As a result of the COVID-19 crisis, many executive search firms are seeing a 30-50% decrease in new business. The resulting effects on cash flow and other key business metrics must be monitored closely. If you don’t have a reliable pulse on how your business is performing, it’s impossible to make informed decisions. And during a world-wide crisis, ill-informed decisions can be catastrophic. Now might be a good time to set up a comprehensive dashboard for your executive search business. “But the trick isn’t merely in collecting the data,” says Michael A. Morrell, founder of Riviera Partners. “It’s in interpreting it, and understanding the importance (or lack thereof) of each data point.” By building a scenario-based framework, fueled by your firm’s real-time dashboards, you set yourself up to make better decisions. This post identifies the key stages in the search lifecycle that should be part of your dashboard, why they’re each important, and how COVID-19 is affecting them. Business Development Business development is the first step towards new revenue generation. It’s the earliest sign of growth for executive search firms, but tracking solely volume here won’t help with decision making. You should consider conversion rates and average fees collected per search to get the full scope on how BD trends might affect your bottom line. In the early days of COVID-19 many firms reported pausing business development completely, for fear of burning bridges before they were even built. With hiring freezes and paused outbound activity, your BD data likely took the first hit, but it will also be the first to rebound. As people settle into their new normal and companies lift hiring freezes, you may decide to loosen the reins and cautiously go after new business. And if you’ve seen this chart starting to trend up, you need to make sure you have recruiter resources available. Waiting too long to staff up your firm puts you at risk for losing deals because of bandwidth limitations. Catch this upward trend early, and bring on new or recently furloughed staff so you’re prepared. New Searches Once you’ve won your client’s business, activating a new search is the first part of revenue recognition. As such, this is a key metric for cash flow analysis. And just like business development, recognizing upward trends of this metric will help you staff up appropriately. At the start of the COVID-19 crisis, new searches were down about 40% on average across a wide-range of executive search firms. During an economic downturn, you should plan for various search completion timelines. Sure, you may have snagged a third of a new search fee today as a retained firm, but consider the lagging effect of the other two-thirds of the deal. Uncertainty around this metric requires a delicate balance, and if thrown off kilter can be a cash flow nightmare. Held Searches Held searches were once new searches, but for one reason or another have been temporarily paused. They aren’t a financial milestone, but still incredibly important to keep a pulse on. Monitoring this metric closely and preparing for lengthy search timelines can help firms manage cash flow expectations. And in a normal situation, drawn-out held searches more often than not make up for time lost via restart fees. Thrive’s executive search peer roundtable sessions and customer data revealed a big uptick in held searches right off the bat. The unique nature of COVID-19, though, has resulted in much more flexibility and emphasis on doing right by clients by waiving standard restart fees. Tim Gordon, founder and managing partner at Thrive customer Aequitas Partners reported leniency with clients putting searches on hold due to COVID-19. However he warned: “If all of your held searches decide to restart at the same time – and are effectively complete search reboots – and you aren’t asking to be paid for it, that’s a financial risk to consider and plan for.” If you’ve taken a similar approach, this metric will be crucial to your scenario planning. Canceled Searches Canceled searches are usually not an issue as retained searches are intended to be guaranteed. A successful executive search firm doesn’t see too many of these under normal circumstances, so preparation for a big hit may have taken a back seat. Many firms are reporting an uptick in canceled searches; certainly more than they buffered into their forecasts. And the clients that are cancelling might have justified reasons in doing so, no matter how “guaranteed” the search was. Firms need to weigh the severity of the short-term hit they might take from a canceled search against maintaining the strength of an important client relationship. Closed Searches A closed search is the final factor in the revenue equation, so this metric is equally important in discussing the health of your cash flow. With social distancing, clients may be hesitant to seal the deal with late-stage candidates. If your firm is like the majority, this metric probably started to drop off for you at the onset of COVID-19. But be cautious – as a lagging indicator, closed searches may not have hit their low-point yet as new searches continue to trend down and held searches trend up. Keep that in mind when managing expectations for your firm. Building business insights Once you have business dashboards set up to capture the above metrics, you’ll need to add monetary value to each. Here are some scenarios you might explore from your data: What happens if new searches are down 30-50% for a month versus multiple quarters? What BD efforts can we reallocate resources towards in order to make up the deficit of canceled searches and lost restart fees?What verticals are performing well? Is there an opportunity to scale up those efforts by reallocating internal resources that are focused on struggling verticals? The above metrics should be reported on weekly, monthly, and quarterly: Week-over-week: A real-time pulse check. These smaller sample sizes give you insights into where your business metrics are heading. Based on this, you can make short-term decisions to pull back or speed up certain activities.Month-over-month: Validate trends you may have seen in preceding weekly reporting. Use these reports to make adjustments to existing plans and strategies.Quarter-over-quarter: Quarterly data analysis is an opportunity to more drastically change course, if needed, and make broader business changes. This larger dataset is helpful with validating, or disproving, weekly and monthly reports. For example, it may have seemed positive that held searches were trending down WoW, but was that merely because there were more canceled and less new searches overall? Thrive’s COVID-19 Executive Search Dashboard In a time where the slightest business decision can make or break an executive search firm, having reliable data is more important than ever. Thrive is committed to helping the industry understand and act swiftly on changes to their business. At the beginning of each month, we will be releasing our own dashboard focusing on the lifecycle metrics discussed in this post. We will share benchmarks and identify trends based on the state of executive search, sourced from Thrive’s customer data. If you would like to join our community of executive search leaders and add your voice to this evolving dialogue, send an email to leadercommunity@thrivetrm.com.