Executive Search – Helping companies adapt & transform
COVID-19 hit organizations in previously unfathomable ways: most urgently, they had to figure out how to keep people safe. Second, they transitioned as many functions, processes, transactions and modes of communication as they could to digital. Ultimately, they navigated disrupted supply chains and the shifting regulatory and policy responses to the pandemic, and many adapted their business models to a new reality. It isn’t over, and staying relevant, staying in business through the ongoing upheaval requires executive talent with essential skills to drive change and lead their organizations to adapt in this unprecedented moment. AESC member executive search firms are supporting organizations worldwide as they adapt and transform. They too are changing.
In service to their clients, retained executive search firms adapted, and continue to adapt. From conducting a virtual end-to-end search process to the leadership profiles now most in demand, COVID-19 drove rapid, unpredictable change and tested the agility of the executive search profession. Firms and consultants adjusted to an uncertain market, the shift to remote work, travel restrictions, evolving leadership criteria, new service demands and changing client and candidate expectations. With a vibrant and innovative approach to capturing the opportunities and mitigating the challenges of these tumultuous times, the result is a more nimble, responsive and innovative profession—changed—and well-positioned to thrive, whatever the future holds. We spoke with AESC representatives to better understand the shifting dynamics of executive recruitment and how AESC members are helping clients getting it right for the post-COVID era of business.
Retained Executive Search Market
While 2019 was a banner year for the retained executive search profession, according to AESC data the profession took a big hit in Q2 of 2020. “When COVID hit, the demand for our services dipped,” says Anthony Batchelor, Partner and Chief Commercial Officer at Odgers Berndtson, Canada and Board Director, Americas, at AESC. “In the early days of the pandemic, there were a lot of organizations that might've been thinking about changing up a couple of key executives and decided not to do that. Optically, letting people go at the beginning of the pandemic would not have looked great. So, we did see a lot of organizations press the pause button. I talked to numerous CEOs who said, ‘this is actually going to be a really interesting leadership test for my senior executives, to find out whether they can rise to the occasion and deal with a real crisis.’ And a lot of CEOs that I chatted with were thrilled with how their leadership teams responded.”
Search firms also responded well. They adapted with a rapid transition to remote work and the adoption of digital communication and collaboration tools, often guiding clients to accept the transition to online assessments and video-based interviews and onboarding. Not long after the first waves of the pandemic, the executive recruiting market began to heat up. According to AESC data, the profession rebounded in Q4 of 2020 and continues to perform well in 2021.
Today, many firms are positioned to approach, and perhaps exceed their pre-Covid business performance According to K Sudarshan, Managing Partner India and Regional VP at EMA Partners and member of the AESC Council for Asia Pacific and Middle East, “This year, in all our markets, especially in India and Middle East, we are growing at 60% from pre-COVID levels. My belief is that established firms, established brands, firms which have a track record will continue to grow. COVID has only accelerated the pace at which we are doing things today. That, I think that's the biggest positive.” Nick Chia, Managing Director at Russell Reynolds Singapore, says “We started the year saying please, let's do a bit better than 2020. And now we are exceeding 2019 run rates.”
Claire Skinner, Regional Managing Partner, Europe and Africa with Heidrick & Struggles and Member of the AESC Council for Europe & Africa acknowledges that people within executive search and leadership advisory firms can have widely varying experiences in the current market. “If you're already a well-established, successful partner in your sector, this has been an incredibly busy time because demand has increased exponentially. In addition, as we are now accustomed to working in a hybrid fashion, you can just crack on with more immediate access to clients and your own colleagues and senior leadership; their flexibility and capacity to see you for half an hour or 45 minutes has grown, and this is much more accepted across the board. You can also be more effective on how you spend your time. If you are a new partner coming into a firm, your ability to go and see your clients and build relationships in person has been a bit harder.”
Those firms with a robust book of clients may be doing better than firms or consultants just starting out, because the ability to attract new clients in the current environment is a steep challenge. “For a critical hire, why would you use a search firm you've never used before, whose consultants you don't know? You wouldn't,” Chia says. He finds that during the pandemic clients are relying on their trusted advisors for a broader range of counsel, from understanding the talent market before commencing a search through onboarding and coaching. “There's a lot more of that trust needed that is much more difficult to build from scratch in a pandemic with remote meetings and lack of face-to-face interaction. So, if you're in, you're in a great position; and if you're not, it's really hard to break in.”
A Different Process
Search consultants tend to be “relationship-focused” people who typically spend a great deal of time meeting with clients, interviewing and introducing candidates, and collaborating with their teams. It’s a profession that is intensely personal, with a lot of face-to-face interaction, and consultants often have an enviable bank of frequent flyer miles. COVID-19 put an abrupt end to travel and in most geographies closed office doors, as well. In response, search firms switched nearly seamlessly to remote work and deployed the available digital tools to remain connected with clients, candidates and colleagues from their home offices and kitchen tables.
These strictly curtailed opportunities for contact disrupted the traditional process of completing a search assignment. Countless executives today were placed in their roles in 2020 and 2021 without having met their boards or their teams in person; companies that would never consider hiring an executive they had not met have been forced to do just that—or leave key positions vacant. The impact on the search process is multifold:
Streamlined - With the elimination of most travel and the discretion afforded by taking meetings from a home office, candidate calls and interviews are easier to schedule, increasing the efficiency of the process. The time and cost savings for everyone involved are likely too valuable to lose and a virtual process has proven it works.
Rigorous - Executive assessment processes that use objective instruments to measure knowledge, abilities, attitudes, personality traits and motivations are largely virtual. Coupled with in-depth interviews and reference checks, a multi-qualitative and objective approach can help ensure a fair and unbiased review, provide a strong predictor of job performance and increase confidence in the likelihood of a successful hire.
Inclusive - Video meetings allow more people to participate, broadening the opportunity for senior leaders and prospective team members to meet a candidate, potentially increasing buy-in from client leadership teams and providing candidates a better feel for culture and team dynamics. “We're seeing more stakeholders are involved in decision-making.” Malcolm Duncan is Owner at The Insight Group, Australia. “A chairman might spend some time with a potential CEO one-on-one, and now all of the board, rather than just a committee, can meet with the executive before the final decision is made. There's much more engagement across an organization.”
Faster - A digital process with the ease of scheduling video meetings and online assessments shaves weeks off the traditional search process. Clients typically want a short list yesterday, and while face-to-face meetings are starting back for finalists, clients are unlikely to want to give up the efficiency and speed of the remote interview process before the late stage of a search. The speed and efficiency of the adapted, digital search process is balanced by the risks and obstacles created by these same changes.
Gauging presence - Search consultants and their clients alike recognize the limitations of video interactions. Sudarshan explains, “Clients are comfortable meeting people on video, but since they can’t meet the candidate face to face, we increase reference checks and 360-degree references. These become much more rigorous. Also, on a video you can only learn so much in terms of someone's executive presence. Now, there is far more focus on that aspect of the interview, rather than the content of the interview itself.”
Gauging interest - The remote search process has also complicated how consultants discern a candidate’s enthusiasm. Nicolás Mora Schrader is Managing Director, AltoPartners Chile and Member of the AESC Council for the Americas. “As search consultants we have to constantly calibrate the candidate’s interest. It would be horrible if at the end of the process when the client decides to make an offer, the candidate retreated and said, ‘I thought about it, and I'm not that interested.’”
Mora Schrader explains, “Before COVID it was obvious that a candidate was committed to that process. I invited you to my office for a meeting, and then I invited you to my office for a second meeting, and then I scheduled a meeting for you to meet my client. When a candidate goes through all those stages, taking time off from their personal agenda to do it, it becomes clear that the candidate has a genuine interest in the position. Now, the process requires less effort from the candidate, who can be in a process and never leave the living room. It doesn't reflect a lot of commitment on their part as it used to before.”
As the world of business has changed, so have the necessary attributes of leaders who can drive change, pivot and adapt, and lead their organizations assuredly into an uncertain future, particularly armed with the all the learning that came out of the last, difficult years.
Each year AESC partners with The Conference Board on the annual C-Suite Challenge TM survey. In the 2021 survey, CEOs identified the top lessons learned through the pandemic:
• Keep calm
• Act quickly
• Ability to adapt
• Digital development
To capture these lessons, clients are asking their search advisors for a different kind of leader with a nuanced set of key skills and qualities. It may be that clients have learned they need it all. Sherry Ding is a Consultant with Spencer Stuart based in Shanghai. She says, for example, “For a good CFO, they almost need to be a good CEO, just with the finance functional expertise. This is true for a larger company, and it is also true for a startup. For people to be successful in those environments, they need to be good at almost everything: a very good communicator, especially if it's a public company, understanding the business, thinking like an entrepreneur, good leadership and communication skills, etc. Also, they need to be open-minded and well-rounded.”
Flexibility, agility, adaptability – all qualities that indicate an executive can lead, even thrive amidst uncertainty and change has moved from the nice-to-have column to essential. Remaining calm and adapting to change and uncertainty during COVID kept teams reassured, operations going, and major adjustments such as moving to remote work, shifting supply chains and adopting new business models possible.
Clients are looking for innovative leaders who can both imagine and drive new ways of doing business. Ding explains, “Even some B2B businesses are trying B2B2C models to understand the end user, their client's customers. For example, if my business is producing ingredients for food, I need to understand more about the end users, the consumers so that I can help my customers with product innovation to gain higher market share. Everyone is trying to push their thinking and do more than the traditional business model. That requires different kinds of leadership,” she says.
Human skills are essential, too. Chia says. “We are seeing companies seek out people who can mobilize and engage and motivate, and incorporate purpose, sustainability, diversity, equity, and inclusion. We all want to work for an organization that has purpose beyond the dollar. So someone who can do all of that, but still deliver on the P&L…that's the trick.”
“It’s our job to find those extraordinary talents,” Ding says.
Demand for Services
Even before the pandemic, digital transformation was reshaping how companies do business, lead teams, and engage with their stakeholders and communities. Clients of executive search increasingly leaned upon their trusted advisors to navigate these changes and the pandemic only increased that demand. Batchelor explains, “A lot of organizations realize that they have the right person in the role from a technical perspective and from a cultural perspective, but from a leadership perspective, there's still some work to do. So we have seen our leadership services business spike. It's getting the one plus one equals three math to work with your extended leadership team. While our search business has increased, the leadership services business is on fire.” It’s no longer enough to find and place great leaders—executive search firms are supporting clients in important, new and expanding ways.
Onboarding - According to Mora Schrader, clients need more help with onboarding in a virtual environment. “It’s harder and more important than ever,” he says. “Particularly driving inclusion for diverse candidates. Coaching is huge, and assessment has had to evolve; there’s a greater dependence on that in the absence of walking the halls to determine culture fit.”
Integration - Integrating new leaders has become far more challenging, especially large organizations. Sudarshan explains, “For a person to understand the political drift in the organization, who is aligned with whom, it's all very difficult to figure out through video interactions. How do you read body language? These are big challenges and we've seen a lot of executives struggling. So, clearly that’s an area where we can help, so that the executive whom you hire is successfully on-boarded.”
Cultural assessment - Understanding organizational culture has always been a part of effective executive search. In order to ensure cultural fit of a candidate, a search consultant must first understand the culture where they’ll be placed. Because experiencing the culture of a workplace isn’t happening for remote candidates in a virtual process, many firms are putting more structure and diligence around culture, joining those firms that are already involved in the work assessing and defining an organization’s culture.
Well-being - The pandemic has brought wellness and well-being to the forefront of candidate care and the employee proposition. Michele James is President at Avery James, Inc, in Los Angeles and member of the AESC Council for the Americas. “Corporations are constantly asking through surveys ‘how do you feel about coming back into a hybrid environment? How are you managing, what are your concerns about your own well-being, your health and safety, do you think that the corporation is managing this process well?’ It's a moving target and there's a lot of unsure footing on where they stand with their employees, which is critical.” With waves of employees at all levels leaving their employers, James asks, “Are they going to be able to retain the workforce they have, as they navigate through these different leadership challenges?”
Retention - The remote environment introduces challenges for any new executive. For diverse executive hires, the challenge is exacerbated by the very differences that make these leaders so valuable to organizations. The diverse leader’s new ways of thinking and unique perspectives that drive innovation can also be a barrier to connection, particularly in a remote environment. Search firms are coaching C-suite leaders and teams as well as new hires to help build bridges, retain diverse talent, and capture all the value that diversity brings. James encourages organizations to ask themselves, “What does an employee observe from a diverse candidate perspective? Is there adequate leadership development, are there mentor-protege opportunities, does the corporation have a true compassion for what has happened globally? Is there adequate empathy? Answers to these questions will empower employees and give them a level of comfort that their organization is moving in a positive direction.”
Coaching - A challenge through the pandemic was getting virtual leadership teams to work cohesively together. Both individual and team coaching are making a difference. Batchelor says, “If you are a relatively new leadership team and you came together in late 2019 when the pandemic came about, you didn't really have a chance to work together physically in the same room. Team building and driving for operational efficiency across your leadership team helps newer leadership teams that had been pulled together virtually.”
The demand for expanded advisory service shows no indication of slowing. According to Batchelor, “We seem to think that there will be no let down, even once we're past the pandemic. We have started to see many search firms double down on the leadership side and gobble up a bunch of advisory firms. And I don't see that trend changing at all.”
Candidates Have Changed
The pandemic changed what we thought mattered. In the ongoing war for talent, more than ever 2021 has proven to be a candidate’s market, and candidate preferences, even non-negotiables, have changed. “We’ve come to a new reality,” Mora Schrader says. “We’re in a place where there are more job openings than candidates, and companies are going to have to adapt, get creative, go the extra mile to meet the demands these candidates have.” Those demands frequently include:
Flexibility - Employees proved they can work remotely, and now top talent is asking for the flexibility to choose where and when they work. Franco Parodi, Managing Partner of Parodi & Associates and member of the AESC Council for Europe & Africa says, “Even family companies, who always insisted that the candidate has to stay very close to the headquarters, have learned the home office is an option and that people can keep their families abroad and just commute over the weekend as a solution. And it works.”
Diversity - Diversity can lead to more adaptive teams – exactly what this period of change calls for. AESC reports, “talent that doesn’t see diversity in an organization’s leadership, whether as a path for themselves or as a reflection of the organization’s values, that talent has other options.”
Autonomy - Ding identifies the advantage that local companies in China have, even over multinationals. “A multinational company can probably offer the head of the China market. But local Chinese companies can offer the CEO role with more freedom and autonomy to make decisions.” Autonomy is also a factor in agile organizations that de-centralize decision-making.
Shared Values - An article in co.uk reported on HR leaders competing for talent, who identified values such as purpose, social justice, and climate that drive the decision-making of top talent post-pandemic. Next gen talent in particular expects a commitment to well-being and mental health, work-life balance, and transparency. Critically, how organizations treated their stakeholders during the pandemic is seen by talent as a reflection of their values.
Location Location Location - Some talent is eager to return to the office, and some may want to relocate. But largely, the pandemic has led to candidates insisting on choice. “Candidate reluctance is often sort of border reluctance as well,” Duncan says. For example, “We've got no line of sight of getting people from overseas into Australia at the moment. So the idea of expats returning home, let alone foreign candidates coming into the country, it's just not possible under the current government regulations.”
Clients are looking closer to home, Duncan explains. “We have seen that some of our global clients have been recognizing the international, cross-continent moves are more challenging in this environment. So, they may be looking a bit more locally for people. But equally, we've seen a number of leaders who have been separated from extended family during this period and unable to travel and that's put enormous stress on them and their loved ones. Therefore, they are looking to relocate back to be closer to their home geography.”
How do consultants align client and candidate in a virtual environment? James explains the dual responsibilities of accurately representing the client and the opportunity to a candidate, and to help the candidate through the process. “It's our job to present our client in the best light to try and influence the candidate to take a hard look at the client as the next potential stop in their career. The best that you can do is to continually coach them through the executive search process, not just the market, but the ESG climate too. It's a 360 degree process where you're trying to bring it all together for your client.”
James adds, “You have to listen to the candidate as well. They have very legitimate concerns about so many things now, and it is their market, and so, to that end, you have to be respectful of what their desires are, what they want to see in their next executive role.”
But clients can’t afford to take their time. “We've also found that candidates are potentially considering multiple opportunities simultaneously, more so than they have in the past,” Skinner explains. “They're not having to fly to the US, Germany or other countries to meet people. They're doing this now via Zoom. So if, for example, they're actively thinking about New York, chances are they may have three or four processes running concurrently, through different search firms of course. Whereas if you were an executive before, you just wouldn't have been able to do that.”
COVID-19 was and is a disaster resulting in a catastrophic loss of life. Through the tragedy some good has emerged.
Sensitivity - Skinner reminds us that COVID affected communities and regions differently. “At a country level, how our teams were experiencing COVID in Denmark was completely different to how our colleagues or friends were experiencing it in Italy. So, when companies are trying to deliver their messaging about safety and wellbeing, it’s been critical for leaders to take those differences on the ground into consideration, while also communicating on a consistent and frequent basis. Generally speaking, today global leaders have become much more authentic in their communications, acknowledging they may not always have all of the answers, while also providing more autonomy to regional and local leaders in different countries around the world.
Resilience - “A much stronger group of resilient people coming up behind us,” Duncan says. “You know, kids now who have had their whole schooling disrupted, they're probably going to be much more ready for a chop and change world. So if some good has come from this, if you look outside the human cost, it'll be the resilience that it builds in all of us, but particularly the upcoming generation of leaders.”
Empathy: - For Skinner, “One result of the pandemic is that people have been more honest and open in their conversations about how they are feeling. I see this from our own leaders and colleagues in our business and also from our clients—‘how are you?’ is no longer just a simple form of greeting, and now it’s much more of ‘how are you really doing?’, knowing that a colleague may be struggling with balancing work and homeschooling, or caring for a sick parent at home, or not able to see other elderly relatives in different cities. People's empathy, their connections, these have really strengthened.”
Connection - It is impossible not to connect in a personal way with clients and colleagues better while visiting their homes and families on video calls. Parodi says, “Our relationships within our companies and also with our clients has become much more personal and much more intense in a certain way, because all of a sudden we have the time to speak about our private situation, how we deal with it, et cetera. And it's a much more confident situation also, at the end of the day, because we have the spare time to dedicate to, let's say much more superficial things, but who at the end are not superficial because we are showing empathy and showing interest for their personal life. And that is bonding people much better together.”
Familiarity - Humor and intimacy emerged from the lockdowns as well. “At the end of the day, we all became much less formal, because you meet them at their homes,” Parodi says. “The dog’s on the screen, the kids are saying ‘hello, it’s time to come to dinner.’ It's a totally different relationship, with candidates and with clients as well, because you’re so close to them.”
All of this may indicate that it’s a good time to consider joining the retained executive search profession. James says, “There is always a need for individuals who can walk this delicate dance: you’re engaging with clients, you're developing business, you're keeping an ear to the ground for what's happening in your industry of expertise, and then you are always keeping an eye out for talent.”
Where there is a need for these nuanced skills, there is also a significant reward. “It's a great profession,” James says. “You're able to leverage the knowledge you've gained and the relationships you have to satisfy a need within organizations. You're moving the needle and helping shape an organization by your assessment of the talent you bring to them.”
“Being part of that team, it's very satisfying,” she says.
Future of the Profession
All trends are pointing toward a profession that will continue to leverage the wisdom, humanity and experience of trusted advisors to achieve what a scan of data sets cannot. Ding explains, “Our connection with candidates and understanding their career aspirations and their capabilities, our understanding of the client and their situations, and our ability to make the bridge between them, that is hard to replace with technology.”
Some of the more transactional aspects of the search process are under pressure from widely available access to data and easier access to clients and candidates. However, retained executive search is advisory; it never has been a transactional business. Rather, it’s a business based on relationships -- a form of management consulting. Duncan says, “It's still those discerning skills around knowing what good talent looks like, being able to advise your client, being able to attract that talent and understand how to do that efficiently and ethically.” That is the value of search.
For Chia, the pandemic has eliminated distance. “We can pitch for any assignment anywhere in the world with any group of consultants at any time. And we can access any candidate from any part of the world at any time for essentially no travel cost, and it has reduced the time lag to set up client and candidate meetings.
The way people work has changed, and both leaders and employees have a new understanding of how they use their time and what “work” looks like. Parodi explains, “Senior managers have learned the benefit of getting away to think strategically in calm without being distracted by a lot of people coming into their office, phone calls, et cetera. Today the opportunity to have a home office is nearly a must-have offering, to stay at home and take off time—which doesn't mean not to work, but to work in a different way. In our organization when we came back all together it was fantastic: teaming up again, being together, having big discussions, exchanging, et cetera. But after this people said, ‘I need a day again to concentrate on my stuff’ and that's fine.”
Mora Schrader says, “I don't see us going back. Some people are crossing their fingers and hoping that things will go back to normal, that this will just be a nightmare we all went through and that's it. But I just don't see that happening. I think it would be a waste if we didn't learn from it, if we didn't adapt, if we didn't grow from what we've been living for the past year. I think that the industry will learn from this, and that the industry will improve and become better, because of what we've lived.”
Borders are opening, businesses are luring employees back to the office, and people have adjusted—what was unprecedented has become familiar. The virus that turned the world on its head is much less of a mystery than it was two years ago. But there is no going back to pre-pandemic norms. Communities, organizations, and what it takes to lead them have changed, and the firms that find and support those leaders have changed, too. The retained executive search profession addressed the upheaval and uncertainty of the pandemic with resourcefulness, agility, endurance and creativity. The industry has adapted and is driven to transform itself and the companies it serves, now and through the changes to come.
Contributing AESC Member Authors
Chief Commercial Officer & Partner, Canada, Odgers Berndtson – Toronto;
AESC Global Board Director & Member of the AESC Council for the Americas
Russell Reynolds Associates - Singapore
Spencer Stuart - Shanghai
CEO, The Insight Group – Sydney;
Member of the AESC Council for Asia Pacific & Middle East
President, Avery James Inc. - Los Angeles;
Member of the AESC Council for the Americas
Managing Director, Equation Partners/ AltoPartners – Santiago;
Member of the AESC Council for the Americas
Managing Partner, Parodi & Associates – Düsseldorf;
Member of the AESC Council for Europe & Africa
Regional Managing Partner, Europe & Africa, Heidrick & Struggles – London;
Member of the AESC Council for Europe & Africa
Managing Director, India & Regional Chair, Asia, EMA Partners – Mumbai;
Member of the AESC Council for Asia Pacific & Middle East