For the 1st time in almost 10 months any reference to the global pandemic needs to be in passing as we consider the big issues for Boards, Private Equity Investors and CEOs to consider when it comes to executive search in 2021. With our attention focused largely on the Australian and to a lesser extent Southeast Asian markets we need to acknowledge that industries such as hospitality, travel and tourism and traditional retail have been decimated in most developed economies. Many retailers have made successful investments in their online shopping and delivery experience, a luxury not available to the travel and hospitality markets. We also need to acknowledge that the Australian economy has weathered the storm well so far but that the major international markets of the USA, the UK and Europe are still hurting badly. However, there are already trends and issues that organisations investing in senior talent need to consider.
1. Movement
In our blog piece in November 2020 we asked the question “What does top talent do after a downturn?” The position that we took then and that we have seen beginning to come to fruition in the first weeks of the year is that there is a pent-up demand among executives for new challenges. Often, movement has been delayed while people analyse and interpret the likely lasting effects of the pandemic on the markets in which they operate. There has also been, recession after recession, a progressive dilution of loyalty as C-Suite executives and other senior managers have weathered the storm, helped their business survive, and are now feeling a little underappreciated. Undertaking professional and personal development programs, reviews of incentive remuneration and employee benefits has rarely been more important than they are right now, if organisations are to avoid an exodus.
2. Start up to Scale up and Revive to Thrive
Whether businesses were relatively new, or well-established a year ago, the common thinking in the early stages of the pandemic, when economic forecasts were grim, was to survive at all costs and come out of the other side. In economies that have not been hurt as badly as those early predictions expected, leaders with defensive mindsets are likely to be left in the wake of more aggressive competitive activity. CEOs in particular need to take their start-ups to more scalable and viable long-term operations quickly. If they have revived an established business that suffered during the middle of 2020 the same growth mindset needs to be applied. Investing in a growing market to achieve greater market share has always been marketing 101 - in 2021 it is business 101. Most industries are back in growth mode, still well short of pre-pandemic levels and with a little less viable competition. Executive search needs to deliver C suite executives that have smart growth mindsets.
3. PE Funding
Private Equity funding is alive and well investors are looking for good opportunities. In the last quarter of 2020, we made executive placements in companies that had substantial private funding in industries as different as aerospace, fresh food, hardware, renewables, education and premium beverages. The common drive in each of those businesses was a roadmap of profitable growth with a capital event somewhere on the horizon. The funding, the movement we talked about in point 1 and the mindsets required in point 2 above combine to present compelling opportunities for talented executives. The best will hunt these opportunities out.
4. How good is the board?
There is a sense that some Boards may have regressed to governance roles during 2020. After all, how many board members, however illustrious their management careers were, had experience of managing during a global pandemic? In simple terms Boards need to add real value to the business and to the C suite executives they support. More and more board chairs will be looking at the directors around the table and assessing their capacity to support market growth, sales, business transformation, strategy, people innovation and business model originality. Governance will always be a necessity but it also needs to be a given, and probably no more than 10% of the Board’s contribution. Executive Search specialists are in a unique position to access retiring or recently retired executive talent that has much to contribute in all of the areas above and more.
5. Transformation
At the end of 2019, Digital Transformation was THE buzz phrase. Seen as a vehicle for the creation of competitive advantage, it accelerated rapidly through 2020 as a vehicle of necessity as more and more executives and their teams worked from home. For 2021, the Transformation issues, while heavily influenced by digitisation, are much more broad. How people work, how businesses deliver value to customers, how the value chain has been re-engineered on-the-fly from end to end, what to do with thousands of square metres of CBD office space and how to manage a workforce that is going to continue to enjoy working from home either to avoid perceived health risks, or just because they have discovered a more deeply enriching life experience, mean that Transformation is a multi-faceted challenge.
In our consulting practice, we are already deeply engaged with leadership development solutions that take systemic transformation way beyond the enterprise and right through to technologies that deliver practical solutions and new ways of working. In the executive search arena, we have already seen an increase in the number of organisations searching for “Transformation Directors” and we truly believe that these executives, never having experienced the transformation the world has been through in the last year, will be creating their own solutions as they go.
Major change is always a stimulus for the health of the Executive Search industry, it will take most of 2021 to discover how many organisations have the talent in place to realise the new opportunities the year will present.