State of the Executive Search and Leadership Consulting Profession
Over the past decade, the executive search and leadership consulting profession has experienced remarkable growth, driven by the increasing demand globally to attract and retain top-tier talent. Over the last few years, the pandemic’s worldwide disruption exposed both strong and ineffective business leaders. As AESC CEO Karen Greenbaum puts it, “Some organizations may have found that they didn’t have the right leaders during the pandemic. The global lock down created a need for a rapid pivot and leaders were tested like never before. Some excelled but others lacked agility, adaptability and resilience as well as the ability to lead a rapid digital transformation."
This need for diverse talent who can lead through change and for leaders with new competencies and skills has significantly increased the demand for talent and leadership advisors with deep experience, diverse networks, and in-depth industry, function and market expertise.
Growth Reflects Value
According to AESC research, the global executive search and leadership consulting profession generated $16 billion in revenue in 2019, marking a steady increase from $9.7 billion in 2012. Though there was a brief pandemic-related 12% dip (dropping revenue to $14 billion), the ensuing rebound in 2021 to $19.9 billion and then in 2022 to $21.1 billion was “amazing,” Greenbaum says. This growth trajectory highlights the continued recognition of the strategic value executive search and leadership consultants bring to businesses.
In 2020, “the world came to a stop,” Greenbaum says. “Our clients around the world froze as the global pandemic meant dealing for the first time ever with lockdowns and restrictions, supply chain disruptions, a shift to a fully remote workforce and the need for rapid digital transformation. AESC members were ready to respond with critical talent and leadership guidance,” she says. “While we had a second-quarter dip in revenues, we quickly recovered and moved into action to support our clients.”
Over the years, the profession has evolved, building on its critical strength in executive search and broadening its advisory services to include a range of offerings dealing with leaders, teams, and culture. As Greenbaum says, “We are at our best when we serve as trusted advisors bringing our expertise, guidance, advice and unbiased opinions based on a deep understanding of the most urgent talent and leadership challenges.”
The escalating complexity of the global business environment has led to heightened demand for talented executives capable of navigating challenges to capture opportunities for sustainable growth. Globalization and digitalization have increased the need for leaders with diverse skill sets, cultural adaptability and technological prowess. “Businesses need leaders who can drive change; leaders who are adaptable and agile and can help carry an organization to the next level. They also need leaders who can create positive, purpose-led, inclusive cultures that help attract and retain talent,” Greenbaum says. AESC members have been able to “help organizations regroup and find the kind of leaders they need by broadening the lens with which they look for exceptional, diverse talent to meet the needs of today and tomorrow.”
Turning Challenges into Opportunities
Business leaders around the world have identified external and internal forces that play out in these top four challenges: uncertainty, the need for new skills and competencies, dealing with the talent shortage and the ongoing challenge of attracting and retaining top talent. “By partnering together, we are able to find ways to turn those challenges into opportunities,” Greenbaum says.
Businesses are faced with uncertainty – geopolitical, economic, environmental, and more. “If you think about everything that's affecting our clients and us — geopolitical disruption, economic uncertainty, war, climate change, global slowdown, supply chain disruption — what do all those things have in common? We can't control them and these challenges create significant uncertainty,” Greenbaum says.
SOLUTION: Partner with experienced Advisors
“Uncertainty creates challenges for sure. But adaptable and resilient leaders can see past the negative aspects of uncertainty to focus on innovative opportunities,” according to Greenbaum. “From seeking new leaders to developing leaders of the future, from assessing and team building to aligning culture – a trusted talent and leadership advisor can provide targeted guidance to accelerate growth.” AESC members think beyond a single “transactional hire” through a lens of the broader business context and opportunities. “AESC members possess the necessary skills, knowledge and expertise to bring valuable insights, and help their clients create an environment where the best people want to come, stay and contribute,” Greenbaum says.
CHALLENGE: Need for new competencies & skills
AESC’s 2022 research shows that to be successful during the pandemic, leaders needed the ability to quickly pivot. Survey respondents identified two necessary competencies: adaptability and agility.
Now, as companies move out of the pandemic mindset and leaders are evaluating and re-evaluating strategies, AESC 2023 survey respondents have replaced “adaptability” with “resilience,” says Greenbaum, who believes this shift is critically important for today’s “uncertain and turbulent times.” Businesses need “a leader who can lead with resilience so that they can inspire other people to hang in there and deal with whatever comes their way. If the last couple of years hasn’t taught us the importance of resilience, I don't know what would,” she says.
Businesses are seeking talent that is often significantly different than what they have sought before – including leaders who can drive change and leaders with new specialized skills and competencies—all in an environment where there is a significant shortage of the right talent. AESC research indicates organizations are seeking new highly specialized roles including Chief Sustainability Officer, Climate Change Risk Officer, Chief Information Security Officer, Chief AI Officer, Data Scientist, Chief Diversity Officer, as well as traditional roles that require new capabilities, such as CIOs with expertise in artificial intelligence, cyber risk management, and platform-driven change to name just a few.
SOLUTION: Partner with an Executive Search Expert
How do businesses find these new leaders? They turn to advisors with deep expertise and experience, who have done this before and understand business requirements, the evolving market, and where to look for unique talent. AESC’s most recent client research indicated that clients seek advisors with deep industry and functional expertise, a strong reputation, and experience in in-depth candidate assessment.
No longer can businesses simply rely on finding candidates with a 20-year relevant track record. Often these are new or evolving roles where a long track record is not possible. It becomes critical to partner with an expert who understands the needed requirements and knows how to broaden the search to a wider range of networks and adjacent industries.
These advisors also bring experience in multi-factor assessment to evaluate past experiences and how a candidate’s prior experiences can translate to leading in a new area, in a new environment. Often, psychometric assessments are included to understand the personality characteristics that will enable the leader to succeed in the specific role with the specific team and business. Greenbaum says, “We saw firsthand during the pandemic what happens to firms that didn’t have the right leaders to deal with a completely new challenge – the need to pivot to a virtual environment in weeks not years.”
The use of a structured multi-source assessment process not only provides a more complete picture of a candidate but is important to reduce bias through consistent validated processes.
CHALLENGE: Talent shortage
The pandemic years created pent-up demand for leadership, which has run headlong into a talent shortage — a lack of top-tier executive leaders capable of driving innovation, managing uncertainty, fostering agility, and attracting and retaining employees. “It’s a ‘candidates’ market,’” Greenbaum says. “Candidates are often in the driver's seat. And they seek more than just a pay increase. They are looking for an organization that has a purpose and an inclusive culture that aligns with their values. In a strong candidate market, candidates have choices and they can spend as much time or even more evaluating each opportunity as the business does evaluating them.” One emerging potential conflict in hiring - is a number of businesses want to move back to full time onsite or a hybrid environment, and executive candidates may insist upon a fully virtual role. This issue alone can be the deal breaker in hiring.”
SOLUTION: Expertise Matters!
“A shortage of needed talent increases the need for the work we do,” Greenbaum says. “We are rarely hired for ‘an easy assignment.’ AESC member firms understand the connection between leaders, teams, and culture. And they have the in-depth experience needed to solve the most difficult talent and leadership challenges.” They can tap into a global network of executives, understand functional requirements and industry nuances and go beyond the ‘usual suspects. They also understand that it’s not just about hiring top talent. You also need to ensure that you are retaining your talent. To develop a strong leadership team and create a culture that encourages attraction and retention, there needs to be a focus on culture assessment and alignment, leadership development, team effectiveness and longer-term succession strategies.”
CHALLENGE: Attracting and retaining top talent
Considering the talent shortage, both attracting and retaining talent are top priorities. It’s not unusual today for executives to be pursued by more than one organization. “And when you have choices,” Greenbaum says, “you're going to ask a lot of questions, not just about how much money you’ll make, but what it's like working for the business pursuing you. Is the purpose and culture aligned with your own values? Do you connect with the selection committee and others that you meet in the interview process? Is this the kind of place you want to go and where you see yourself staying? Purpose and culture matter.”
SOLUTION: Match candidates to culture
AESC’s recent BlueSteps survey found that 59% of executives are looking for a new position. This shows that companies are missing an opportunity to both attract and retain talent if they don’t address their own leadership, values and culture.
Talent and leadership advisors know the importance of assessing the current culture, hiring the right leaders to help lead a culture shift, assessing why leaders join and why they stay, and more. It’s critical to be authentic about priorities in areas such as diversity, equity and inclusion, sustainability and a commitment to the environment, and even the current culture and what needs to change. Also, they work with the clients to understand why an organization may be seeking leaders who are ‘culture adds’ in their quest to build a diverse, purpose-driven leadership team.
Partnering with a Trusted Talent and Leadership Advisor
What’s the difference between working with a recruiter and working with a trusted advisor? A recruiter may have a narrow focus on finding a candidate, based on the client request. It’s more of a transaction. But an executive search consultant is an advisor specializing in talent and leadership. They are consultants who a client can rely on for their expertise, guidance, and advice. Clients can count on honest and unbiased opinions and a relationship built on trust and mutual respect.
A trusted talent and leadership advisor takes this guidance a step further. They not only work to understand a client’s business challenges, but they have a unique capability of understanding these challenges and opportunities through the broad lens of ‘talent and leadership,’ and they are able to partner with clients to solve their critical challenges from attracting and retaining talent, developing future leaders, creating a culture that is purpose-led, and more. This understanding is within the overall context of strong leaders, inclusive teams, and innovative cultures.
Such advisors who specialize in executive search are known for their deep industry, geography, and functional expertise. Right from the start, they add extra value. They know how to define a new role based on emerging trends, or how to address changing requirements of a current role. They work to understand the client’s leadership team, organizational culture and the conditions that are driving the need for change. They bring expertise in multi-factor assessment to ensure ‘culture add’ and to reduce or eliminate bias from the hiring process. And their trust is critical, not just with the client but also with executive candidates to ensure success – a win-win situation for the client and the candidate.
Broader areas of leadership advisory services may focus on leadership development, succession and assessment, culture assignment and alignment, board effectiveness and more. These advisors are also known for their deep expertise ensuring value throughout the process. It is this specific expertise – based on proven processes – that ensures results.
Growth Reflects Value
The growth in executive search and leadership consulting reflects the value the profession provides to clients seeking the right expertise, proven processes and results-oriented track record. Greenbaum says, “It is exciting to observe the continued evolution of the profession from a high impact focus on executive search – attracting top talent – to a broadened focus on the most significant talent and leadership issues clients are facing as they seek to strengthen their business. These challenges include attracting and retaining top talent, developing the leaders of the future, driving innovation and expansion, and creating a winning culture.”