Before the Global Financial Crisis of around 10 years ago the buzz phrase in the executive search community was “The War For Talent”. Top talent was in short supply in developed economies at both the executive and middle management levels. The GFC brought this to a shuddering halt. As the financial crisis took hold business activity slowed dramatically and many companies needed to batten down the hatches.
It was very common to hear of executive teams and many more middle managers going on to shorter weeks and foregoing bonuses and pay rises. The reality was that many of these managers continued to work full-time to ensure the survival of the companies they worked in.
In the year immediately after, the executive search and recruitment industries had a boom with many organisations reporting record volumes and profits. However, this was not really driven by a sudden surge in the economy but rather by turnover.
The reasons for the turnover were simple. As businesses returned to normal, many managers simply felt that sacrifices they had made were neither recognised nor rewarded. It was the inability of businesses to value the survival work that was done that made many managers a flight risk.
Fast forward to 2020 and in mid-November, particular in Australia (but we expect other developed economies to follow the same pattern) we are still uncertain of the economic impact of the Covid 19 pandemic. We do know, that to date the economic harm in Australia has not been quite as bad as anticipated. We do not know if the worst is yet to come.
Just as happened 10 years ago, managers and leaders have made similar sacrifices to keep their businesses alive. In many ways the responses have been more creative. We believe that, as we move into 2021, flight risk will be substantial. In fact, we are already hearing from executives and managers about how their businesses have secured financial concessions from people while profiting from government stimulus. In Australia this was primarily the “Jobkeeper” program and the “Cash Flow Boost”. Both were federal government initiatives. Similar initiatives have occurred in other countries, perhaps most noticeably the job furlough scheme in the United Kingdom.
We believe that it is the failure to recognise Flight Risk and the traditionally researched factors that contribute to it. Coupled with the knowledge of financial benefits provided to companies by government, this could see another boom for executive search and recruitment in 2021.
The reality for companies, is that they can plan to avoid flight risk. The problem is that the first time a business leader recognises that a valued executive is a flight risk is when they are met with the “can I have a chat” visit. Tthe door closes behind the employee and a resignation follows.
In order to minimise the business damage from flight risk, businesses need to be across the potential and performance of executives in value creating roles in particular. For all employees regular performance and pay reviews that are aligned with industry norms are also important factors, as are changes in management, demographics and the stability of workload in recent months.
If these issues are understood and effectively addressed a little of the sourness of knowing that governments helped businesses out while employees dug deep for their employers and have not been recognised can be sweetened.