Over the last three months, a significant portion of our world has adapted to unprecedented circumstances and settled into a new normal. Executive search firms have learned how to operate with fully distributed workforces by embracing technology and investing in systems for better operational efficiency. But now that regions across the globe are slowly reopening, we will have to prepare ourselves for what’s to come—the “next normal.”
Like many sectors, the executive search industry has been through the ringer. In terms of the pandemic’s financial impact, executive recruitment was hardest hit in the final week of March, when canceled and held searches increased by 766% and 340%, respectively, and new searches dropped by 48%. And while the rate of new searches has since rebounded to a certain extent, there’s still good reason to remain cautious going forward.
Executive search firms must learn to navigate their role in placing leaders as the global economy gets back to work. At the same time, they must also add resources to scale responsibly and keep a pulse on the bottom line as they dial up business development. They’ll need a tech infrastructure equipped to manage their business out of this crisis and into the future with greater operational excellence than ever before.
Easing Away from Social Distancing
One of the biggest setbacks for our high-touch industry was learning to operate while social distancing. Getting candidates and clients comfortable with closing a C-suite role without meeting each other in person wasn’t an easy feat. And for many, they resorted to putting searches on hold or deferring start dates until they could get a better grip on the situation.
As regions continue to reopen, executive search leaders will need to put safety first, as they’ve been doing since sending their staff home in March. For less-impacted regions, in-person interviews may soon make a return, but will need to adhere to social distance guidelines. Firms might reserve these meetings for critical hires and unique situations like relocation, while continuing virtual interviews for all other placements. And we should be prepared for clients and candidates in more devastated regions to still push back on in-person meetings.
“In Calgary, we have managed to contain the spread of COVID relatively well and have now begun a phased reopening of businesses,” Ranju Shergill, partner at Pekarsky & Co., said in our most recent roundtable. “Many of our clients, however, particularly those that are larger organizations, continue to work from home as they develop plans for a new work environment to address health risks for their employees.”
And even once in-person interviews become widely-accepted again, working from home will likely linger, if not become a permanent cost-saving measure for many companies. We’ve proven that we can be productive and move business forward from home.
If the remote work trend continues post-crisis, firms that deploy collaboration technology will have a clear advantage beyond the pandemic.
A Recipe for Ripe Business Development
A talent pool unlike any we’ve seen in our lifetime has been brewing and will soon be ripe for the picking. Drastic company cutbacks purged plenty of top-level talent, who are now eagerly searching for their next opportunity. And top executives who wouldn’t have thought of abandoning their post during the height of the crisis, may throw their hats in the ring after leading their company to a safe state. Their resumes will flaunt their success during the crisis, highlighting leadership feats many companies were sorely missing.
If the above isn’t already the epitome of every executive recruiters’ sourcing dream, COVID-19 also spotlighted missing roles and leadership shortcomings that many companies will want to address. Throughout the crisis, executive search firms encouraged clients to consider upgrading their talent and some have built out totally new roles for their target verticals.
“We will continue to support and partner with our clients through this transition which may entail the creation of new roles within their organizations. We anticipate the need for greater considerations for health risks within our new work environments through this pandemic and beyond,” Shergill says.
Some clients even leveraged necessary layoffs strategically, intentionally making room for top talent later on.
“A large manufacturing client had a huge layoff and voluntary retirement at the start of the crisis,” shared Kathryn Hoover, managing partner at The Nautical Group. “However, they’re still planning to hire 50 people by the end of the year. They took advantage of this time to make room for top performers.”
As the economy starts to open up, we should see business start to stabilize with more predictable hiring cycles. So although search work across the board has been down compared to average, the firms that stood by their clients’ sides throughout this crisis will get first dibs when hiring gets back on track. And they’ll have a pipeline of incredible candidates ready to go.
The good news aside, it’s important to stay cautiously optimistic as executive search could still see ebbs and flows. Firms should take a balanced approach to business development, fueled by their real-time business insights, that anticipates the possibility of a second dip of economic impact. Monitoring executive search dashboards weekly will give firms the ability to pull back or double down on certain business development activities in a timely manner.
Elastic Resources are Critical
When the crisis hit, exec search leaders meticulously reviewed their budgets line by line to determine where cuts could be made. Many sought out PPP loans and other government funding, explored rent relief options, and, as a last resort, decreased headcount.
As firms head back to the office with scenario-based budgets, they must balance opportunity with risk mitigation. When business begins to rebound, as we’ve already started to see in our executive search dashboard, cautious optimism should guide decision-making until we can truly confirm that any upward trends are not short-term flukes.
“Elasticity in expenses is key. Firms may not survive a prolonged downturn with high fixed expenses, especially after the PPP money runs out,” Ken Vancini, CEO of Innova International and former co-founder of ZRG Partners, warns. “Firms must keep their finger on the pulse of everything happening in the business and be ready to act quickly.”
And with the average exec search life cycle (90-120 days), typical business slow down over the summertime, and uncertainty around the virus timeline altogether, firms should be wary of aggressively scaling back up to pre-COVID operations. As such, adding more elasticity to your resources will be critical as we head towards our next normal. With this built-in flexibility, firms can call on low-risk resources as demand increases.
For instance, rather than hire, onboard, and train full-time staff for upticks in search work, leaders might consider outside resources like contractors and consultants to tackle strategy and execution. It may be a bit more expensive per hour, but the idea holds a lot less risk if we were to face another dip over the next few months.
“Just like in previous economic downturns, executive search firms should use this time to rethink all aspects of their business including expense structure,” Vancini recommends. “Flexible resources will be useful in the short-term as we phase into the ‘next normal.’ This downturn will help surviving firms become more resilient.”
Utilize Technology to Stay a Step Ahead
As all businesses transitioned to working remotely, early adopters of technology had a distinct advantage. They had greater visibility and control across their business and digital communication capabilities. And they were able to quickly implement reporting cadences and dashboards for real-time insights into their business operations.
As we head towards the next normal, leveraging technology and data should remain a top priority. If a close eye is kept on these metrics, executive search firms can better anticipate any drastic dip in search work during the coming months.
Further, major corporations across the world are taking a stance on more regular work from home measures, even once social distancing restrictions are lifted. It wouldn’t be surprising if many executive search firms followed suit, being an industry that can still be productive at home. In that case, leaning on technology to improve and maintain operational efficiency will also be important.
Seamless collaboration and efficient search management for distributed recruiting teams can be accomplished with the right talent relationship management system. And leaders of executive search firms should continue encouraging regular database clean ups, fine-tuning internal processes, and other activities that invest in a sound, tech-enabled infrastructure.
Continue to Evolve Through the Next Normal
Those that have adapted and evolved since the end of March will likely pull ahead and enter the next normal with a rightfully earned advantage. They’ve spent their downtime pipelining and market mapping for anticipated upticks in work for certain verticals, because they’ve closely monitored trends in their target markets. Databases have been cleaned up and are equipped with accurate candidate information, armed for use when search work picks up.
These firms will enter the next normal with elasticity built into their budgets, prepared to face a bumpy road to recovery. They’ll also have the capacity to take on more work with less risk. And these firms have built scalable systems and processes to make their teams more efficient, no matter where they are physically working.
It would be foolish to hope things will go “back to normal” as the economy rebounds. Any business that has managed to survive—or even thrive—during an economic downturn will tell you that the changes made and lessons learned in a crisis made their business what it is today.
In fact, some newer businesses have found a silver lining in our current crisis by seeing it as an opportunity to test the strength of their organization.
“This downturn is our first true test as a younger firm, so we’re approaching it strategically,” explained Trevor Blair, CEO at Blair Search Partners. “If we come through stronger and are even able to grow during this time, that gives me a lot of confidence in the future of our firm.”
We’re quickly approaching the next normal, and it’s time to take the lessons we’ve learned and meld them with our pre-COVID notion of work. The most successful firms will be the ones that use the pandemic’s lessons to their advantage and adopt these new strategies for the next normal and beyond.
If you would like to join our community of executive search leaders and add your voice to this evolving dialogue, send an email to firstname.lastname@example.org.