1st Executive Blog

08 Oct 10 Obstacles for Executive Search in 2020

2020 is shaping as a watershed for the executive search industry, but perhaps more importantly, if we look at likely partnerships between executive search professionals and employer organisations, many of these challenges are certain to be shared.

 1. The Talent Shortage

The talent shortage remains a factor in most developed economies. There are a couple of dimensions to this. First of all, the baby boomer generation is nearing the end of its working life and the reality is that Generations X and Y just don’t have the same numbers. The issue is more that there may not be enough talent to go around. The second challenge is that baby boomers have had a balance of good times and bad times management experience. The suddenness, and brutality of the 2008 financial crisis meant that executives at the time hardly had the chance to learn how to manage through the recessionary cycle as change happened so devastatingly quickly. Finding the right talent, with the right experience will be a real challenge.

2. Remuneration Gaps

Increasingly, executive search is a global discipline. Executive talent is mobile across the globe but we are starting to notice some interesting impacts on remuneration expectations. We have recently seen senior Australian executives returning from career stints in the United States or in Western Europe, seeking salaries sometimes 50% higher than the local market is paying. The ABC recently reported an inability of some recruiters to engage with these candidates for local roles and create a value based remuneration expectation.

3. Crossing Borders

As executive search becomes increasingly global, it is possible that the ease with which senior executives have moved across borders will become more challenging. The United States has become more inward looking under President Trump, the United Kingdom will still take a year or two to work out how to manage the mobility of labour post Brexit and many Asian markets that employed Western talent are now seeing their own emerging talent stepping into roles previously held by Western expatriates.

4. The Role of AI in Search

There is a view developing that AI and big data may replace the executive search consultant. While more advanced consultants are embracing the possibilities, there are others who fear the march of technology in recruitment. Quite often it is the intermediary developers of technology who promote this view. They represent just one more of the doomsayers of the executive search and recruitment industry that have been profligate for the last 30 years. People interact with and understand people better - we do not see that changing.

5. The Big Platforms

In Australia, companies such as Seek and LinkedIn continue to develop products and services that they offer to both executive search and recruitment consultants as well as to hiring organisations. Some clients have a perspective that only candidates sourced in some kind of mystical way represent any value to be paid to the recruitment & search industry. The commercial and strategic reality is that the most advanced corporations focus their investment on their own core business. It is rare that their core business includes recruitment and executive search - they still need and value external specialists.

6. Clients and Pricing

Related to the previous two items, there are procurement professionals who believe that if the advance of technology and AI has made life easier for the recruitment & search industry, that the service should be less expensive. The reality is that it mostly affects the research and administrative components of the search process. All decent recruiters and search consultants can find candidates. The value and the justification for reasonable pricing comes from their unique ability to evaluate the talent that they meet for the clients that they have.

7. Geo – Political Uncertainty

It is fair to say that in this region, the major international centres for executive search include: Melbourne, Sydney, Singapore, Hong Kong, and a number of other large Asian cities. The fact that the troubles in Hong Kong should arrive so quickly and endure for several months shoe how quickly additional challenges to the movement of executive search talent can change. 

8. Economic Downturn

Economic downturns always affect hiring intentions. However, they are not always as bad for the executive search industry as many people would anticipate. Many organisations realise that they need leadership change at such times, while others are more likely to engage in highly targeted engagement of executive interim managers to deal with particular challenges and opportunities.

9. Hyper Competition

Hyper competition in executive search and recruitment has often been spoken of. The reality is that apart from a handful of larger international chains, the industry is highly fragmented and the boutique nature of most executive search firms means that they have deep and enduring relationships with key clients. We see that very high levels of competition are more likely to affect general contingent recruitment as offshore providers with access to lower cost professional labour will hit the Internet and their phones harder in order to deliver talent to price conscious corporations.

10. Global Reach

Even the larger executive search groups have substantial gaps in their global geographic coverage. In addition to this, the level and commercial experience of executive search consultants in major firms may be limited by the need to support more top-heavy organisations. It may well be that large groups of independent firms, such as NPA worldwide, are able to mobilise senior search consultants in more locations more quickly.