immediate reality with cashflows down and an uncertain time frame for recovery. At the same time, the choices made now will determine who emerges stronger on the other side.
It’s like a time of war, we noted last week. And that means dramatic measures are in order.
As the new reality continues to unfold, we’re hosting regular peer roundtables, engaging in candid conversations with customers, and thoughtfully considering the latest research. This week, we analyze how firms are responding and we propose an action plan that minimizes the impact of COVID-19 on your executive search firm.
1. Redirect business development efforts into strengthening relationships.
Cut aggressive business development activities. Instead, redirect your efforts into building up existing relationships. After all, that’s the foundation of a successful executive search firm.
Our roundtables revealed strong feelings that any marketing efforts now must be dialed back. Rather than chasing new opportunities, now is the time to buckle down and strengthen relationships. Offer a helping hand to your clients.
Being a resource now puts your firm in a strong position for when hiring picks up again. A few ways to do that:
- Dial back on selling. Instead, reach out to your clients to learn how you can add value. You may be able to provide market intelligence or introductions to people, for example.
- Pause business development emails that don’t acknowledge the pandemic. They read as insensitive. Instead, some firms are sending weekly letters with observations and updates.
- Offer extra services to clients without expecting to be paid more. This includes strategy and planning services, as well as waiving restart fees when clients choose to pause a search.
- Look for other ways to connect people. One firm is considering starting an open forum to connect companies that are still hiring with folks being displaced.
Says Stanley Davis of Standish Exec Search, “It’s awfully crowded out there, and the people that are trying to remake themselves on the fly aren’t going to have luck. What we’re doing is reinforcing our brand, reminding people who we are. It may not pay now but it will in the long run.”
While it’s tempting to look for new business opportunities as markets shift, the firms that come out on top will be those who prove their worth to their clients in this new reality.
2. Cut costs and tap into every resource.
It’s time to trim the fat and consider all resources at your disposal. This includes government stimulus programs for small businesses.
Many clients have paused searches. Those that haven’t are asking for more from you, putting pressure to cut fees or stretch contracts. While every firm will have a different situation, the impact on cashflow can be devastating if not checked. The goal is to get your firm through this downturn. To do that, use everything at your disposal.
Take measures to adapt to these new conditions with the following:
- Act swiftly to cut costs where you can. Make big cuts to overhead costs. Renegotiate office space rent. Put marketing expenses on hold.
- Revise your 2020 projections. Be realistic about when you’ll expect to see revenue come in from your markets that were hit hard. McKinsey recommends creating scenarios based on possible outcomes.
- Explore stimulus loan options, particularly ones that will be forgiven if you keep staff on board. Even if you don’t need it yet, consider what things may look like in three, six, or nine months.
- Address payroll expenses as a last resort. Some firms have found themselves in the difficult position of having to furlough staff and adjust salaries.
Firms are looking for creative ways to keep their teams working, like work-share programs. Many are hopeful that the recently signed CARES stimulus package in the U.S. and anticipated programs in other countries will provide much-needed funds.
3. Lay the groundwork for the future.
Now is the time to get things in order and plan for the future. The efforts you invest will pay dividends when the industry rebounds.
It’s tempting to just focus on getting through each day right now. But for many firms, this downtime is an opportunity to do the things that they’ve put off for too long.Jim Jonassen, founder of JJA Venture Search and a Thrive customer, recommends, “It’s time to do some real domestic housekeeping—invest time in infrastructure, data migration and enrichment.”
What other long-term plays can you put in motion now? Consider the following activities to support a stronger future down the road:
- Enrich your talent management system or CRM. Some things you can do in your database that will pay off later: Update outdated data, connect people to companies and searches, add search tags to contacts and companies, and create networks or lists of frequently used practice areas or industry titles.
- Plan for how you want your business to look in one, two, five years. Is there a merger or acquisition you could start laying the groundwork for?
- If you can hire, snap up strong talent that’s now becoming available.
- Consider how you can improve internal processes and resources. Set up internal training and employee education programs and document your work processes.
Jeff Herzog, president of executive search firm FPC National says, “When we all come out of this, the writing, reading, self-improvement, and education we’re encouraging our employees to do will certainly pay off.”
4. Use technology to move searches ahead.
Everyone knew they’d have to get on board with modern technology sooner or later. Now it’s no longer a choice.
In just a few weeks, this traditionally high-touch industry has been flipped on its head. All face-to-face interactions are virtual. In fact, some firms reported making placements using only video calls last week.
It’s time to embrace the new version of the industry that relies on technology to build relationships. Once we accept that this is our new normal, at least for a while, we can be creative to get both candidates and clients comfortable with hiring under these circumstances.
- If the search is on hold at a later stage of the process, consider facilitating typical in-person interactions via video for reluctant clients.
- Try virtual cocktail hours with candidates and their spouses to help parties get to know each other on a personal level.
- Suggest virtual office tours to help candidates can get a feel for the office layout and culture, since executive candidates can’t tour the office space now.
- Tap into automations to help your team manage relationships. This technology will let you do more with less and keep things moving ahead.
“I think some clients are starting to accept that this might be our new normal for a while, and that it’s time to seriously consider conceding in-person interviews if they want to fill a role. Those that are getting more comfortable with this option, I think will have a lot of opportunity to grab high quality talent and be ready for the recovery,” said Tim Gordon, founder and managing partner at Thrive customer Aequitas Partners.
Act now, but look to the future
It’s imperative that executive search firms act now to preserve their businesses for the near term. At the same time, any actions will have far-reaching consequences. The steps outlined above represent an action plan that helps firms balance their needs with those of their clients, so they can emerge from the other side stronger than before.
David Mansbach, managing director at AETHOS Consulting Group, sums it up for one of the hardest-hit industries, hospitality: “The hotel and restaurant industry are extremely resilient. Consultants and executive recruiters that are committed to serving as ‘thought partners’ to their clients over the next 6-9 months will re-emerge and be part of an industry that is never going away.”
Stay tuned for more from Thrive. 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 firstname.lastname@example.org.
Read also: How COVID-19 is Impacting the Executive Search Industry