Executive Talent: A Buyer’s or Seller’s Market – The Impact of Covid?
By Keith Labbett, Managing Partner at Osprey Executive Search / AltoPartners Toronto
With all that has transpired in the past seven months, I am constantly being asked how has this effected the market for executives?
To break the question down, quite simply “is it a buyer’s or seller’s market for top executive talent”?
With conventional thought being completely thrown out the window of late, the answer is something that may surprise you.
This obviously can vary from market to market and country to country, but in the major economies and for a majority of major industries it remains quite constant.
Given the unprecedented upheaval caused by covid19, one would think that it has changed from a seller’s market (being the talented executives that are being pursued), to a buyer’s market for solid companies that are looking for these people The reality is that companies who are looking to bring on top executive talent (often in order to “retool” the team) to take advantage of this market, or are leveraging the fact that they have very deep pockets, are finding it much more difficult to get people to accept an offer than one may think. In many cases it is more difficult than before the lockdowns.
Factors affecting the executives’ decisions to change jobs:
Do I risk leaving my loyal stable position for a new opportunity? Parachute or not, it is a risk, and many are becoming more risk adverse!
Has the new organization reacted too quickly and/or incorrectly before the true effect of the lockdown has been realized?
Did I assess the situation correctly or will I become a victim of “last in first out”?
The most damaging to an executive is an organization’s misstep/read, which can put the executive in an impossible situation and render them ineffective in their new role, something that is emotionally frustrating and can/will damage their reputation, and could ultimately have a knock-on effect in their personal lives.
The thought of a V versus a less strong recovery and believing they are in stronger/safer position with an understanding of the people, culture, company, products and industry that they know well outweighs a risk of an unknown entity.
I spoke to one senior financial services executive quite recently, who turned down a very desirable opportunity with a major international institution and stayed with the upstart (be it well financed) midsize boutique. The reason was that despite being less stable, they could not ignore great opportunities of growth and industry innovations with their current firm to sit in a senior position at an institution likely experiencing limited growth while being required to learn a new set of politics and culture.
One thing that doesn’t seem to be as large a factor as anticipated at the beginning of the lockdown, is social distancing and people making hires via video. AltoPartners can cite many examples of this.
Key Factors To Remember When You Are Hiring In These Times
If you are an organization that is hiring, or wanting to hire top executive talent, in these current market conditions you need to be aware of these key points:
Don’t pick someone just because they’re available - make sure you do your due diligence and get the best person in the market. Some good people may be available, but organizations are also using this an opportunity to cut under-performers, make sure this not what you are hiring.
Be sure to communicate with the candidates as to why your organization and the position is the best possible choice for them long-term.
-> All too often employers spend so much time assessing the candidate, that they forget to sell themselves, ask if the candidate has any concerns, or even worse come across as cold with an abrasive, non-collaborative working environment.
-> Don’t come across as supercilious or unwarrantedly aspirational. Coming across as aspirational can be as serious a misstep, be sure claims and plans can be backed up!
-> This can be tricky as both sides would like to put up a strong front and this is where a professional third-party is extremely effective.
Have your Board and Executive on side with the search committee. If the executive senses any degree of conflict or even just lack of alignment, it can cause them to pass on an opportunity in any market, this is even more so in the past six months.
Be ready to discuss the numbers, not just their compensation. Most executives are going to want to dive deeper into your finances than they may have in the past and any reluctance to do so may create doubt.
Make sure your ESG is on track. If that is going to be the role of the new executive, then make sure they are comfortable that the Board and organization’s culture is aligned to allow this to happen. The same applies for Digital Transformation.
Have an onboarding process in place and communicate what that process is to the candidate – have you had to change your onboarding process because covid19 has closed your physical premises? Think about how to effectively present your company culture, work environment and team dynamics through a virtual onboarding process.
Much of this message can be communicated up front by a professional third party to all potential candidates, making for a smoother yet more robust group of candidates, leaving a great impression in the market and ultimately a stronger hire.
What does this mean for the future? It certainly looks as though talent and the pursuit of talent will stay on the seller’s side for the foreseeable future.