If you want to get a sense for what 2021 is going to look like in executive search, all you need to do is look at 2020.
No, we’re not talking about the roller coaster that was opened and completed searches, but we are talking about how those searches were opened and what it took to complete them. Chief among them:
- Winners are winning big; Everyone else? Not so much.
- Hiring profiles are changing.
- Speed matters more than ever.
Though these trends are significant enough that they’d matter in any market, their impact is greater given the speed at which the market is rebounding. In Q4, opened and completed searches both grew roughly 17% YoY, a sign that businesses are operating with increased urgency after a year of uncertainty.
(For a complete analysis of Q4, as well as benchmark data, check out our latest executive search report here.)
Though we’ve seen linear, quarter-over-quarter growth since Q2, the market actually gained steam throughout Q4, delivering a strong finish to the year.
On the opened search front, both Q3 and Q4 beat Q1 (the only quarter of the year that had some normalcy before the COVID-19 pandemic really took its toll.) On the completed search front, only Q4 beat Q1.
And yet that completed search performance was as much a product of urgency as it was a steadily recovering market: executive searches completed in Q4 did so at a much faster pace than the same period in 2019.
1. Winners are winning big; Everyone else? Not so much.
Perhaps the most eye-catching stat of the year was that top-quartile firms outperformed the median in 2020 by 40 raw percentage points.
This huge gap in overall industry performance hid a fundamental truth about 2020: The market recovered, but many firms did not.
Without the top quartile of firms in both open and completed searches, the year would have looked far, far worse than a modestly flat 2% decline in opened searches and a -6% drop in completed searches.
In other words, all the year’s positive business performance was swallowed up by a small segment of firms. While a rising tide may lift all boats, as the saying goes, it does appear that the COVID-induced reset on the industry has changed those dynamics.
It’s worth noting that we covered this trend in Q3, finding that high-performing firms are significantly more active in tracking analytics, collaborating with clients, and reaching out to candidates.
This time, though, we found an additional wrinkle: They’ve adapted to sourcing a more geographically diverse candidate pool faster. 80% of the top quartile firms for completed searches in Q4 were also at the top of the list for out-of-region hires (meaning, a placed candidate that was located in a different region than the hiring company.)
2. Hiring profiles are changing.
In our survey of executive search leaders at the end of Q4, we heard that the single biggest recruiting initiative for 2021 will be diversity, equity & inclusion.
While unsurprising, what did catch our attention was this: 2020’s heightened demand for board roles was tied to this initiative.
“The push for more diverse boards has been the biggest factor and 100% of our board work has involved deep diverse slates of candidates,” Larry Hartman, CEO of ZRG Partners, told us. “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.”
Companies also appear to be bending on remote executives—or, at least, remote hirings.
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.
While this type of hire still represents a rather small segment of the search market, its growth suggests it’s a trend worth monitoring.
3. Speed matters more than ever.
While speed to completion has long been a datapoint in executive search, you need not look any further than Q4 to understand the implications of high-velocity recruiting.
Q4 grew 17% YoY on the completed search front, but that only happened because of the impressive total of fast-moving searches. More than 70% of all searches completed in Q4 were opened in the second half of the year. Only 57% of completed searches were opened in the same time frame in 2019.
In our survey of search leaders, there was a sentiment that search velocity will become an even more valuable business driver, as hiring companies look to fill roles with increased urgency.
“With everyone remote, there seems to be a pronounced feeling of urgency when a job is vacant,” one executive search firm founder told us. “So, my focus has also been on how to find the very best candidate while being mindful of time.”
As 2021 kicks off, it’s important for business to be viewed through the lens of these trends. While many expect a return to “normal” for the market (and our data suggests we’re there), that normal only applies to search volume: Not business performance or market trends.
Given that, dusting off the “normal” playbook isn’t going to lead to many wins in 2021. Last year’s changes will be here to stay.